Inside Brex and Ramp’s AI ambitions

November 19, 2023

Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up! This week, we dig into spend management companies’ AI aspirations, and one U.K. fintech’s recent growth.

AI ambitions

At one time, there was a running joke that every company would become a fintech. But now one has to wonder, will every fintech become an AI company?

This week, we reported on Ramp’s new integration with Copilot, Microsoft’s brand of generative AI technologies. The spend management company said that now, Microsoft Teams users can use natural language to access Ramp’s smart AI assistant from their workspace.

Of course, Ramp is not the first, or only, spend management company leveraging AI. Brex in September launched Brex Assistant, a flagship product of Brex AI. Besides automating expense information collection, Brex Assistant can also do things like answer questions employees would traditionally ask their finance teams, such as how much they’re allowed to spend per day at a location off-site.

Brex co-CEO and co-founder Henrique Dubugras told TechCrunch+ that he believes “this is just the beginning of AI’s impact on rethinking from scratch on both the employee and user experience.”

Earlier this year, Navan claimed to be the first travel company to integrate OpenAI and ChatGPT APIs across its infrastructure and product set.

The company said it was using the generative AI technology to write, test and fix code with the aim of increasing its operational efficiency and reducing overhead. Also, through Ava — Navan’s virtual assistant — travel managers are able to personalize recommendations and increase traveler engagement, execs claim.

One has to wonder, though, if leveraging AI is not just about improving the customer experience but also to improve companies’ bottom lines. It’s a valid question, especially considering reports that Brex saw slower growth (of just 1%, according to The Information) in the third quarter compared to the second.

While Brex declined to confirm The Information’s report that it saw annualized revenue in the third quarter to $283 million, compared to $279 million in the second quarter and annualized revenue of just under $200 million, one has to take this information with a grain of salt. Brex likely saw an event-related bump in revenue after the Silicon Valley Bank meltdown in March. So the fact that it grew slower in the third quarter feels less dramatic than if a big event that gave it a surge in business did not occur. Revenue is still up compared to last year, and according to the company, so are profits.

A spokesperson told me: “Examining our year-over-year growth tells a significantly different story and shows how Brex compares favorably in this market. Year-to-date, three of Brex’s primary revenue drivers (card revenue, deposit spread revenue, and Empower revenue) are growing materially and we’ve seen over 80%+ YoY growth in gross profit.” Empower, the company’s software product, has seen revenue growth of nearly 50% this year, according to Brex.

The company, which was last valued at $12 billion, declined to comment on IPO timing, which is rumored to be sometime in 2025.

In August, Ramp raised $300 million in a funding round co-led by existing backer Thrive Capital and new investor Sands Capital at a post-money valuation of $5.8 billion. At the time, the company said it had passed $300 million in annualized revenue.

Meanwhile, Navan reportedly generated $300 million in revenue in 2022. That company (formerly called TripActions) was last publicly valued at $9.2 billion.

Besides competing with each other, these companies are competing with the likes of legacy providers such as Concur and Expensify. So it’s not surprising that they would all be leveraging AI to win over customers and make their operations run more efficiently. — Mary Ann

P.S. You can listen to Alex Wilhelm and I dive deeper on the topic on the latest episode of Equity here:

An update on Wise

I recently spoke with Wise CTO and interim CEO Harsh Sinha when he was in town for the grand opening of the U.K. company’s new Austin office. In case you hadn’t heard, Wise — which is known for facilitating cross-border payments — is doing pretty well these days. It recently reported that revenue grew 22% year-over-year in its fiscal second quarter — to about $314.7 million. It also saw its income climb by 51% year-over-year to about $420 million. The company has over 5,000 employees globally, 180 of whom are located in Austin, where it’s looking to boost its headcount by 50% over the next 12 months.

With 16 million customers, Wise has been profitable since 2017, well before it went public in 2021, according to Sinha.

Interestingly, Sinha believes that part of the company’s success lies in the fact that it’s “never given its product for free.”

“We believe charging for your product is something you have to do — even if it’s $1,” he told TechCrunch.

Sinha also shared how Wise has grown over time by moving beyond facilitating cross-border transactions to giving users the ability to hold/spend/send funds across the world.

“Now you can hold 50 different currencies at Wise, and it operates like an account product basically,” Sinha said. “You can get your salary paid into it; you can pay your bills from it, you can do direct debits. And basically the proposition is for anybody who lives in multiple currencies that has an international lifestyle.”

He also touted the speed of Wise’s offering.

“An example of the way we move money around the world — you can do a transfer from us to Australia, and it will hit the recipient account in less than 20 seconds. I will challenge you to do that with ACH today,” Sinha said. “And we’ve done this by building a network which connects directly to local payment systems around the world. And 57% of our payments now on the network are instant, less than 20 seconds.” — Mary Ann

Weekly News

Reporter Manish Singh tells us about the India central bank’s decision to put several measures into effect in order to slow down the growth in consumer spending. The new measures are for unsecured personal loans, credit cards, consumer durable loans by banks and nonbanking financial companies. This comes as industry analysts report that 39% of retail loans made in the 2023 fiscal year went to borrowers who already had five or more active loans. Manish writes that this tightening will affect startups in the business of making loans. He spoke with one fintech founder who said that it would reduce growth “by a bit.” Read more.

Reporter Tage Kene-Okafor writes about Paystack laying off 33 employees in Europe and Dubai amid the African payments company’s focus on its home continent. Tage reports that the company maintains a footprint in Nigeria, Ghana, Kenya and South Africa and is now engaging in private beta testing in the Ivory Coast, Egypt and Rwanda as part of expansion efforts. Read more.

Editor Frederic Lardinois broke down the term “FinOps” in an article this week that has tech giants, including AWS, Microsoft, Google and Oracle, coming together to make cloud spend more transparent. That’s because each SaaS platform has its own definitions and way it goes about doing this. Enter the FinOps Foundation, a movement aimed at creating a better framework for how cloud spend is tracked and reported. Read more.

Editor Sarah Perez covered Venmo’s new feature that enables users to split expenses among groups. What’s interesting about this is for groups, like individual clubs, community organizations and even household roommates, you can get rid of the spreadsheets you currently use and instead track everything through Venmo. Everyone in the group can manage the expenses, too, so one person isn’t stuck with the role. Sarah points out that this new feature is likely to “cannibalize the user base of single-purpose apps aimed at organizing group expenses, like Splitwise.” Read more.

TC’s Tage Kene-Okafor reports that Chipper Cash recently announced an enhanced strategic partnership with Visa to drive growth and financial inclusion across the African continent. Having had an established partnership with Visa since 2021 for card issuance, this expanded deal will see Chipper utilize Visa’s vast experience and investment across more areas of its business such as licensing and product marketing. “We are thrilled to announce our expanded collaboration with Chipper Cash. This deepens our support in the growing demand for digital financial services in Africa and driving meaningful impact across the continent,” said Meagan Rabe, senior director of fintechs for Visa sub-Saharan Africa. “We look forward to continuing our work with Chipper Cash to redefine and expand the boundaries of financial accessibility and convenience.” The announcement comes just two months after Chipper announced the launch of Chipper ID, the AI-driven verification and onboarding tool built specifically for the African continent. Read previous coverage on Chipper Cash here.

Other items we are reading:

ICYMI: Plaid officially jumps into lending

Inside the war between Square and Cash App at Dorsey’s Block

Businesses love rewards credit cards. This startup is making them easy to launch (Check out TechCrunch’s previous coverage of Imprint’s $38 million round.)

Americans are getting ‘ripped off’ by big banks, Robinhood CEO says. This comes as Robinhood raises its Robinhood Gold rate again to 5% APY on uninvested cash.

Dwayne Johnson links with Acorns for Mighty Oak debit card launch