This content first appeared in the September 2023 Fintech newsletter. If you’d like more commentary and analysis about news and trends from the a16z Fintech team, you can subscribe here.
Software is inherently global and easily transcends borders—localizing it can be as easy as translating the language. The globalization of money, however, is considerably more challenging.
This is especially true for global businesses, which grapple with multiple bank accounts in multiple currencies, opaque and expensive foreign exchange rates, unpredictable money transfers, weeks-long reconciliations, and more.
As the company of the future becomes default global, there is now a real catalyst for change. That issue is driving top fintech entrepreneurs to pursue cross-border infrastructure that is more easily integrated—as well as full-stack solutions for businesses. We made our new Global Payments Hub to show where we see opportunities to build.
This living site contains a downloadable fintech world map—a comprehensive guide to local payment rails, payment methods, key companies, and more—and a video of a16z General Partner Alex Rampell breaking down what exactly happens when you send money abroad.
You’ll also find international case studies penned by founders and industry leaders, including:
There’s a huge opportunity to develop software that makes moving money across borders seamless and transparent—and for making those services trusted and secure.
Check out the Global Payments Hub to learn more. And, if you’re building in these areas, we’d love to hear from you.
Regular fintech newsletter readers will know that one of our favorite questions is: what will come first, the incumbent getting innovation or the startup getting distribution? In these early days of generative AI, incumbents appear particularly well-positioned, as they are able to ship new features quickly and serve their installed customer bases with AI-native add-ons. Notion, Github, and Microsoft are just three of the already countless examples that come to mind. The latest incumbent to join these ranks is Intuit, which recently announced Intuit Assist, its AI-powered financial assistant that’s accessible across QuickBooks, TurboTax, Credit Karma, and Mailchimp.
About 2 months ago, I tweeted that we at a16z were heading down the GenAI x accounting rabbit hole and since then, I’ve had the privilege of meeting dozens of entrepreneurs and incumbents building in this space. The question I’ve found myself asking time and again is: wouldn’t an AI-native TurboTax just be… TurboTax? This is certainly what Intuit is hoping to accomplish as they roll out Assist to their more than 100 million SMB and consumer customers. However, as always, the devil will be in the details of how they execute—the press release is the easy part.
Phase one of Assist appears to be focused on personalized, uber-scalable customer service: this product “will intuitively show, guide, help, and do the hard work for users, and connect customers to experts on our Live Platform to provide human assistance when needed.” Perhaps most interesting, though, is how Intuit has positioned the incorporation of Assist into Credit Karma: “Assist will identify the right opportunities at the right time and make relevant recommendations, so members can take advantage of better financial products and optimize their spending.” This could be a very interesting first step toward realizing my partners Olivia and Anish’s vision of generative AI putting consumers’ money on autopilot.
So what does this all mean for startups? How can early-stage builders compete with a nearly $150 billion behemoth that already has 100 million customers? As always, they’ll need to ship and iterate faster than their slower-moving counterparts. Similarly, they’ll need to win on UX and their ability to most directly address acute customer pain. But, perhaps most importantly in this wave of generative AI, startups will need to rely upon their current under-the-radar position to take risks. One advantage of having a handful of customers instead of 100 million is that you can afford to take big swings and occasionally miss.
We’ll be watching the development of Intuit Assist closely and remain eager to meet startups who are building in this space. We think there will be opportunities to collaborate with incumbents (partner or enable), circumnavigate them (by selling to lesser-tapped channels such as CPAs), or compete head to head.
Despite the last few years of startup activity accelerating financial services infrastructure, with companies like Plaid, Sardine, and Sentilink allowing new financial services companies to start faster and cheaper than ever before, incumbents have largely remained on the sidelines when it comes to embedded fintech experiences. J.P. Morgan Chase’s recent partnership with Gusto, however, may be a sign that embedded fintech—the idea that a company with sizable distribution offers additional financial services products to its existing customers—has finally arrived for larger incumbents.
Chase’s deal with San Francisco-based Gusto allows a customer to access payroll alongside banking and payments, and is part of the banking giant’s broader strategy to win over small business customers in a scalable fashion.
This partnership is a great example of the win/win/win scenario promised by embedded fintech. It dramatically simplifies distribution for Gusto, as Chase will cross-sell payroll services to its 5 million small business and 200,000 payment services customers. Meanwhile, Chase benefits as it doesn’t need to solve for local payroll nuances, and their customers benefit from a simple and integrated payroll offering.
Although it’s still too soon to say definitively, we may be seeing a turning point in enterprise embedded fintech partnerships. Outside of payroll, we’re also seeing enthusiasm from enterprises to start working with startups building embedded accounting (like Ember), embedded lending (like Parafin), and embedded insurance (like Authentic).
As a SaaS and fintech investor, I’m frequently asked by B2B fintech founders how they should think about acquiring their first set of customers, and moreover, how to engender trust in a new startup that’s dealing with potentially millions of dollars.
In our upcoming series “My First 15,” I’ll be chatting with the founders and CEOs of some of today’s leading fintech companies including Plaid and Marqeta. I’ll ask them about how they targeted and acquired their initial customers, and the hard lessons they learned along the way.
BarbAIrians at the Gate: The Financial Opportunity of AI
Generative AI will likely usher in profound methods of company transformation. We’ll see AI cut costs, make existing companies vastly more profitable, and enable new business models to emerge. This article will lays out the Known Knowns, Known Unknowns, and Unknown Unknowns of the unfolding opportunities.
— Alex Rampell, a16z fintech general partner
To see how people are interacting with generative AI, we used data to rank the top 50 GenAI web products by monthly visits. While it’s not an exhaustive list of all AI platforms, it helped us identify trends, measure how products have grown, and spot where growth is coming from.
— Olivia Moore, a16z consumer investment partner
The fixed income markets are a pillar of our global economy, but it remains far too difficult to access fixed income securities like treasuries and corporate debt. Enter Moment, a company building infrastructure that simplifies embedding these investments in any application. We’re thrilled to announce that we’re leading Moment’s Series and support their next phase of growth. Learn more.