3 posts tagged with "Fintech"

The fintech world loves a good rivalry, and few are as instructive as the battle between Brex and Ramp. Their competition for the corporate card and spend management market reveals deeper truths about product-market fit, strategic focus, and adapting to changing market conditions.

Brex launched in 2018, offering high-limit corporate cards for startups with no personal guarantee required. They achieved hypergrowth—reaching $100 million in ARR within just 18 months. Meanwhile, Ramp entered in 2020, positioning around cost savings and integrated expense management rather than flashy rewards. Despite Brex's head start, Ramp managed to overtake it in key metrics within a few years.

Three Key Turning Points That Reshaped the Rivalry​

1. The Fundamental Value Proposition: Flashy Rewards vs. Cost Efficiency​

Brex initially targeted venture-backed startups with high-limit corporate cards that didn't require personal guarantees. This solved a real problem: young companies flush with VC funding but limited credit history couldn't get the financial tools they needed. Brex monetized via interchange fees while offering rewards to drive adoption.

Ramp entered with a fundamentally different approach: instead of competing on rewards, it focused on helping companies save money. Its straightforward 1.5% cash back on all spending bundled with free expense management software appealed to finance teams looking to control costs and streamline processes.

"Ramp reframed the product-market fit for corporate cards. While Brex's model celebrated spending (and getting rewards), Ramp's model celebrated efficiency and financial discipline."

By integrating spend controls and real-time tracking from day one, Ramp created significant stickiness compared to Brex's initial rewards-driven model.

2. Brex's Pivotal 2022 Decision: Abandoning SMBs​

In mid-2022, Brex made a strategic decision that dramatically altered the competitive landscape: it stopped serving "traditional" small businesses to refocus on VC-backed startups and larger companies.

While Brex narrowed its funnel, Ramp deliberately widened theirs. Ramp aggressively courted the very SMBs that Brex abandoned, and within months, saw its revenue run-rate double by "going after businesses at all stages of maturity."

This strategic divergence gave Ramp a larger addressable market and a reputation as the more inclusive solution. It also endeared Ramp to many in the startup community who felt Brex had abandoned its roots.

3. Market Timing: When Macro Conditions Flipped the Script​

Brex thrived during the bull market of 2018-2021, when heavily-funded startups focused more on growth than cost control. But when the tide shifted in 2022—interest rates rose, venture funding slowed dramatically, and tech companies prioritized efficiency—Ramp's message of frugality suddenly resonated much more strongly.

"When the 'era of zero interest rates' ended, fintech narratives moved away from vanity metrics like total spend volume toward net revenue and sustainable economics. Ramp was already positioned for this new reality."

Critical Product Strategies That Made the Difference​

Fundamentally Different Business Models​

Brex expanded to become an all-in-one financial platform, launching Brex Cash (a business bank account) and Brex Empower (a spend management SaaS platform). By 2023, about one-third of Brex's revenue came from interest on customer deposits, only ~6% from SaaS subscriptions, with the rest from card interchange.

Ramp pursued a more focused, product-led growth strategy. From the beginning, Ramp used its free corporate card + software bundle as a wedge into organizations. Crucially, Ramp doesn't charge for baseline software tools, making spend management and bill pay free while monetizing primarily through interchange and premium SaaS packages for larger customers.

Ramp's Bill Pay Masterstroke​

Ramp's launch of Bill Pay in October 2021 proved especially prescient. By late 2023, Ramp had "flippened" Brex by hitting $30 billion in annualized TPV (total payments volume) across cards and bill pay, growing 209% year-over-year. This product execution—Ramp's rapid development cycle versus Brex's broader but slower build—significantly influenced their growth trajectories.

Operational Efficiency as Strategy​

Ramp maintained lean operations throughout its growth, emphasizing automation and efficiency over headcount. Brex, in contrast, aggressively scaled headcount during its hypergrowth era (2018-2021), and by 2023 admitted that growth had "masked areas needing improvement" operationally. In 2024, Brex announced a "Brex 3.0" internal overhaul—flattening management layers, cutting costs, and refocusing the team.

"While Brex was reorganizing in 2023-2024, Ramp was accelerating, having already instilled cost discipline."

The Results: A Dramatic Reversal in Momentum​

Metric	Brex	Ramp
Revenue Timeline	• 2019: ~$100M ARR (18 months post-launch) • 2021: ~$192M • 2022: ~$215M (+12%) • 2023: ~$319M (boosted by SVB deposits, +48%) • 2024: ~$370.2M • 2025 (target): ~$500M	• 2022: ~$100M ARR (within 2 years post-launch) • Aug 2023: ~$327M ARR • End of 2024: ~$648M ARR • Jan 2025: ~$700M ARR
Transaction Volume	• 2021: ~$12B annualized TPV • 2023: ~$20B TPV (surpassed by Ramp)	• Late 2023: ~$30B annualized TPV (209% YoY growth) • Early 2025: ~$55B annualized payments
Customer Base	• Over 20,000 at peak (2020–2022) • Focus shifted to larger, fewer enterprise clients (est. ~10,000–15,000 in 2025)	• Over 30,000 customers (early 2025), from startups to mid-market firms
Funding & Valuation	• Total raised: ~$1.5B • Peak (Jan 2022): $12.3B valuation • Secondary market valuation (2024): ~$5-6B (estimated)	• Total raised: ~$1.1B • Peak (Jan 2025): ~$13B valuation (secondary share sale) • Previous down-round (Aug 2023): $5.8B
Headcount	• ~1,500 (late 2023), then layoffs (~20%) • ~1,100 (early 2024), stabilized afterward	• ~1,100 employees (end 2024) • Doubled headcount in 2024 (from ~500 to 1,100)

Lessons for Founders and Operators​

The Brex-Ramp rivalry offers several valuable lessons:

1. Market timing is critical. Ramp's value proposition of efficiency perfectly matched the post-2022 focus on profitability. Companies must be attentive to market trends and adjust strategy accordingly.

2. Product-led growth can outpace sales-led growth. Ramp's free software that delivered immediate value created a viral adoption pattern that efficiently scaled customer acquisition.

3. Strategic consistency may outperform dramatic pivots. Brex's abrupt decision to cut off a segment of its customer base created disruption, while Ramp maintained a consistent approach of serving businesses of all sizes while focusing on its core value proposition of cost savings.

4. Operational efficiency is a competitive advantage. Ramp's lean operation and emphasis on automation allowed it to invest more in product development when competitors were cutting back.

5. Market narrative shapes competitive dynamics. Ramp positioned itself as the champion of financial discipline exactly when the market shifted to value that trait, while Brex had to work against its established image.

The Battle Continues​

Despite Ramp's recent advantages, this story is still unfolding. Brex remains a formidable player with a larger enterprise client base and a more diversified revenue mix. Its "Brex 3.0" initiative aims to streamline operations and focus on high-value customers and software products.

Ramp, meanwhile, is pushing further into enterprise software and experimenting with AI to maintain its innovative edge. External factors—economic cycles, interest rates, and competitive moves by others—will continue to influence this rivalry.

What's clear is that Ramp's ability to execute a clear, cost-focused vision with product-led growth allowed it to gain ground on, and eventually surpass, Brex in growth trajectory. Their different journeys offer a case study in how focus, agility, and alignment with customer needs can reshape competitive dynamics in a fast-moving market.

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This analysis is based on publicly available information from various sources including Tearsheet, Sacra Fintech Research, Fintech Futures, Banking Dive, Fintech Labs, and The Generalist.

1. Technology Trends and Observations:

• Shift from "blockchain-powered" to "AI-powered" company claims.

• Emphasis on AI, machine learning, and blockchain as tools, not business models. Their value depends on their application in products and economic models.

  • Ramp & Finix's AI application on analytics, reporting, and expense automation.

• Generative AI's potential in reducing labor costs and the challenge to differentiate genuine AI usage from PR hype.

  • Publicly available large models cannot satisfy the specific and refined needs of fintech institutions.
  • The financial sector resists the "black box" nature of previous AI generations and hasn't fully embraced them with the arrival of Gen AI.
  • Institutions should build their own mid-sized models using their data.
  • They should adopt Gen AI's interactive patterns to enhance the experience of existing products.
  • The current goal is to improve products rather than inventing new Gen AI products from nothing.

2. Industry Insights:

• Insights from Cannabis Banking Summit: Challenges and opportunities in cannabis banking. Engagement with cannabis leading banks and credit unions to enhance risk management and compliance.

  • "Too much cash in our community is a problem", which is inconvenient, expensive, and often dangerous.
  • Working in the challenging realm of cannabis banking fosters the development of robust compliance, governance, and risk management systems, a point underscored by several bankers who have leveraged this expertise to branch into similar high-risk sectors like online gaming and crypto.

• Pay-by-bank has emerged as a popular payment method that offers a convenient and secure way for customers to make online purchases directly from their bank accounts.

3. Political and Regulatory Influence:

• Regulatory processes in the U.S. are slow, with a prediction of a 3-5 year adjustment period for banks heavily involved in "banking as a service."
• The regulatory focus is mainly on the Bank Secrecy Act (BSA) and anti-money laundering (AML) concerns.
• The increasing cost of compliance in the "banking as a service" space and the challenged promise of middleware platforms to reduce these costs.
• Banks are signing up for FedNow, but they're mostly only signing up to receive payments, not to send them.

4. Banking as a Service (BaaS) and Open Banking:

• Rise in "banking as a service" discussions with a perception of it being problematic rather than positive.
• Open banking's proactive approach in educating policymakers contrasts with the lack of momentum for "banking as a service."
• Skepticism around the extent and impact of open banking, especially its ability to facilitate account switching.
• Debate around standard-setting bodies and the belief that Fintech companies haven't been involved enough in shaping these standards.

5. Compliance, Compliance, Compliance. Dodd-Frank Act Section 1033 – Consumer Access to Financial Records

• Financial Data Exchange (FDX) will become the standard-setting organization for open banking.
• Big tech firms like Apple face challenges with rules requiring data sharing for companies with over $10 billion in annual revenue.
• Anticipation of bi-directional data sharing between banks and fintechs leading to further debates.

DC/EP stands for Digital Currency Electronic Payment, a central bank digital currency.

• It is: a dual-layer research and pilot project plan.
• It is not: a payment product.

Current State of Electronic Payments​

More than half of China's population is using electronic payments, with mobile payments accounting for a significant portion of personal consumption payment methods.

What Problems Does DC/EP Aim to Solve?​

1. Consumers need better and cheaper payment methods, with retail as the core use case.
2. Mobile integration has replaced many items such as ID cards, keys, and wallets.
3. Merchant application scenarios exist both online and offline.
4. Encourage competition and innovation among various upper-level institutions.
5. Protect privacy.

Dual-Layer System​

• The first layer is the central bank.
• The second layer consists of commercial banks, telecom operators, and internet payment platforms.

The second layer has the motivation and cost to perform well, while the first layer ensures that the second layer bears sufficient risk and responsibility.

How to Promote It?​

For smaller countries, it is relatively simple to replace paper money with plastic notes within a year; however, in China, each update of the Renminbi has taken about 10 years and still leaves many legacy issues. Fortunately, multiple parallel solutions are possible, making the continuous scalability of the solutions important.

One of the main tasks of the central bank is to maintain currency stability.

• The focus of research and development is not on the digital currency product itself, but on settlement and clearing.
• Improve the connectivity of different payment products.
• Prepare emergency and alternative solutions.

Main Technological Solutions​

1. Account-based electronic wallets, with merchants using QR codes.
2. NFC.

Other options include bank cards and IC cards.

Privacy Protection​

User privacy must be protected, but it cannot be 100% anonymous; acceptance of oversight by authoritative institutions is necessary.

Issues with Blockchain​

Alternative solutions involving blockchain and distributed ledger technology are still under development, but:

1. Throughput is insufficient to support retail use cases.
2. The immutability requirement conflicts with the need for chargebacks in case of incorrect payments.

Cross-Border Payments​

Libra's focus on cross-border remittances as a key application is problematic because retail terminals cannot be used directly, leading to issues of double conversion on both sides of the border.

Different national conditions result in significant resistance; for example, internationally, there is concern about anti-money laundering, anti-terrorism, and anti-drug financing, while China also pays attention to anti-gambling. Many countries have a need to prevent dollarization.