4 posts tagged with "fintech"

I. Brex's IPO Plans and Recent Developments​

Speculation surrounding a potential IPO for the corporate fintech company Brex has grown over the past year. However, the company's management has remained cautious about the timing, and there are currently no definitive plans for a near-term public offering. Brex's Chief Financial Officer (CFO) has stated that while the company will "certainly consider going public in the future," there are no immediate plans to do so. He added that Brex is well-capitalized and expects to operate as a private company for several more years.

The collapse of Silicon Valley Bank triggered a surge of interest in Brex, which onboarded over 4,000 new customers and secured more than $2 billion in deposits within 36 hours. This event fueled market speculation about a potential IPO. However, Brex's management later clarified that their current focus is on strengthening internal business operations and they are not in a rush to initiate the listing process.

Co-CEO Pedro Franceschi has emphasized that the company will not go public until the conditions are right. "It's easy to become a public company," he noted, "but it's difficult to operate one with low volatility and high predictability." Consequently, Brex aims to achieve a more predictable and stable business model and financial performance before considering an IPO.

According to reports, Brex plans to become cash-flow positive by mid-2025 and reach an annual revenue of $500 million by the end of 2025, laying a solid foundation before going public. Co-founder Henrique Dubugras also stated in a 2024 interview, "We expect to be profitable in 2025. If we can achieve that, an IPO will follow. But first, we must hit our profitability targets." This indicates that Brex views achieving sustainable profitability as a prerequisite for initiating the IPO process.

II. Overview of Brex's Current Financial Situation​

Since its inception, Brex has experienced rapid growth, becoming a unicorn in the fintech sector.

• Valuation and Funding: To date, Brex has raised over $1.5 billion through multiple funding rounds, reaching a peak valuation of over $12.3 billion in 2022. This valuation is significantly higher than most of its competitors, highlighting investor confidence in its business model. It is important to note, however, that the fintech industry underwent a valuation contraction from 2022 to 2023 due to macroeconomic pressures, leading to write-downs in the paper valuations of many private unicorns. Since its $12.3 billion valuation in early 2022, Brex has not pursued further large-scale equity financing. Instead, the company has recently turned to credit facilities to supplement its capital, such as a $235 million revolving credit line from Citi and TPG at the end of 2023 to enhance financial flexibility.

• Revenue and Growth: Brex continues to expand its business operations. While the company has not publicly disclosed specific revenue figures for the most recent year, various sources indicate strong growth. In 2024, Brex's revenue reportedly grew threefold, and its net revenue retention increased by over 15 percentage points. The company itself has revealed that its enterprise client business grew by approximately 80-91%. In terms of customer numbers, Brex has attracted over 150 publicly traded companies as clients, including Anthropic, Arm, and Robinhood. Third-party analysis estimates Brex's net revenue in 2023 was approximately $319 million, a nearly 50% increase from $215 million in 2022. While not officially confirmed, this data aligns with Brex's announcements of "significantly accelerated revenue growth." Management's stated goal is to achieve $500 million in annual net revenue by 2025. Reaching this target would further solidify its position in the corporate financial services market.

• Profitability and Cost Management: Brex has not yet achieved full profitability but is rapidly improving its financial health. The company has conducted two rounds of layoffs in the past 18 months to cut redundant expenses and control cash burn. According to official disclosures, Brex's burn rate had been reduced by nearly 70% as of 2024. The CFO stated that the company is focused on "sustainable growth" and its "path to profitability." Brex anticipates that 2025 will be its last year of burning cash, after which it will begin to generate positive free cash flow. In other words, Brex plans to reach break-even in 2025, a timeline that is closely aligned with its IPO strategy. It is worth noting that in 2023, rapid expansion led to soaring expenses, raising concerns about its high burn rate. In response, management took decisive action by streamlining the team and strengthening cost controls, which has significantly improved its unit economics. With a substantial capital cushion (over $1.5 billion in cumulative funding and considerable cash on hand), Brex is not in immediate need of IPO financing to sustain its operations. This provides the company with the flexibility to wait for the optimal market window to go public.

III. Industry Context and Competitive Position​

Brex operates in the corporate fintech space, specifically in enterprise spend management and corporate financial services. This field has seen the emergence of several innovative companies in recent years, leading to increasingly fierce competition. Brex began with corporate credit cards and has since expanded into business bank accounts, expense management, and travel and expense software, aiming to create an all-in-one financial operating platform for businesses.

Brex's main competitors include:

• Stripe: One of the world's largest payment infrastructure unicorns. While Stripe's core business is online payments, it also offers corporate cards and treasury management services, giving it a significant advantage in terms of customer base and product capabilities. Stripe was valued at a staggering $950 billion in 2021, but its valuation was adjusted down to $50 billion in a 2023 funding round due to market shifts. In early 2024, its valuation rebounded to approximately $650 billion through an employee stock buyback transaction. Stripe is already profitable (reportedly turning a profit in 2023) and is using secondary market financing to provide liquidity for its employees, thereby delaying its IPO to await a higher valuation. Stripe's strategy shows that even industry leaders are waiting for the right market window to achieve a favorable valuation at their public offering.

• Ramp: A direct competitor to Brex in the corporate spend management space, known for its "money-saving" positioning. Ramp has grown rapidly and is well-capitalized. In an August 2023 funding round that raised $300 million, it was valued at $5.8 billion. Although this was a decrease of about 28% from its previous valuation, Ramp remains a major player in the industry. The company has not yet had any layoffs, indicating relatively stable efficiency and cost control. Ramp's founders have also recently stated that there is no clear IPO timeline, expressing that they "look forward to exploring the public markets at some point, but have no active timeline." Ramp's positioning is similar to Brex's, and their customer bases overlap, meaning they are likely to be directly compared in the capital markets.

• Airbase: Another key spend management startup alongside Brex and Ramp, focusing on the mid-market segment. Airbase was valued at approximately $600 million in a 2021 funding round. However, due to intense industry competition, Airbase was acquired in 2024 by the publicly traded HR software company Paylocity for $325 million. This price was about half of its peak valuation, demonstrating the consolidation and valuation pressures on smaller players in the market. The acquisition of Airbase highlights the prominent position of Brex and Ramp as standalone companies, as smaller competitors find it difficult to go public independently and often opt for acquisition as an exit strategy.

• Other Competitors: In addition to the companies mentioned above, the corporate finance management space includes Navan (formerly TripActions, specializing in travel and expense management), Mercury (a digital bank for businesses), and Divvy (acquired by Bill.com). Navan confidentially filed for an IPO in September 2022 with a valuation of around $12 billion, but there has been no progress since. Mercury, which focuses on banking for startups, reached a peak valuation of approximately $3 billion. These companies offer solutions with different entry points but have overlapping product features with Brex (for example, Brex has recently launched global business bank accounts).

Overall, Brex holds a leading position in the competitive landscape, thanks to its extensive product line and large customer base. Its peak valuation of $12.3 billion in 2022 was more than double that of its main fintech rivals. However, Brex faces potential challenges from industry giants like Stripe expanding into the enterprise spend management sector, as well as differentiated competition from up-and-comers like Ramp, which focuses on user experience and cost savings.

The overall industry backdrop is favorable, with strong demand for corporate fintech services. A growing number of companies are looking to optimize spend management and improve financial transparency through digital tools, providing a vast market for companies like Brex. At the same time, macroeconomic changes (such as the interest rate hiking cycle) have made both customers and investors more focused on profitability and steady growth rather than cash-burning expansion. This is a key reason for Brex's strategic shift to focus on larger enterprise clients and a clear path to profitability. In the current environment, it is expected that the top players will continue to attract customers and capital, while some smaller competitors will be acquired or marginalized, leading to increased industry concentration.

IV. Potential IPO Timeline and Valuation Range​

Based on the information above and the current market environment, we can make a predictive analysis of Brex's IPO timeline and potential valuation.

• Timeline: Brex could potentially initiate an IPO as early as 2025, but only if it meets its internal profitability and revenue targets. In 2024, company management repeatedly emphasized the need to achieve profitability before considering a public offering. This suggests that Brex is likely to formally pursue an IPO in the second half of 2025 or in 2026, after its profitability metrics have been met. If the company achieves positive cash flow as planned in 2025 and market conditions are favorable, the window for an IPO could be from late 2025 to early 2026. Of course, the company might also choose a more cautious path, such as waiting for several consecutive quarters of profitability to demonstrate the sustainability of its performance to investors. In that case, the IPO timeline could be further extended.

• Valuation Range: To estimate Brex's valuation, we need to consider its fundamentals and market comparables. Brex's last private valuation was $12.3 billion in early 2022. After a period of market turmoil, many unicorn valuations have shrunk. However, by increasing revenue and cutting costs, Brex is striving to maintain its high valuation. There is currently no public information on Brex's target IPO pricing. Nevertheless, we can infer a range based on similar companies and industry conditions:

  • Internal Valuation Benchmark: Brex's management and early investors will likely aim for an IPO valuation that at least matches its previous private valuation. The $12.3 billion figure serves as a psychological benchmark, and an IPO valuation significantly below this could be perceived as unsuccessful. Therefore, it is reasonable to assume that Brex will aim for a listing at or above this level. If the company achieves $500 million in revenue and is near break-even in 2025, a Price-to-Sales (P/S) ratio of 20-25x would not be out of the question. This would correspond to a valuation of approximately $10-12.5 billion, which is in line with its last funding round.
  • Competitive Comparison: Looking at competitors, Ramp's post-money valuation in 2023 was only $5.8 billion, while Navan's confidential IPO filing targeted a valuation of around $12 billion (though its progress is uncertain). The leading payments unicorn, Stripe, currently has a secondary market valuation of $65 billion, is already profitable, and may wait another 1-2 years to pursue an even higher valuation. In comparison, Brex's valuation would likely fall between Stripe's and Ramp's, positioning it in the upper tier of unicorns. Given the valuation contraction seen at companies like Ramp, if Brex can maintain high growth and reach profitability, it could justify a higher valuation multiple than its peers. However, in a cautious market, investors may discount Brex's past cash-burning expansion. Therefore, a reasonable valuation range might be between $8 billion and $15 billion, depending on its revenue scale, growth rate, and profitability at the time of the IPO.
  • Market Scenario Analysis: In an optimistic scenario, if the macroeconomic environment is favorable and tech stock valuations continue to rise by the time of the IPO (assuming 2025-26), and Brex demonstrates sustained profitability, its valuation could even surpass its previous peak, reaching over $15 billion. In this case, Brex would be seen by the market as a rare, high-growth, and profitable fintech company, potentially enjoying a valuation premium. Conversely, in a conservative scenario, if market sentiment towards fintech companies is lukewarm, or if Brex's growth slows despite approaching profitability, the IPO valuation might be close to or slightly below its last round, in the $8-10 billion range, to ensure a successful offering. This would still be significantly higher than smaller players like Airbase that were recently acquired.

It is important to emphasize that the final valuation will also be influenced by overall market sentiment and pricing strategy. Brex might follow Stripe's lead and use secondary transactions to adjust valuation expectations before the IPO, for instance, by allowing some employees and early investors to cash out, thereby reducing the impact on the IPO. In summary, based on current information, Brex is likely to wait until its financial metrics are "up to par" before choosing the right time to go public, with a target valuation of no less than its previous private round, ideally aiming for a market capitalization in the double-digit billions.

V. Market Factors Impacting Brex's IPO​

The current market environment is generally moving in a direction favorable for IPOs, which is a positive sign for Brex's future listing.

Favorable Factors:

• Tech Stock Performance: After a downturn in 2022, U.S. tech stocks rebounded strongly in 2023 and 2024, with investor risk appetite returning. The NASDAQ Composite Index rose by about 43% in 2023 and another 29% in 2024, repeatedly hitting all-time highs. The S&P 500 has also seen gains of over 20% for two consecutive years. The recovery in tech valuations has raised the market capitalization of comparable companies, which helps align IPO pricing with the expectations of existing shareholders. For Brex, the valuation of publicly traded companies in the fintech sector has rebounded, and investor acceptance of high-quality tech firms has improved.

• Interest Rate Environment: The Federal Reserve's aggressive interest rate hikes in 2022-2023 to curb inflation put pressure on the valuations of growth companies. However, looking ahead to 2025, inflation has fallen from its peak, and the Fed's hiking cycle is nearing its end. The market even anticipates that interest rates will stabilize or enter a downward trend. A stable interest rate environment is conducive to higher stock market valuations, as lower rates increase the present value of future earnings, making investors more willing to pay a premium for growth stocks. Therefore, if Brex chooses to go public during a period of falling interest rates, it may benefit from a more favorable valuation environment. Furthermore, stable interest rates imply reduced macroeconomic uncertainty, which is crucial for keeping the IPO window open.

• Investor Sentiment and the IPO Window: After a two-year slump, the IPO market showed signs of recovery in late 2024 and early 2025. According to statistics, U.S. IPO proceeds reached $8.4 billion in the first quarter of 2025, more than triple the amount from the same period the previous year. The average share price of newly listed companies rose by 38% from their offering price, indicating strong post-listing performance and a return of investor confidence. This optimism is partly driven by enthusiasm for new technologies like artificial intelligence and expectations of a soft economic landing. Institutions like EY also predict that IPO activity will accelerate in 2025, with several factors (a strong stock market, low volatility, a robust economy, etc.) creating a more favorable environment for IPOs. This means that if Brex seeks to go public in 2025-2026, the overall environment is likely to be relatively advantageous, with the market willing to give new listings a chance.

Unfavorable Factors & Considerations:

• Shift in Investor Preference: It is important to note that after the lessons of the past few years, investors are placing a greater emphasis on the profitability of listed companies. Recent IPOs, such as the data security company Rubrik going public while still unprofitable, have sparked a re-evaluation of the "high-growth but not yet profitable" model. Brex's CFO has pointed out that the prevailing view now is that a company should be profitable at the time of its IPO. This has become a threshold for increasing the chances of a successful listing in the current macroeconomic environment. Therefore, if Brex can present a financial statement that is close to break-even or already profitable at the time of its IPO, it will be much more appealing to the market and will boost investor confidence. Conversely, if it goes public without being profitable, it could face a valuation discount or a lukewarm reception. This is the core reason behind Brex's management delaying the IPO to focus on improving its financial metrics.

VI. Does Competition with Ramp Determine IPO Success?​

Risk Assessment: Medium Probability, but Manageable​

Based on current data, the risk that Brex "cannot go public if it fails to surpass Ramp" is approximately 20–30%, classifying it as a medium-probability event. While it warrants attention, it is far from being a decisive factor.

Core Rationale​

• The Gap in Revenue and Valuation is Within a Tolerable Range Ramp's latest valuation is $13.0 billion, with an annualized revenue of approximately $700 million. Meanwhile, Brex is targeting $500 million in annualized net revenue and aims to achieve profitability within the year. Although Ramp is slightly ahead, it is not a landslide victory, and capital markets still accept the logic of the "top two" players co-existing in an industry.
• The IPO Window is Reopening, but with Higher Standards IPO activity recovered in the first quarter of 2025, with investors emphasizing a "clear path to profitability and operational efficiency." As long as a company can demonstrate it is at an inflection point toward profitability, it can pass market scrutiny without needing to be the number one player.
• There is Precedent for Co-existing Competitors to IPO The fintech sector has a history of top duos going public around the same time (e.g., Uber/Lyft, DoorDash/Grubhub). Currently, companies like Chime and Circle are also pursuing IPOs, indicating that investors are comfortable with a competitive landscape where multiple leaders co-exist.

Three-Scenario Analysis and Probabilities​

Scenario	Key Conditions	Probability	Likely Outcome
Optimistic: Successful Differentiation	Revenue growth outpaces Ramp; achieves profitability by year-end.	45%	Independent IPO around 2026 with a valuation of $10–12 billion.
Baseline: Co-existence & Competition	Maintains 25–30% YoY revenue growth; break-even point is slightly delayed.	35%	IPO in 2026–27; valuation at a 20–30% discount compared to Ramp.
Pessimistic: Falling Significantly Behind	Revenue growth drops below 15%; continues to post losses with an unclear path to profitability.	20%	IPO is postponed; pivots toward an acquisition or a backdoor listing.

In other words, the probability of being unable to go public because of the failure to beat Ramp is approximately 1 in 5.

VII. What Brex Can Infer — Predicting Its IPO Through the Lens of Chime’s Debut​

Chime’s June 2025 listing provides a real-time benchmark for large U.S. fintechs making the jump from private to public markets. Five datapoints from that deal translate directly into a working forecast for Brex’s own IPO.

Chime Signal	What Happened	Implication for Brex
Valuation reset ≈ -50 % from peak	IPO valued Chime at ≈ $11.6 B—well below its $25 B 2021 round	Expect a similar haircut: target $8 – 12 B vs. Brex’s $12.3 B 2022 mark
Profitability threshold	Posted $12.9 M profit in Q1 25 before listing	Brex likely waits for its first profitable quarter (earliest Q4 25) before filing
Above-range pricing & day-one pop	Priced $27 vs. $24–26 range; shares +59 % at open	Solid fundamentals could let Brex price high and still enjoy a pop—critical for employee morale and secondary liquidity
PS multiple compresses to single digits	Trades at ~8.5× 2024 sales	Apply ~8–10× to Brex’s 2025 revenue goal ($500 M) → mid-case valuation $4 – 5 B; but SaaS-like mix may justify upper single-digit teens, lifting target back to $8 – 10 B
Asset-light model rewarded	76 % of rev. from interchange; high 88 % gross margin	Brex’s software-heavy, credit-light mix should command a premium to banks but a discount to pure SaaS—validates its pivot toward expense-management software

Conclusion​

In conclusion, Brex's IPO prospects depend on its ability to meet its performance targets and the alignment of macroeconomic market conditions. The company has no immediate plans to go public and is expected to seriously consider an IPO only in 2025 or later. Financially, Brex is working towards a balance of profitability and growth, which will lay the foundation for securing a favorable valuation. In the competitive landscape, Brex is in a leading position but must remain vigilant about the moves of industry giants and the challenges from emerging players.

Based on the available information, Brex's IPO valuation is expected to be in the tens of billions of dollars, with the specific amount depending on its revenue scale and the revenue multiple assigned by the market at the time. The current market environment is slightly favorable for Brex's future listing, with strong tech stocks, recovering valuations, falling interest rates, and a reopening IPO window. However, investors are also more cautious and pragmatic.

For Brex, the optimal strategy is to strengthen its internal fundamentals (business predictability, improved profitability) while waiting for the right external opportunity (a time of positive market sentiment). This approach will maximize the success and financial returns of its IPO. All eyes will be on Brex's moves in 2025 and beyond to see if it can become the next star company to lead the corporate fintech sector onto the public markets.

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.