Podcast #9 - Andrew Jamison, CEO Extend

(Note - all views are those of Fintech Compliance Chronicles/my personal views and not affiliated with any other organization)

Welcome back to the podcast! This week’s guest is Andrew Jamison, an industry leader in B2B payments and spend management, and the CEO and Co-Founder of Extend.

Extend is a “digital credit card distribution platform for banks, fintechs, businesses, and their customers, that redefines how credit cards are issued. A certified Visa and MasterCard partner, Extend seamlessly integrates with legacy bank issuing systems to enable modern virtual credit card features and distribution capabilities. Extend offers both a virtual credit card distribution app (paywithextend.com) for business customers that want to instantly equip anyone with a secure mean of payments, and a suite of APIs for fintechs to leverage virtual credit cards to enhance their products, enable commerce at POS, and streamline payment operations.”

Some background about Andrew - he is a “virtual card expert, who managed all B2B payments solutions for American Express for 12 years with a mandate to drive digital payment innovation and adoption. Over the course of six years, he doubled B2B payment volumes by launching and scaling new capabilities and platforms. Prior to AMEX, Andrew spent eight years managing global SAP deployments for large multinational corporations. He earned an MBA from INSEAD.”

Grateful to Andrew for taking out his time to talk to us about the intersection of B2B payments and compliance! Special thanks to Avenue Z for helping coordinate the discussion.

Zarik: Welcome Andrew Jamison to the Fintech Compliance Chronicles podcast. Really excited to be talking to you today to learn a little bit more about Extend, the company of which you are the CEO. As I always like to start off with in these conversations, who are you and what do you do?

Andrew: Thank you Zarik, for having me on the show. So I'm the CEO as you rightly pointed out. I'm one of three co-founders of Extend. We are just approaching our eighth anniversary of creating this company. It's been an interesting journey. Upon which I've relied an awful lot on my prior experience.

That's spending the best part of 10 years working alongside SAP and understanding the enterprise resource planning space and the size and scale of business and specifically around finance functions. And then more recently with the 12 years I spent at American Express managing B2B payments, and the platforms over there.

So understanding the payments ecosystem. And so all this comes together, with the creation, of Extend, which is really a spend and expense management tool designed right for the middle market or the emerging middle market. The idea is to allow people to do more with what they already have.

It's really about spend and expense management from the card you already have from your existing bank provider in your pocket.

Zarik: Great. Thinking to the origins of the company, what would you say were some of the pain points? In spend management, particularly thinking about B2B payments in general, what were some of the gaps, pain points, opportunities that you and your co-founders saw, that you built Extend on, to try to resolve and, ease.

Andrew: Yeah, so for the segment that we really go and support, the main part of our customer base really is in that emerging middle market segment. It's companies with less than 75 million in revenue, and north of 10 million in revenue. So in that space there's somewhere between 150 and 200,000 companies, that represent a spend capacity of about $2 trillion.

So a sizeable spend. It's a top 10 global economy right there. What I saw though with the tools at our disposal is frankly, there was just too much friction. In the ecosystem specifically, the companies are seriously resource challenged. Whether it's to do with capital or people, they don't have the luxury of having departments, right?

The departments are often departments of one or two, and those individuals have so much diversity in what they do in any given day. And what they didn't have was access to tools that drove automation, tools that drove control. Tools that allow them to get to compliance right. In a more seamless fashion.

So for us, what we were trying to solve for is could a company of less than 200, 300 employees easily be able to manage both expenses after an event had happened, but actually more importantly, also then manage events before they happened. So, this is where the prevalence of subscriptions and how people run their businesses has changed so much over the past five years that actually just new tools are needed. There's so much more is happening through payments online, but you have to have control and you have to really understand that your subscription's not gonna run wild out there.

And so many businesses today rely on buying these services on behalf of third parties that actually just need a better way to reconcile and to automate billing and collections and all these pieces. So that was really the vision here was like, could we look at that customer segment and really think long and hard about how do we drive truly automation into that segment, right?

And access to tools that frankly, that'd been kept away from them, partly because they were not scaled enough as businesses, and typically those tools just took too many resources for it to be profitable for people to bring those capabilities to that segment.

Zarik: That makes sense. If I'm remembering correctly, your company started in 2017, is that right?

Andrew: That is right. Yeah. So we started in 2017. The company was formed in April, but we didn't raise our first fund until October of 17. So we had sort of a six months period where we got some friends and family money together, as much as anything else you have to prove to investors that you're worthy and that comes at the cost of having to lean in, to your network and have people be willing to back you, even if it's for a normal amount.

It's really an important part of the journey. And actually for our collective wives, it was a really important part of the journey. 'Cause I don't mind you giving your time because time is money given your careers. 'Cause we're not 22 starting the business, right. We're all in our forties at the time.

So for them it's like, I just don't want you to invest our own money given the fact you're giving up so much already. So how do you partner up to bring capital and skill together right? To develop this company.

Zarik: That makes sense. And actually what came to my mind when you were talking about subscriptions; it's interesting that in 2017, this was the vision you had because from my perspective-- certainly more I think on the B2C side than the B2B side, the subscription pain and the need for organizations to be able to support, subscription management recurring payments, if you will-- I think it's become much more of a going concern for individuals and organizations since then. So I would say kudos to you and your team for anticipating that, as a challenge and to some extent, I'm sure it did exist, but at least from my vantage point of seeing this as a problem to be solved, I think it's gotten more and more. So certainly, seems that you all have positioned yourself very well to be able to tackle it.

Andrew: I was gonna say, I'd love to take credit for that, but there's always luck in this. Right? And so this is where part of the story is luck because COVID has actually been one of the biggest reasons why this whole thing has, I think gathered speed and like a snowball running downhill. It's just gathered momentum.

And, I think if you go back to 2017, yeah, there were subscriptions. Absolutely right. We still stood up paying subscriptions for Jira, for managing tickets or for running essentially Slack or all those different things. But the reality is we also believe at the time, where anywhere between 10 and 20% of the workforce were contractors, long term contractors that didn't have access to a card, we thought originally there would be a lot more in that particular space. As it turns out, there was an even bigger problem, right in that sort of indirect spend where, there was frankly, a lot more problems to be solved there and much bigger tickets. And that's what's allowed us to scale, really fast is seeing that opportunity develop.

Like everything right, there's always elements of luck. And being there at the right place at the right time.

Zarik: Agreed. And you talked a little bit about partnerships. If you could talk through your partnership with, BMO, where, you focus on essentially creating a set of virtual cards and, having some really innovative ways to work through underwriting.

If you can talk through that and even how you manage things like AML, KYC identity verification to the extent that you need to, when you're partnering with them and when you're thinking about, the creation of virtual cards.

Andrew: So this is where we differ from others in the market, that instead of partnering with BMO and banks, have decided to go it alone, right? And so that's where our model actually is. We partner to overlay our technology, over the top of existing infrastructure. So it's dependent really on what processor they're using to issue cards, to manage cards, right?

What network they go and authorized transactions on and how transactions are routed through the ecosystem. So essentially our model there is really a white label model. And we do not onboard a customer because BMO does. BMO is the one running KYC and essentially all of those aspects.

And so that's the beauty of our model, we don't have to go down that path of KYC. Now, here's what's interesting in that model though, is when virtual cards are generated and now increasing, getting into the hands of individuals, now you start saying, we need to do OFAC screening.

And so we essentially have partnered up with them to drive that process. That's key because this is net new. You're delivering a card to an individual versus a business. And more and more bank partners are saying, well, the minute you straddle into that space, you do need to run that part of the process.

But the beauty of our model really has been the fact that I don't underwrite. Actually, I'm not the issuer of the cards. BMO underwrites, BMO issues. And then when a card gets presented at a merchant, be it online or, in retail with Apple Pay that whole, process runs through the normal rails.

So again, relying on the whole infrastructure that BMO has put in place around making sure fraud isn't happening and all these different things, my belief is they have all the resources to make that happen. And it would be very hard for a FinTech to hold that high standard.

And that's why we have relied on the model where we are gonna go out and partner with traditional banks, to make them really successful.

Zarik: Yeah, and I think it says something that BMO is willing to partner with a company like yours and take on some of that risk and infrastructure, regulatory infrastructure, if you will, to be able to perform those checks. 'Cause I've also heard of cases where there's tech / bank partnerships on the table, and sometimes the bank will say, you know what? We don't want to assume the risk for your customers. So, I think it's a testament to, the quality of partnership and their trust in you.

Andrew: Yeah, look, I mean, here's the benefit of having been in the industry and having been on the other side of the table for 12 years whilst I was at American Express: for me, compliance isn't an option. It's a necessity. And as long as you kick off with that as a mindset you build your company in a certain way.

And it's never been a case of circumventing. It's always been a case of addressing. And I think where technology and compliance sometimes goes a bit awry is people are understanding what each party's actually doing. And so the hardest part here is much more about being able to outline to different teams exactly the role you play and therefore what rules should be applied to that particular scenario.

Too often these things get bundled and sometimes it's, people say, there's too much compliance and oversight. It's like, well not really. It's just about can you understand which parts of this are relevant right to the process that you are supporting on behalf of your bank partner.

And I think navigating that gray zone is where most people have trouble. And I think that's where, having the benefit of having been, in and around industry and enterprise for the best part of 25 years before starting this business. It was very clear to us that if we were gonna be successful, we would have to be onboarded as a supplier, likely not just by the banks, but by the processors and by the networks. And so for us, we knew out of the gate, we were going up against the biggest of companies in financial services full stop. And so we would have to be able to pass all of these different gate reviews, and really be supportive in that process.

And that's actually been a huge asset because that's where we've built the trust and we all know this business and financial service trust is such a key element in being able to grow together. Because without trust, things fall apart really fast. As we've seen in the FinTech ecosystem where people didn't take something seriously, the thing unravels really fast.

Zarik: Agreed. It can go bad pretty quickly. Just staying on the topic of regulation more generally. I'm curious if either as a consequence of your past industry experience or given the increasing profile and exposure of Extend to the larger market, you've received any regulatory feedback, or just indirectly have heard from some of the organizations that are using your tool from their compliance teams perhaps.

You said a lot of the burden is picked up by partnerships like BMO, for example. Would be curious to hear what kind of feedback you're getting from some of your customers, your partners, et cetera.

Andrew: Yeah, so look, we've had great feedback, partly because we help accelerate timelines for our bank partners to be able to launch these capabilities for the customers they're trying to serve. A bank partner may say, I love the solution, but you do need to do sanction screening.

And it's like, well that's gonna take us two years to develop internally. And it's like, great Extend, can you help us here? And that's where it wasn't two years. Because our advantage is speed of building technology and integrations and different pieces. There we were 12 weeks later, having satisfied the compliance needs of our bank partner. And so that's where I think you get these great partnerships, right? It's about, leveraging technology and building the right process flows, where you get the benefit of being a FinTech. But then you get the benefit of size, scale, compliance, trust with the partner issuer that you have that's been in market and understands the market as well as anyone else.

And that's where we get the benefit of experience from them and allows us to drive clarity in how we're building and designing, our solutions. So look, overall, the other thing is having been onboarded by so many of these strategic partners, where there's PCI compliance and you go down the list they've commended us because we've thought through and every time we get assessed it's like, oh, you know, you've actually thought this through and you've thought it through in a way that you can go and scale your business without us having to be concerned, right? Around whether or not you're doing these different things.

So what I will say is, sometimes you can say, oh, it's frustrating. It's just added six weeks. It just added 12 weeks to the process. But I think compliance is a necessity. You can't go around it. And as long as you embrace it, I think you get to a really healthy place.

We always wanna move faster. They always wanna move slower 'cause they wanna make sure they get through the right gate reviews and somewhere in between we do really well together.

Zarik: I think it's all about balance, to be successful on, that topic of compliance. 'cause at the end of the day, compliance should be a competitive advantage if it's helping you achieve your bottom line in a way that maybe some folks don't think about. But I think you illustrated it really well.

How it can benefit and help you stay outta trouble at the same time.

Andrew: Yeah. And it goes beyond the banks, right? We struck up a partnership with SAP Concur invoice to essentially allow them to have bank partners of ours who are part of that ecosystem to be able to add virtual cards as a payment method to suppliers.

And the key part here is you have to have someone be able to register a card. Well, SAP does not want to get into this, PCI compliance world. We understood that and so we're able to create the infrastructure that ensures that we can authenticate. Someone owns a card without SAP Concur and their invoicing platform having to worry about it because we handle it on their behalf.

And so, it's interesting how it goes one step further always. You're trying to serve the banks who are trying to serve their customers, but those customers are already using certain software solutions. So actually you have to serve the software solution provider too. It's a really complicated web, and I think that's why B2B embedded payments has taken so much longer to take a foothold because of the complex nature of it.

The permutations are massive compared to the consumer world where we walk around with a device and that's the thing you need to worry about, and it doesn't go beyond that.

Zarik: Certainly agree. And if I could just hone in on the SAP part for a second, I would have seen them as a competitor of sorts from your perspective.

But you just mentioned that you've partnered with them, which I think is really fascinating and interesting. And my understanding is also you had a background that involved, some time in SAP consulting, if I'm not, mistaken. So I would love to just dig into that a little bit, the thought process behind, partnering with them.

How, if at all your prior background played into that, does it just come back to the thing you talked about earlier with credibility, experience, trust?

Andrew: Yeah, we're talking about a massive sort of enterprise partner. And I think, credibility is huge, right? It's being able to point right to people I knew within the company who had worked with in the past. It's about them having a full understanding that I actually understand the ecosystem.

I understand Concur. I understand Core SAP. I had also, whilst I was at American Express, done a partnership right with SAP around how we could really help customers send payment instruction files directly to Amex so that we could then marry up an instruction with a card to give to a supplier.

I'd done a bunch of those initiatives because I'd been with SAP and working with them as a consultant in Europe. And so I had a pretty good understanding of the ecosystem and what needed to happen. That is definitely one of the big advantages of having a few gray hairs, the fact you're able to parlay that experience into meaningful relationships that frankly outsize the size of the company. Punch above your weight. And that's really been a huge foundation for so many of the things that we are doing.

So yeah, it is critical in my mind to get to this space where you are embedded in those ecosystems because I do think the future of this goes into embedded payments. I think the challenge so far though, has been that outside of core payment rails, which is ACH, it's wires, it's checks, there hasn't really been any standards around how things should happen. Cards always had standards, but the standards were driven by the merchants and their point of sales and how data went from the point of sale to the networks and then got pushed down to the issuers and eventually to the customers.

So there was always a standard there, which is why that ecosystem grew really, really well. I think the challenge of software providers who work alongside small business all the way through to large enterprise is when it came to issuing cards. And in this case, digital cards. There was no standard.

There has been lots of partnerships where people have gone out and said, you know what? I'm gonna work with this bank or that bank, and everyone puts a ton of effort behind it, but it's not really scalable outside of that one bank partner. And then you realize that it's not a build it and forget it, it's a build it and support it forever.

And before you know it, you gotten yourself down a rabbit hole and seemingly you're never getting out of it. And you have to keep supporting this thing forever. And you're like, well, this was never our business model. How did we end up here? And so our vision has always been, let's also create that middleware that creates a standard for digital card issuance so that we can plug into software partners.

And they can do what they do best, which is develop standard software. And let us take care of the idiosyncrasies of how one bank may issue a digital card versus how another bank issues a digital card. And then we truly help you and we make it easier for those business owners to do the things they need to do inside of a cockpit that they chose and not having to have whiplash of being inside here, "well now I need to go and make a payment. I need to go over here and now I need to come back and rent reconcile back over there." And that's really what we've been trying to help with. And that's where APIs, frankly, have really helped to get us here. So a lot of this is about maturity of technology as well, and I think a better understanding of the baseline capabilities that need to be in play.

Zarik: Speaking of capabilities and technology maturing, would love to get your take on future trends, where do you see the space evolving, particularly as you think about embedded finance, how it's expanding into global supply chains. Even thinking about things like cross border transactions, real time payments. Certainly, someone with your payments background and obviously what you're doing now, I'm sure you must have a lot of thoughts about, where the industry's going and specifically where you think Extend, can play into that in the future.

Andrew: So when you think of rails clearly the rails are evolving, right? We've gotten to a place where we have real time payments. I think the big argument there is that, okay, but who's making the transformation from one payment method to the next? Checks are there and there's still a ton of 'em in the US but what people forget is we've automated most of the process around it.

It's a sunk cost. So what's gonna make someone move from there to realtime payments? Someone's gotta capture the details of the from and two, and so unless you're gonna put resources against it, are you gonna change it? Now, of course there's fraud and all these things that are gonna wanna make you move into that piece, but I do think from a foreign, and an FX payment side of things, you start looking at stable coins, it's no longer like you're trading a commodity. 'Cause the stable coins are linked to currency baskets and so they have stability in them. And that's what businesses have wanted.

It's like, I don't want to be using essentially commodity pay things that one day's worthless, one day's worth a ton. So the idea behind really the stablecoins is, okay, let's create a basket. And with that basket we create stability and then we can start thinking about how we do international payments, on those rails.

And so because international payments are so expensive in the end of themselves, there's a real appetite for people to solve it through these real time rails, that essentially drastically reduced costs. 'Cause I think at the end of the day, businesses are saying, help me reduce cost, help me reduce fraud.

Those are the two key drivers. I think for too long we were not coming up with that great innovation and so businesses stuck to what they were doing and automated their way around the problems.

And so that's one aspect. I think no discussion today is relevant without how AI is coming into the picture. And for a long time I've been somewhat dubious 'cause I've seen big data a million times, right? Data's not new, but really the ability, now to be able to query that data through a really simple query, has really what's transformed it.

And eventually then we get into a Gen [AI] tech where they start thinking, and taking actions. In the payment side of things, I don't think we're there yet. 'Cause you wouldn't want it to hallucinate and all of a sudden, boom, a million dollar payment went out the door. And so yes, there's gonna have to be approvals in there and all these different things, but as it comes to segmentation, as it comes to insights, as it comes to control, as it comes to compliance.

Even now when we take our APIs and we start plugging 'em in right to the Claudes of this world or the ChatGPTs of this world, you start saying there's real value. Because simple prompts now are allowing you to get great feedback and insights and ability to take action. And I think that's where, for a long time you've had to rely on building more of the report layers and the infrastructure to support these reporting tools. I think these BI tools are gonna get displaced really fast, right? This business intelligence. And that's where I get super excited because let's face it, there isn't a CFO or a VP of finance out there who wouldn't love to turn up to a report ready made that didn't have to go and build a report and think through it.

It's like I just asked a bunch of questions and now it's just feeding it to me every day. And next step it'll take action or send out emails to remind people of X or Y or query these different things. So that bit becomes really interesting and I think it helps finance and payments a huge amount actually.

So that becomes super interesting.

Zarik: The capabilities, I think, are just tantalizing to think about, for the future as the AI space in particular evolves and intersects with FinTech.

My last question, in the spirit of giving back, if you will-- let's say there's somebody listening, to this podcast who's in a similar space that you were in 2017. And it's a founder, maybe a group of founders that are, building something in the embedded finance space. And they're thinking about, how to navigate, how to operate.

I would say given this is a compliance focused podcast, would love to hear your take and lessons learned. For somebody in that position as early stage founder, what would be some of the pitfalls that they should be aware of, especially in today's environment? And how to navigate the compliance mindset and compliance expectations in general as you're building, an embedded finance organization.

Andrew: Look, I think the important thing is you need to know how to trust yourself, but trust and verify. And I think that's where building a really strong network right across the different functions is so critical. And I think number one is when I say you've gotta trust yourself, for me, that's about, it's your vision.

Don't let someone else tell your story. That's number one. I think number two is, as you go out and do the fundraise, I think you've also gotta be realistic about what it is that's truly achievable. 'Cause eventually it catches up with you, right? You can have a flash in the pan and outright success, but the reality is, it will catch up with you if you haven't really thought through the whole end-to-end process and the reality of the addressable market that you're going after. I'm fortunate in that I started the company with three founders. Now, many venture capitalists would say, well, that's a nightmare, right? You've spread the equity across three people.

And the way I look at it is, number one, if you don't believe the pie is big enough for three of you, then I think the opportunity's not big enough or, you haven't thought big enough. The other thing for me is, that's the beauty of having multiple founders is you hold each other accountable and you hold each other to a higher standard. And the three of us come from very different functions. I had more of the product and go to markets in terms of sales motion. Danny, one of my other co-founders was an iOS, developer, but also had frontend design experience. And my third co-founder had a strategy and operations background.

And so right across those three pillars, we had a really, really strong foundation. My advice there is be well surrounded because I have an utmost respect for people to do it on their own. The burden there must truly be prolific because having to net off all the different things, you need to check off as you build a business, especially in financial service where compliance and all these things are so important, you just can't afford to make mistakes along the way, and so experience counts and, experience in the right fields counts.

Zarik: I think that's a great place to leave it. Andrew, thank you so much for your time. Really appreciate it and best wishes to you and to Extend.

Andrew: Thanks for the engaging conversation. Really, really appreciate it.