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Ep. 244: Andrew Jamison - How Fintech is Streamlining Financial Processes
November 27, 2023 | 21 Minutes
Welcome to Count Me In! Join your host Adam Larson as he dives into insightful conversations with industry experts. In this episode, Adam is joined by Andrew Jamison, CEO & Co-Founder of Extend, a Point72-backed fintech platform that enables virtual card and spend management capabilities for small businesses. They discuss how small to medium-sized businesses can leverage fintech solutions to reshape their financial landscape. Get ready to gain valuable insights and practical advice from Andrew as he shares his expertise in the field. Don't miss out on this engaging discussion that is sure to empower SMBs in embracing the latest technologies. Tune in for this informative episode!
Full Episode Transcript:
< Intro >
Full Episode Transcript:
< Intro >
Adam: Welcome back to another episode of Count Me In. I'm your host, Adam Larson, and today we have a fantastic guest joining us, Andrew Jamison, CEO and co-founder of Extend. A fintech platform that enables virtual card and spend management capabilities for small businesses.
We'll be exploring how small to medium-sized businesses can leverage these innovative solutions, to reshape the financial landscape. Andrew will share valuable insights on the importance of embracing fintech technologies and how they can drive efficiency and growth. From the power of data and open APIs to the role of big partners in mitigating risks.
Andrew will guide us through the key factors and success stories of implementing fintech solutions. Plus, we'll explore the future of AI, and machine learning, and finance, and the skills finance professionals should cultivate for continued relevance. So, let's get started.
< Music >
Andrew, I'm so glad to have you on the Count Me In podcast, today. We're excited to have you here, and we're going to be talking about fintech, and different solutions, especially, in the realm of small to medium-sized businesses. To jump right in, how do you think that the fintech solutions are reshaping the financial landscape, especially for small and medium-sized businesses? And why is it crucial for them to embrace these technologies?
Andrew: Look, I think we're continuing down a really exciting journey, actually. Where the prevalence of data, and the ability and accessibility of technology means that we're finding more and more verticalized solutions. Which helps on two fronts; one, on the one hand, it means if I'm very specific in the industry that I serve. I start to have a solution that actually talks to me, specifically, in my industry.
And I think the ability for people to access that technology means that you now have more and more independent developers, who are exploring how these open APIs can be used, leveraged, and really brought together to create solutions that are increasingly targeted, at the different functions that we work in. So I think that crossroad we're there, and it's only going to explode from here, in my mind.
Adam: It's definitely going to explode. You see the different technology is getting more and more accessible. But sometimes it's harder when you're in a small to medium-sized business. Sometimes you're an accounting department of one, or two, or three people, and it's harder to implement some different types of technology. What advice would you give to somebody trying to look into it, saying, "Hey, I want to jump into this, but I may not have the budget that bigger organizations have?"
Andrew: Look, what I look at small companies, they want to do more with what they have. And they're trying to abstract away the complexity because, you're right, I look at our team, we're a team of 80-odd employees. And the reality is I have one VP of finance, and he's only just now gone and hired his right-hand person. And the reality is that they're jacks of all trade. They're AP, they're AR, they're essentially all your cash flow management, and they do all your recording, all in one.
So if I sit down, specifically, with him, it's really all about seeing how they can leverage existing software for longer. How do you abstract away some of the challenges with some of the software that you might have, as you start growing as a business? How do you leverage other solutions, which are just embedded with those solutions, so that you don't have to go through a massive transformation?
Well, I'll give you a great example, and that's Graham Stanton's Avise. His whole thesis is all about lots of businesses use QuickBooks, and then quickly you grow up, if you're a successful company. But do you really want to make the next step to the next enterprise solution? Which, actually, costs a disproportionate amount of money more, relative to the benefits that you're going to get from them in the early years.
So there's always that, healthy tension, but we're starting to see more and more people focus on the abstraction piece. Keep the ledger the way it is, and then just start adding solutions over the top that help me run my business more efficiently.
Adam: I like that. Adapt it to what works for you, as opposed to maybe doing a whole ERP system that may be too much money or too much of a spend for you.
Andrew: Yes, and, again, finance team of one, I came out of the exact polar opposite world. The first 10 years of my career were in deploying SAP. So right at the enterprise resource planning side of the equation, and just a completely different beast, in terms of the different types of people that you had to go and engage with. And also just the number of departments that you got to engage with. Therefore, the resources that were required, just to keep the engine running for that platform were just completely different.
Adam: Now, we can't talk about moving to different technologies without talking about things like fraud, and just the risk there. And especially if you're a smaller department, or a partner of one, like in your case, there are two people. How do you protect against hackers or different things, different emerging threats, especially, in the fraud space, especially, if you're a medium-sized business?
Andrew: Look, I think you have to rely on the bigger partners. You can work, certainly, to continue to enhance your solutions. But you do have to lean on some of the bigger partners. We lean on, certainly, on the AWS infrastructure to help us there because they have so much more money to plow into this.
Now, obviously, they're a bigger target than we are. But they also have way more resources to help plug those gaps. So in our mind, it's also two things; one is it's not really about if, it's when, it's going to happen. And, then, it's really about how do you mitigate it in terms of relying on these partners.
Now, clearly, cybersecurity, whether it's through an encryption or authentication. I think lot of work continues to be done there. And I think we all experience it, in the consumer world, which is more and more of it has to be done through biometrics, it has to be done with MFA, and sometimes it has to be done through both.
And, I think, we need to continue and go down that path, and that's not going to change either. I think that's where more and more resources are going to get plowed in, especially, if you're in the fintech space. We're dealing with money. We're dealing with the lifeblood of companies. And, as a result of it, we have to be doubly sure to make sure that those threats are mitigated as best we can.
Adam: So you've already talked about having threats and relying on third parties. Are there any other key features that these types of businesses should look for, when they're looking into different solutions?
Andrew: The one thing I've learned is one size doesn't fit all. You have to look at what is the primary tool that people are using. Is it mobile? In which case you have access to certain tools. Is it web? In which case you have access to different tools. And you have to marry them all together as well, and to sort of create one overall solution.
So, for me, it's also having the ability to look at things through those different lenses. And, again, when I look at our business, where we are helping to promote existing credit cards in circulation through partners like American Express, or Regions Bank, or Pacific West Bank. Where we're promoting people who can use their existing credit card.
Now, there is an underlying piece that comes with that. Which is I, specifically, want to leverage the infrastructure of these big bank players, without having to repeat it and replicate it for ourselves. Why? Because they have way more data points than we could ever hope to have. And really that's why leveraging that infrastructure in the back end, creates that additional layer of security.
Adam: It really does create that extra layer of security because you're relying on people who may have the bigger infrastructure, to build in those things that you might be unable to build yourself as not a bigger company.
Andrew: I think there are two parts, everyone can go out and build anything. And what I've learned through my time, with big companies, like the 12 years I was in American Express. You can always start a project; the real thing is it really the core of your business. And if it isn't, you have to ask yourself that difficult question of, "Yes, I can build the best mousetrap for today, and maybe tomorrow. But what about the day after that, and the month after that, and the year after that?
Because we know how budgets operate in these companies. It's, essentially, every year you go back with a cup in hand, and you try and secure a budget. And, then, essentially, you go into some sort of a recession or some sort of a cutback, and there's budget gets constrained and suddenly you're no longer investing in that piece of business. And it's amazing how quickly you fall off being best in class if you don't invest in solutions, today.
I think that's the other thing to be really wary of is you have to be mindful of that, to double down on areas that you are truly going to commit to, as a business, because otherwise you're going to go through these cycles. And I think that's where maybe large companies today are placing more emphasis on their partnerships with fintechs.
They're embracing fintech because I think they've realized that trying to compete, in that world, sometimes, isn't good for them either. It distracts them from their core. They don't move as quick as they would want to move, and they certainly can't experiment as quick as they would want to because they have all these different layers of approvals. And then the bigger challenge still is it's not just about the layers of approvals. It's the fact you start spreading across lines of business, and that, maybe, don't have experience in that particular segment.
And, so, you make mistakes in thinking that consumers work maybe the same way as large corporate. And you're not actually, again, identifying the right solution for that particular client segment that you're trying to serve.
Adam: Yes, so we know that implementing these applications and partnering with different companies, ultimately, saves you money. It might not save it right up front, there's a little bit of investment involved, but over time, it'll definitely save you money. Are there any real-world success stories or examples that you can share, of where people have implemented this and really seen a huge change?
Andrew: Look, I mean, that's part of the journey that we're on. Which is we deal with a lot of finance teams and the word we keep hearing day after day, month after month, is this wonderful word called reconciliation, and that's what eats time. It's, essentially, you have approved something somewhere down the line, either verbally or through a technology system, and then you have to marry it up with a payment.
And, so, that aspect of things, and we talked to a lot of clients who used to have all these charges appear on one central bill product. And, so, at the end of the month, they'd have this huge list of transactions and they'd be like, "Right, now, I got to allocate them."
And the reality is this is happening over weekends. And, so, it's sort of like, "Great, you've given me my life back." Which is if you're automating hundreds and hundreds of these transactions back to these digital records, that happen upstream. Then, truly, not only are you creating efficiencies and allowing people to do more with the time that they have. I think you're also taking away some pretty mundane tasks, and that, to me, is the key.
And there's, obviously, a lot being discussed around AI and all this. And I'm like, "AI is not new: It's been around for decades; it's just got a new name." And, for me, it's more about the application of that information in such a way that we'll see the lowest-hanging fruit, and the earliest benefits will really come in that automation of back office functions.
Things, frankly, that don't need or warrant a person to be doing and can be done just as well, and, sometimes, better by a machine.
And I think that's where I get excited is like, imagine if you can get away from really 30, 40, 50% of tasks, that are super mundane and not strategic, and let's focus on some more interesting problems. So that, essentially, we can really move the needle forward. Because there's a lot of green pasture out there, of things that need to be moved forward for businesses.
And, so, it'd be much more fun to spend our time tackling those challenges, than some of these mundane tasks, that these different teams and functions have to perform either on a daily, weekly, or monthly basis.
Adam: Yes, it seems the rise of machine learning, and AI, I mean, like you said, it's been around for years. It's definitely coming to everybody's worldview with the Chat GPT, and generative AI kind of things. With those things coming to a head and really changing how the finance team looks.
What are skills and things that people can do, maybe, the people who are running those tasks? Let's say you're listening to this podcast, and you're one of those people doing those mundane tasks you were talking about. What can they start doing right now to make sure that they're relevant as they go forward, in the future?
Andrew: Look, I think it's all about having an inquisitive mind, and it's all about what's the next challenge you're trying to solve for. And I think you always try and pick out these needles in a haystack, and the machines will do that.
Andrew: And, "Do I see these same transactions happening twice? I don't have to write a report; I can just ask the machine and it, essentially, starts returning these things." And I think those are things that become really meaningful to businesses, is help me pick those needles out of the haystack. That in the past, I would have had to go and write some report to go and pull back. And guess what? Writing a report takes resources. All of a sudden, it's like, "Well, I can't do that either because those resources are allocated something else."
So if you can, essentially, and that's the beauty of having a conversational AI, is, yes, of course, it has to be programmed. The reality is it continues to learn and evolve, and you can fine-tune it, and then you can adapt it to different scenarios. And, so, you can start asking different questions of the machine and it, again, continues to improve, over time.
And I think we've already seen with chatbots, that servicing is increasingly coming through machines, except we all know dead-end pretty quickly, even today, and that's always more frustrating. At which point you pick up the phone and rage and say, "I want to speak to a human being." And, then, depending on who the company is, it's either easier or harder to get a hold of an individual.
But I think that's where it's going to help, is help me service myself because that's another big thing. Even as a department, when you hit these different challenges, it's all about I want to be able to service this myself. And I think that's really the key, and I think that's where fintechs have also helped a lot, which is help me unearth things which are just not in an obvious place.
And, so, we spend a lot of time as, essentially, we have digital credit cards flowing through the ecosystem. The beauty really of these digital credit cards is you actually append them with metadata, along the journey, which is what department someone in. Then you start figuring out what business unit they're in or you start to figure out what's the expense category. And all these things can be automated, when you start pulling together different things.
And I think then it's going to become even more interesting, as we go down the line. Because you're really going to be able to pull together these different data points to get insights, around what's really happening with the health of the business.
I think that's why I also like this marrying up of old and new. Because that also means you don't have to go and rebuild everything. There's access to these data points and huge piece of information, that you get through the existing banks. And now it's about, "Great, I can use their information, and I can enhance that information, and I can then send it back to the corporate who can update their ledgers directly."
And a lot of this manipulation was made available to the Fortune 500, Fortune 1000. And there were big projects that they had to go and pay for, mind you. But the reality is now more of this is becoming accessible to small businesses, and I think that level of automation and insights is really going to help them move forward.
Adam: It really is. Because, you mean, you go back in the day where you had to categorize, have a category for each transaction, and make sure you do those things. If people were using the QuickBooks, back in the day, but having, like you said, the embedded metadata. Being able to have that automatically, you can automatically start tracking those things. And it allows you to move faster and analyze better.
As leaders, in the organizations, they have to rethink how they're leading their team. Because you're no longer looking at the little mundane tasks, but you're able to do those more strategic decisions, like you were saying.
Andrew: And I also the idea of more real-time data flowing in. And if I'm a finance person, that's what I want is real-time transactional information and data. So I know what's coming down the pike or, essentially, how I'm trying to manage the existing cost base. I was in a company where we grew really fast, but we were on a route to going to doing an IPO. And I remember, very distinctly, the CFO saying, "The hardest thing to control is all these incidental expenses that keep rolling through."
So, again, how do you manage?
How do you pull the different levers, as a finance person? To make sure that people have the right tools in their hands, so they can go and spend when they need to spend. But, actually, it's been approved ahead of time. And not only is it approved ahead of time, for a very specific thing, but it's actually got all the metadata that says once it happens, the chapters close, no need to revisit.
It's essentially flowed all the way through, and that, to me, is what finance folks are really looking for. It's give me the chance to opine on something ahead of time, and let's work together to make sure that it has all the information needed. So that it then flowed through the system, and we just look at it once.
Adam: Yes, and if you just watch TV, you see commercials for these things just to consumers. Like, "Hey, sign for this app and it'll tell you all your bills, and you can clean up your stuff." If we're making it available for consumers, that means small to medium-sized businesses are going to have better access to these types of softwares.
Andrew: Yes, I look at the coming together of finance and procurement, and things like Glean are out there, also, really helping, as solutions really sort of focus in on what you're buying is it competitive? And all of those different things come into play. And I think that becomes also great tools for all about providing insights to these small finance departments, and really help them operate at a much higher level than they were operating beforehand.
Adam: Yes, so as we look toward the future, where do you think we're going? Where are the new technologies going to hit and how are things going to improve, as we look five to 10 years in the future?
Andrew: So, look, I take a lot of learnings from my days, certainly, at SAP. And that's to say that when you really look at it, and the amount of effort I feel they put into HANA, and to all these different things, it's all about data. And, so, their primary concern, I'm guessing here, was we just need to be the source of data, the ledger, the source of truth, and we'll facilitate other things. And what started off as EDI is now APIs, and then we're going to layer on top of that some of these more conversational components of it.
But what I'm learning through that and what I'm taking away from that is, there isn't a huge appetite for companies to move from one ledger to the next. And that's partly because the ledger is the ledger, is the ledger. Now, obviously, if it can be done in real time, it helps.
But the reality is it's really what you do with that data there and then. And I like the idea that a lot of these legacy players and financial service, obviously, is one of those players, it has a lot of legacy infrastructure in there. Is really going to get updated really fast, and integrated and embedded faster into the software solutions that finance people are using, or procurement people are using. Because, essentially, they're going to focus on that last mile and we're not really there, yet.
I think when it comes to data, a lot of work has happened with companies pulling data out of ERPs. But, obviously, the really hard bit is pushing data into ERPs. Why? Because if I'm a finance person, I want to see those things before you go and update my ledgers.
So I think there's still a lot of work to be done on that particular front, in terms of great, pull data. And, again, commercially, people have pulled data. Why? Because it helps with underwriting. But then we've learned that underwriting is really, actually, quite tough, as well. You look at some of the decisions that some of the emerging credit cards in the commercial space made around no longer supporting small businesses.
Why? Because in an economic downturn, the reality is it's small business that suffers, and that's where losses have suffered. And, so, some people made the decision to walk away from there. Now, the interesting thing is that's where banks have played for years, and that's where they've learned, and they have other sources of information, and data to go and support right businesses.
The regular mom-and-pop businesses that are out there. Because not everything is about fintech, it's the real world, too. America runs on small business, and Milburn, and Dunkin' Donuts, apparently, but that's a different thing.
But that's kind of, in my mind, where things are going to get really much more interesting, is really helping to deliver on the promise, to facilitate the world of the office of the CFO in these smaller companies.
Where, essentially, there's more control, but the integration is better in terms of flowing data and information into the systems. And the systems that have been put over the top of them, to make sure that they don't lose that metadata, and they can report that metadata or use it for conversational AI, et cetera.
Adam: Definitely. Well, Andrew, I really appreciate you coming on the podcast. This has been really insightful conversation, and thanks so much for sharing your insights with our audience, today.
Andrew: No, absolutely, Adam. Thank you for having me on the podcast, I enjoyed the conversation.
< Outro >
Announcer: This has been Count Me In, IMA's podcast, providing you with the latest perspectives of thought leaders, from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting in finance education, visit IMA's website at www.imainet.org.