June 9, 2020

Fostering Financial Wellness Through Fintech

Head of Product, Ahmed Siddiqui, was recently featured on Currencycloud's Payments Innovation podcast discussing the future of fintech and making financial services more accessible for working Americans.

During his discussion with host Brady, Ahmed talks about:

  • Why Branch pivoted to payments
  • How they are keeping the service free for employers and employees
  • What the future holds for Fintech

Tune into the audio session or read a transcript of their discussion below:

Brady: Welcome to another episode of the payments innovation podcast. This is your host Brady, and I'm joined today by Ahmed Siddiqi. he's the head of product at Branch and he is the author of the Anatomy of the Swipe. Ahmed, how are you doing today?

I'm doing great, Brady. Thanks for having me.

Yeah, absolutely. We're really excited to have you today. You have a great background in Fintech. So, aside from those few credentials I shared, would you be able to introduce yourself to our audience?

Ahmed: So, I’ve been working in the Fintech payment space for the last six years now. Prior to Branch, I was actually one of the early product managers over at Marqeta, which is an issuer processor of cards. Before that I actually had no experience in payments or Fintech. I worked in VC for a little bit. I had my own little kid's iPhone app business. And then even prior to that, I worked for IBM on their consulting side. Even though I've been in the payments and Fintech space for the last six years, I still feel like there's just so much to learn. I still kind of feel like the new guy.

Brady: I think a lot of people in payments feel that and there are different pockets and sub-segments within payments. Obviously with Marqeta and Branch, your expertise is really in card payments. So starting at Marqeta, I know you came without payments experience. How did you get into that role? What did you find interesting about Marqeta that you really wanted to work on?

Ahmed: So, how I got involved with Marqeta was really kind of funny. I was living in San Francisco and my wife and I were actually planning on moving back to Minnesota, where I'm originally from. We had just had our first kid and raising kids in San Francisco without having parents around, was challenging for us. So I was looking to move back to Minnesota and had everything kind of packed up, ready to go. And I got this Facebook message from this guy that I went to high school with, his name is Dave Matter. I think that you interviewed him maybe a few months ago, right?

Brady: Yeah. He's been on the show.

Ahmed: Dave and I go way back. He Facebook messaged me and said, "Hey, are you around? We should grab coffee, haven't talked in a while." And so I was like, "Great. Yeah, sure. Let's meet up." I ended up meeting up with him. He told me a little bit about the business. I didn't really fully understand it at the time, because this was almost six years ago and Marqeta was about 35ish people and I didn't understand payments at all. But he explained it to me in a way that made a lot of sense and I got pretty excited about the concept. Again, I told him, "Look, I'm moving to Minnesota next week." And he's like, "No wait, wait." He was wanting to try to convince me otherwise. He's like, "We've got this opportunity out in Dubai."

And I kind of looked at him like, "Yeah, it's actually on my bucket list to work in the Middle East." He goes, "Well, what's it going to take for you to work with me on this?" I told him I had to talk to my wife about it. Later that night I went out to dinner with my wife and I asked her, "Would you rather have the snow or would you rather have the sand?" Obviously she was a little confused. But she ended up picking the sand. So that's actually how I ended up at Marqeta. But in a weird kind of happenstance way.

Brady: Yeah. And it sort of kicked off a career in payments, obviously. Some of your early learnings you've actually captured in your book, which we can talk about a little later on. But just curious if you could provide a background about Marqeta? What the company does, what you found fascinating about Marqeta and wanted to jump in, and then specifically what you were working on out in Dubai.

Ahmed: Great, yeah. Marqeta is a modern issuer of cards, issuer processor of cards. So think about it as kind of the underlying tech that enables you to create a debit card or a credit card and the underlying tech that actually helps move the money from that card swipe to the merchant. It’s infrastructure, but what's really fascinating about Marqeta is that it's a developer-first company. And I love that being a developer myself. We were able to kind of make this very complicated topic of card issuance into something that's easy for a developer to understand and work with and integrate into their apps. And that's actually one of the main reasons why I loved working there.

Brady: You mentioned Marqeta is an infrastructure. Currency cloud is as well. So we have that mindset that we're working with other Fintechs to provide the front end. But I think what goes along with that is that the industry or users take for granted certain capabilities, whether it's in card issuance or card payments or anything else related to what those infrastructure providers do. So what are some of the things that you might have taken for granted in the world of card payments until you joined Marqeta and learned how it really worked?

Ahmed: I mean, I think it resonates with just about anybody. You've got this piece of plastic in your wallet and all of a sudden you swipe it and the merchant has your money. It seems so mundane, but there's a lot of stuff that's happening under the hood that enables that. A lot of people think that there's real money on that piece of plastic, when there actually isn't. It's in the cloud and it travels via bits and bytes, which is really interesting.

Brady: So this idea of an infrastructure player, Marqeta is working with some other Fintechs and I'm curious how you see that impacting the industry. You've since left Marqeta and now work at Branch. Do you use other infrastructure providers? How do you see those types of infrastructure providers impacting Fintech? Whether you have to build everything yourself, or if you can go out and assemble some core components of what you want to build?

Ahmed: I think infrastructure in Fintech has just gotten to be so good over the years. You don't really need to know about what's all going on between the swipe Visa or MasterCard, the banks, et cetera. You're able to kind of use this infrastructure to be able to build apps on top of it. And what's interesting is that you don't need to be a bank to use Marqeta's technology or any Fintech type of infrastructure product. I think that's really cool because you can use cards for various different use cases. 

DoorDash and Instacart, for example, they're not banks, right? But payments is actually a very important thing to them because they're collecting money from somebody who wants food and then paying a merchant, but how do you actually do that and reconcile it and be able to manage it so that money doesn't move to the wrong place? I mean, they're able to actually hook into a platform like Marqeta and issue their own card that they basically give out to their drivers.

Doing that even six years ago, when I first joined, was  kind of unheard of because there was no developer-friendly API infrastructure company that could allow that.

Brady: It makes you wonder where some of these other technology services would be without these Fintech infrastructure players. How do you have a DoorDash without these virtual cards that are approved at specific merchants? I don't know if you can, unless you just have a high level of trust in the driver, which is certainly a possibility, but it might not operate as seamlessly as we expect today.

You could just have a direct connection with that merchant, but then you're talking about integrating in with every single merchant. Whereas if you were to use card rails, essentially Visa and MasterCard have kind of built that for you. But similarly, if you wouldn't have had an issuer processor that you could work with, you'd be working with various different banks. We were dealing directly with Visa and MasterCard and it's actually really hard to do.

Brady: Right. So changing lanes here. Can you tell us a little bit about Branch, your second act in the payments world? A little bit about what you do, how you joined, and what Branch is doing in the market today?

Ahmed: So Branch is actually a challenger bank that partners with employers to help their working Americans grow financially. When I say working Americans, they are the people that work for these employers. Think of the Domino's pizza drivers or Subway sandwich artists, or team members over at Target. We're offering a platform that can help these people get ahead financially. I got into this because obviously I've always spent time looking for ways to get back to Minnesota. And it just so happened that Branch is based out of Minnesota. It originally started off in Los Angeles, but moved the company to Minnesota. 

Originally, Branch started off as a scheduling company. We were able to offer ways for Target employees to view their schedules in an app and swap shifts and pick up additional shifts. And what's really cool about this is that these hourly workers who are actually looking to make more money now have an opportunity to do so by taking more shifts. So that’s what we built initially.

Then, as we were exploring this a little bit more, the mission of the company was, "How do we just help these people make more money?" We realized that there is this need for "How do we help these people make their money faster or be able to get access to it faster?" We started launching some Fintech and financial wellness products around this, and that really took off. What we found is that even a little bit of money, $50 to $100 actually goes a long way, especially if you're in a bind and you're getting paid every two weeks or whatever it is. We were able to start offering earned wage access. And then recently we launched our challenger bank product.

It’s a completely free checking account with a debit card, two days early pay. And then again with that, all of the earned wage access is completely free. So we've kind of gone from a scheduling and schedule management company to a payments, Fintech, and financial wellness application.

Brady: Quite the pivot, but what's really exciting, I think you guys are taking an approach that we see a few companies doing. Signing up consumers with a challenger bank model and trying to offer financial wellness to those consumers. We know that so many Americans don't have more than $400 or $500 in savings. 

But I think what's fascinating about Branch is you guys are actually partnering with the employer to provide unique functionality to the employees. It gives you deeper insight into your user and then based on the employer, you get to tailor your offering to benefit those employees directly. Do you have any examples you can share there about specific use cases you guys are working on that are really only available in this employer to employee model that you guys have?

Ahmed: I'm glad that you brought this up. I think this is one of the major things that, having worked in enterprise sales for so long, we've built a really good method around how we tackle this. But again, being in the payment space and really trying to understand how we can move money faster and cheaper. We've been able to find some pretty interesting use cases. One that I'm really excited about is this partnership that we've got with Domino's Pizza. What’s great about this one is it's actually solving a really, really big pain point in that nobody buys pizza or pays tips in cash anymore, especially with the cause of the crisis.

For a pizza delivery driver, who used to be able to get maybe $50 to $100 in tips every night in cash, they don't get that anymore. Instead they get a stack of receipts. And then what they do is they come back and they present these receipts to the manager, and then they tally it up and they would go to the till and try to pull that money out. But if there's no cash in the till, what do you do? And so what we did is through our partnership, we actually came up with a way where we can pay these drivers digitally through our debit card and our wallet. And that's been a really exciting way for us to serve a market need. And just being able to kind of show that, "Hey, there are better ways to get people paid."

My hypothesis is that every major tech company that's out there at some point is going to become a payments company or a Fintech company, in some way shape or form.

Brady: I think that's really cool how you're taking a holistic approach, understanding the user, understanding their day-to-day life in order to help them solve real challenges and provide real value to them. So can you talk a little bit about your business model, your revenue model, how it might differ from traditional banks, how it might differ from other challenger banks, how you try to align with your consumer and your customer, which is the employer, through that model?

Ahmed: We’re completely free to employers and we're completely free to the employees. And so the way that we've been able to do that is essentially through interchange revenue, where any time that an employee swipes our debit card, we earn interchange from the merchant. What’s cool about that is that we're able to keep this as completely free to the employee. There's no overdraft fees, there's no monthly minimum fees, there's no maintenance fees or whatever, or even any other sort of membership or whatever. 

This way, we can actually offer earned wage access for free to these users as well, simply because, again, we would earn the money on the interchange for whatever you spend. And so there actually are no fees to be able to take an earned wages advance either.

Brady: It's kind of revolutionary when you think about it, what these business models have been able to accomplish for the user. To think that an employer could get these products to their employees for free. How do you not sign up for that? So I'm sure you guys are seeing some growth in the market. And you mentioned briefly the COVID crisis affecting some of your users. I’m curious how you see that in a larger context, maybe beyond just the pizza delivery drivers, but your user base as a whole, or your customer base as a whole. Are you doing anything different these past few months or plan to?

Ahmed: Yeah, we’ve been thinking hard about areas where we can actually impact people based off of sort of the tech stack that we've built. And again, I'm pretty happy about what we've built over at Branch; everything that we're building helps move money faster. And so how can we leverage that to service people where they're having issues with getting money from point A to point B? The reality of it is that a majority of working Americans are actually living paycheck to paycheck, and being able to deliver money to them earlier than their typical two-week cycle has some pretty meaningful impacts. And again, people are kind of rushing to the grocery stores to buy the hoard and buy up stuff. Well, you need money for that. Being able to forward the money so you can do that, we're able to facilitate that. I'm not advocating for hoarding, but when you need the money, you need the money.

Brady: So you briefly touched on the difference between building Branch and building Marqeta, and I'll let you take this question wherever you want to. But can you provide some insight there about different challenges, different things you're thinking about, maybe lessons you learned at Marqeta that you're taking over to Branch.

Ahmed: Yeah. I mean, the irony of it is that I'm actually employee 35 in both companies. And so I was fortunate to join at roughly the same state stages. Marqeta had a number of pivots when I was there as well. And it's kind of very similar at Branch. I think the key difference is that at Branch, there's two customers. There's kind of the end employee, which we're maniacally focused on, making sure that we can build a fantastic app experience and just overall experience for them.

But then we also have to think about the employer, trying to work with them to deliver this. On the Marqeta side, I'd say it's a platform play where a lot of the work was catered around being the infrastructure behind a lot of these types of companies. And so a little bit different, but again, the fact that they're both in payments and very fast growing companies, I think there's actually more similarities than there are differences.

Brady: Yeah. And I think for our listeners who want to learn more about that topic, they can check out your book, which you just published, The Anatomy of the Swipe. So can you talk a little bit about what prompted you to write the book, but then a little bit about how you structured it and what topics you touch on?

Ahmed: So again, like I mentioned to you, Branch started off as a scheduling company. There weren’t very many, at the time, payments people or people that really understood Fintech. So I was actually going through and writing a lot of confluence articles on, "This happens when a card is swiped, this is what acquiring is, this is what issuing is. This is how the banks interact, what is ACH?" Essentially, I was compiling all this stuff and I have a really good friend, Eric Coaster, he teaches over at Georgetown University who teaches a class on how to write a book. He reached out and he was like, "Hey, I'm actually planning on doing a course on writing a book and it's all going to be all online. You still have to commit quite a bit of time, but would this be of interest to you?"

And I was like, "Whoa, okay. Yeah, I actually always wanted to have a book and I actually think I might have some content for it." What I did is I essentially took a look at all my confluence pages and I smashed it together. Obviously I had to redo a lot of it. I had a lot of stick figure drawings that I like to use when I'm explaining these concepts, and I put those in the book. And then obviously, people don't want to look at ugly stick figure drawings, so I actually found a really talented artist that was able to reimagine those stick figure images into comics.

The approach to the book is, "How can I explain what happens when you swipe that card at your favorite coffee shop in really easy and simple terms? And again, do something a little bit fun as well and show some comics in there." So that's the approach. And again, my main reason for doing this is I ideally just want to be able to educate as many developers and entrepreneurs out there that are interested in doing something in the payments or Fintech realm. How do you unlock the power of payments and Fintech by having some knowledge or being empowered by having some knowledge on it?

Brady: Yeah. I think the book's a great introduction. I know from my standpoint, obviously I don't have experience building products in the card payment space, but just reading through it, some of these things that you take for granted, you lay out in good detail and it gives us an understanding. And if you're about to build something, it's certainly a great place to go. So you mentioned you had a lot of this material already written. Did you have anything that you wanted to write about in the book that you actually had to go dig up more research on or you actually stumbled across new learnings as you were laying this out in an informative way?

Ahmed: My experience has been predominantly on the card issuance side, but I had to learn the acquiring side. I actually learned by doing a lot of work in this technology called Push to Card that I was doing with them with Branch. And so I had to learn the acquiring side. In order to do that, I actually ended up interviewing a lot of people that were in the space and hopefully was able to condense how the world of acquiring and the world of issuing work together to build this whole ecosystem. 

Brady: Any fun anecdotes or your favorite chapter that you wrote about?

Ahmed: I opened up the chapter talking about a use case where a guy’s car breaks down. He needs money to be able to repair his car and be able to get to work because if he doesn't get to work, then he doesn't get paid. And so he actually used a technology called Push to Card to get some money really, really quickly to his Wells Fargo debit card and then he was able to pay for getting his car towed and then take an Uber to work. And then he was able to work.

I think it was really cool because if you don't have any money in your bank account, there's not a lot of other options. You can borrow money from friends, but then you’ve got to find your friend that can give it to you right away. Or waiting for a bank transfer, which can take a long time. And I mean, in this particular case, he had seconds to be able to do something. And with this technology, he was able to actually get the money to his wallet within 15 seconds and actually make a transaction with it.

Brady: That’s really cool. And these are the small innovations that are happening daily to impact real people with real challenges in their life. So to wrap things up here, I'm going to ask you a two part question. Where do you see the future going for Branch? How are you guys going to evolve? And then coming back to your book, what's a chapter that will be included in your book in three or four years? How do you see this space evolving and how you see your work evolving with it?

Ahmed: I think especially on the Branch side what we really want to focus on is helping these employers get more Fintech savvy. And I don't know what that looks like, but I do have a sense that they will want to get closer and closer to becoming a Fintech. My hypothesis is that every major tech company that's out there at some point is going to become a payments company or a Fintech company, in some way shape or form. This is really where I'd love to take Branch and be able to kind of help those companies get there. 

In terms of where things are going with  payments, I actually would love to write about how there is no anatomy of the swipe. There is no swipe because there is no card. And so I guess I'll have to probably change the title of my book. But I think payments will just become ubiquitous. And again, as much as I think swiping a card is mundane, it's actually going to be even more mundane where, you think about the Amazon Go stores. You literally go in there and you walk out with stuff and you never swiped anything. It just kind of happened.

Brady: Right. Right. And certainly building off the infrastructure of the swipe technology, but with a much more modern touch point. That'll be fascinating. So Ahmed, where can listeners find out more about Branch and find out more about your book?

Ahmed: So, find Branch at branchapp.com. You can also download the app on the iOS app store and also Google Play store. And then for the book, you can go on Amazon and just search for Anatomy of the Swipe, and it's there. Would love for you to download it on Kindle or the physical book.

Brady: Great. Well Ahmed, this has been a pleasure. I could talk with you for another 30 minutes or an hour about payments. Great episode. Thanks for joining.

Ahmed: Yeah, thanks again, Brady. I really appreciate it.

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