Brex announces $5.6B commercial card partnership with Fifth Third Bank powered by AI financial workflows

you guys.

Have a good one.

Great to see you. Cheers.

Goodbye.

Well, we have our next guest already in the reream waiting room. We have P Pedro from Bra, the founder and CEO of B um announcing a massive partnership. We're very excited to welcome him to the TVPN Ultraome.

Welcome to the show.

Good to see you, Pedro. How are you doing? How's your day? Merry Christmas.

I'm great. How are you guys? Thanks for having us.

We're great. We're in the We're in the Christmas spirit. We are in the Christmas. We got bells. Very very holiday themed [laughter] holiday themed shows for the rest of the year.

Yes.

But uh but it's great to it's great to meet you on the show. Yeah. Please take us through the news today. Uh, oddly I'm actually a fifth third customer, so I I want I want to know how this this uh this applies to me.

Yeah, you get a Brex cartoon. No, so in all seriousness, um, thanks for having me. So, uh, today we're announcing a pretty big partnership between Brex and Fifth Third Bank. Uh, it's a $5.6 billion commercial card partnerships where uh, effectively

Wow,

massive.

So good.

I heard a big number. I had to say

I I want I want that in my office. Fantastic. And uh and we're really excited just because you know when we look into across all the US and we just see you know tens of thousands of businesses out there that are still 98% of business are still using legacy corporate cards and you know there's so many uh there's so much opportunity in just automating how these teams run their finances and vifer just has this massive distribution and trust and of course has the the financial services and the the software and the AI that just helps these businesses automate so much of their manual work and better allocate capital. Um, and party.

Yes. Sorry to interrupt. I'm curious when when you guys started working on embedded products. Because if you go back to 2021 and 2022, I'm sure there was a bunch of companies that or at least a few that got created to go and pitch some of these same banks and say, "Hey, your corporate I don't know if people remember anybody that remembers SVB like corporate cards back in the day." I had a few of those.

Their UI was truly insane. It was It was like, "How is this how is this?"

And you had like a different You had like a different login, too. It was crazy.

It was truly the most product experience of all time.

And it was like this is Silicon Valley Bank. We're supposed to be the tech of not to talk but beat a dead horse there. Kind of

at some point you said like hey like like we'll go compete here as well.

Yeah.

Yeah. So so for us it's really been driven by by a lot of just customer demand. So we saw we started this with with Navon and Zip uh where they really saw a lot of the value in bringing financial services and card workflows into their software. Sure.

Uh and we're really excited about it because it's just a oneplus 1 equals 5 situation. Both products becoming better together. Yeah. And then as we thought about the rest of the US and you know there's you know 8% of businesses are now you know accessible through this partnership for example in the US which is a really exciting thing in the commercial space and and the really big thing is how do we make the banks product materially better and when you bring the technology and uh you know what we've done on the card side and especially the financial infrastructure that we've built from scratch like we don't run on stripe issuing or marquetta we just build our own rails from the ground up that enables that partnership to actually take place. So, uh,

how does it how does it actually work? Is it is it fully white labeled or does somebody in in First Third get kicked out?

No, no, no. It's actually it's actually a fully uh a fully Brex uh uh branded card and and the reason is because Fifth Third wants to have uh someone that's actually responsible for delivering this great customer experience on the card and implementing the software and rolling that out to their customers. And what they do really well is uh the banking side, right? is a lending side, is the banking, is the relationships and you know the thousands of branches and just the thousands of uh uh distribution partners that they have on their side uh and the tens of thousands of customers they serve are all effectively relying on that and already have that relationship and now they get a Brex card which are really excited.

Yeah.

Sorry you mentioned you're not you're not using Stripe for what was it issuing issuing. Um, does does Stripe or do do are there other FinTechs that do play a role in like your supply chain or are you like down at like an a layer like just like what what's kind of going on under the hood?

Yeah. So, what we've done since uh 2018 on Brex is we actually built our own financial infrastructure from scratch. Okay.

So, we actually went straight to the metal on Mastercard and built everything from the ground up. And because we vertically integrated the whole thing, this created this pretty big advantage uh on everything that requires like bare metal capabilities on financial services. So for example, global, right, we operate in over 200 countries today with local cards, local issuance because for us it's just a matter of saying, "Hey, Mastercard, we're going to issue in Europe or Brazil or India or Mexico." And just flipping a switch for them because we are our own issuer, right? We we run our own stack. Yeah.

And then Fifth Third was another example where we said Fifth Third wanted to issue a Fifth Third issued card. They wanted it to be their name on the card. It has to be under their license on Mastercard and all of that. And for us is just effectively, you know, bringing in a new bank live which you know we have a few banks on the back end and including Fifth Third of course. So for us it was uh it was sort of piggy back on this advantage that we've had over over many years by building our own rails from the ground up which is really

How are you um how are you thinking about uh we've had bunch of different teams and companies on the show building like new layer 1 blockchains for payments. They're touting like speed default global all these things. We've had a bunch of stable coin issuers and and business. I'm sure in conversations that you have, you know, you're you're being pitched these companies from to be an infrastructure

provider. I'm sure your your investors are like maybe asking you sometimes, should we should should should there be a Brex stable, you know, who knows, right? I'm sure these questions are coming up. How do you think about kind of the layer one landscape? And you're you're operating a a global business today. Uh and so I would I would you know your opinion on some of this stuff in terms of the the real value of it I feel like would carry a lot of weight.

Yeah. So the way we think about it is maybe a little bit different which is we we think that first like stable coins and and and blockchain in general have you know tremendous application and we're really excited about a lot of the work there. We you know we announced support for stable coins this year. Uh when it comes to our banking product and you can pay the card to stable coins. We've done a lot of that. But when we come when it comes to global right and and just s supporting customers in a wide variety of countries uh really the the challenge there is the on-ramp and off-ramp right and specifically you know the the fiat last layer for uh you know an employee to reimburse you in you know u Indian rupees or Brazilian riis and then to for you to settle the card in that currency and do all that locally and unfortunately stables don't help you that much on that last layer and the whole actually a misconception about the way our global product works is a lot of the value comes from remaining in local currency because what they're trying to do is minimize FX right even on stables like FX has a cost just intrinsic to it

sure

and a lot of what we're trying to do is keep you entirely in rei so your revenue in real ice in Brazil are settling your expenses in realis or in euros or in GBP or whatever currency you're in so a lot of the infrastructure build is to enable this multicurrency and multi-entity operations versus having to do the FX X and a lot of the benefits that stables typically bring to the table. So, our use case is a little bit different.

I'm sure that's disappointing to people building global [laughter] payments L1's. They're like, "Wait, you're supposed to need this?"

I mean, we do use it internally for some stuff, but but you know, I would say the value prop for our customers is we stay in local currency as much as possible because just minimize so much savings and effects. Yeah.

What what what are the other uh like keys to success? Uh obviously you you you know you have experience internationally but you're like a YC company. I think I think of Brex very much as like an American company. Um but then in terms of winning internationally, what does it take? What what have the lessons been? What are the uh what are the interesting insights or what were some surprises that that uh cropped up on the journey?

Yeah. So I would say the biggest one is that when you go into like true global like true enterprise the amount of requirements and specifically on both the card and expense management side is unbelievable. So you have these rules for example local PDMs. So when you are in Europe there's these rules that if you have a German employee traveling to London is one set of rules. If you have a London employee traveling to Germany completely different set of rules. Whoa.

And then if they rent a car there's different mileage requirements. And then all this information is something you have to be aware of and

you know of course we use a lot of the car data to make that easier uh and recon it automatically but probably the the the biggest challenge overall is just building the core financial infrastructure because this is something that you know we're literally the only issuer in the US that actually had done this from scratch uh and just the amount of time and energy that we dedicated into building these you know core financial services infrastructure uh is pretty tremendous but you know it gave us a pretty big advantage when it comes to these enterprise customers and you know Today we have maybe three or four years ago I think we had five or maybe 10 public companies on Rex and now we have 250 and growing. So that's exciting things.

That's amazing.

Awesome.

Well, congrats to the whole team on the deal. Congrats to Art. Yes. Uh and uh chief business officer, correct?

CBO CBO. He was coming in to defend uh Keith Ra Boy last week was was talking some smack about the the BD uh BD people of the world. Does open have a have a chief business officer because they just got a CRO. They have a they have a CFO and a they have two CEOs. I think they're missing a

underrated title. You got to lock down art. He's going to get poached.

Artist. Don't listen to them. [laughter]

Awesome. Uh well, yeah, congrats to the whole

Congratulations. Congratulations. Great to have you on the show.

Yeah.

Thanks for having me. I appreciate it.

We'll see you soon. Have a good one. Merry Christmas. Goodbye.

Thank you. Merry Christmas. Uh, [laughter]

the ho ho ho really gets me every time. I've I've been thoroughly enjoying it. I I love that. I love the idea of uh of countrysp specific uh pdiums because if I had a German employee, I would want them to know that they are not an American employee and they are secondass