Martha Rhine, Director at the Payments Consulting Network, recently caught-up with Aleksandra Teichman, Head of US Acquiring at Cross River Bank to learn more about the company, what their offerings are and some of the exciting projects they are currently involved in.
During the ‘What Are the Banks Saying About Embedded?’ panel discussion in Transact 2023, Aleks shared valuable insights on the benefits of embedded financing to both customers and businesses. Embedded finance is a financial service integration adopted by non-financial corporations, which has transformed the way we interact with money and businesses. Previously, financial activities such as loans or payments relied solely on banks. However, recent growth in embedded financing services has paved the way for non-finance companies to provide financial services by connecting fintech and banks to their platforms through APIs, thus offering banking products on their platforms without the need for strict compliance with regulations and licenses. For instance, retailers can integrate financial lending services on their platform to allow customers to split online purchases into monthly installments, commonly referred to as buy now, pay later.
So, what does this mean? Martha asked Aleks a few questions to gain a better understanding of Cross River, its scope of products and services and the tangible benefits it provides its customers in the US.
Read the highlights of the interview below.
M: Thank you for the opportunity to chat, Aleks. Could you please provide a brief high-level overview of the Cross River Bank business?
A: Cross River was founded in 2008, in the wake of the Great Recession, on the principles of tapping into technology to extend financial inclusion to both consumers and business. Today, we live at the intersection of technology and financial services, leveraging our proprietary real-time banking core to deliver innovative and scalable embedded payments, cards, and lending solutions to millions of consumers and businesses. We are the banking infrastructure provider to premier fintechs in the market such as Stripe, Upgrade and DailyPay. Cross River is powering the future of financial services, is at the forefront of emerging technology, and a proud bank partner for several fintech who are being recognized as Top 10 ISVs by ETA.
M: What payment services and solutions do you offer merchants and third parties in the US?
A: Our partners understand that modern payments require three things – security, interoperability and real time optionality. They see that tapping into our APIs allows them to have access to all payment rails, all via API. As a result, implementations are simple, and clients can integrate quickly to offer their products and services on the market. This offers transparency across the payment flow and scalability into innovative financial solutions.
M: Are there any industry sectors or client types that you focus your delivery on? (i.e. issuing, acquiring, sponsorship for payment networks?)
A: Yes, yes and yes. As we sometimes like to put it, we do the bank and the tech, all in one place. We are a one-stop shop. We enable fintechs with BIN sponsorship for issuing and acquiring but the strength of our partner programs lives in our real-time proprietary core and banking infrastructure. Cross River’s platform offers a secure and compliant climate for customizable cross-functionality, transaction and sub ledger account management, debit card solutions, as well as payment rails.
M: What do you see as the bank’s key strengths and differentiators concerning the products and services you provide? What do you see as your (the bank’s) key strengths with respect to your solutions (products & services)?
A: We are known for our collaboration with our partners to create innovative and cutting-edge ways for businesses and consumers to move money when and how they need it. From a technology perspective, our partners can leverage one payment modality like Real Time Payments or Push to Debit; or they can lean in and architect their entire product ecosystem in one core, building at the very base layer of banking infrastructure.
M: At your workshop, you spoke about embedded finance. How have fintech partnerships enabled Cross River to adopt embedded finance?
A: Embedded finance is all the rage right now, but the truth is Cross River has been enabling finance via our fintech partners for over 15 years.
Traditional banking was 1.0, where only Banks could extend financial products directly to consumers and businesses.
Banking 2.0 was the dawn of fintech, which extended financial inclusion to different program managers and tech parents.
Embedded finance is banking 3.0 and takes this thesis to the next level, deeper into the value chain with customers. Our goal is to meet our customers where they are. Through embedded finance, we offer consumers and businesses access to financial products, their day-to-day services which were traditionally not viewed as banking.
M: What were your key achievements over the last 12 months?
A: We have had a tremendous year! We raised $620 million in our fundraising round. We have expanded our partnerships across the industry with partners like Stripe, American Express, Pay.com, etc. and we have enhanced our 24×7 settlement functionally with a direct connection to Visa Direct and FedNow.
M: What merchant services innovations do you have on your product/service roadmap for the next 12 months?
A: There is a lot of work to do to offer the same kind of innovation and financial inclusion to business that consumers have benefited from over the last few years, and much of those lives in settlement. We intend to continue building on our 24×7 settlement functionally.
M: What industry changes or trends do you see occurring over the next 2-3 years that will significantly impact your business and/or your clients?
A: I think merchants will expect that same line of faster payments as a business that they get as a consumer via Venmo or Zelle, so we will see better processing technology to help solve that problem. Also, with faster payments, comes faster fraud and so I expect we will see a lot of innovation on the fraud mitigation, transaction monitoring side. Our partnerships with Sardine and FinClusive speak to our expectations around the growing need for fraud and compliance management.
M. What key criteria or features should a business consider when evaluating acquiring & sponsorship relationships? Solutions?
A: When a fintech is looking for a financial institution to support their program, they should consider FI’s compliance and risk management, technology, and integration capabilities. Our strong foundation in regulatory compliance coupled with our API technology, allows our partners to integrate quickly so they can go-to-market in a responsible way and sustainably scale their business.
M. How do you ensure transparency and access to mandates, rules changes, industry innovations, and payment network compliance/non-compliance to your clients/partners? Do you pass through non-compliance and non-performance fees and charges? Explain?
A: As an infrastructure provider, we work very closely with our fintech partners to ensure we collectively are innovating with the right regulatory guardrails in place. Additionally, because our bank was founded during the recession, we developed close working relationships with regulators, which allows us to ensure we are up-to-date on the latest issues and requirements, clarify any questions with them, and work through solutions when necessary. We maintain a model of close and open communication with our partners to ensure they understand the regulatory requirements expected of us as an FDIC bank and subsequently, of them as our partner.
Martha has over 25 years’ experience in the payments and financial services industries. She has worked with global payment and regional payment networks, processors, acquirers, ISOs, and issuers to execute compliance and release mandates and address non-compliance process changes and expense reduction measures thru training and collaboration with business and financial stakeholders.
Aleksandra Teichman was one of the panelists for ‘What Are the Banks Saying About Embedded?’ session in the recent Transact 2023 in Atlanta. ETA Transact is an annual trade show that brings together payments professionals from across the global payments and technology industries. ETA Transact is an annual trade show that brings together payments professionals from across the global payments and technology industries. TRANSACT Tech Toronto is happening on 14 June 2023. Check out their other upcoming events here.
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