This month, our CEO Drew Edwards sat down with Nik Milanović for This Week in FinTech’s monthly podcast. Drew discussed his 25+ years of experience in the FinTech industry, where Ingo Payments has been and where it’s going, and more.
Listen to our entire podcast, or read the transcript below.
Transcript:
Nik Milanovic
Welcome back, everyone to our monthly fintech podcast for This Week in Fintech. I’m really excited to be sitting here today with Drew Edwards of Ingo Payments. Drew is the CEO of Ingo Money, a company that he founded in 2001. Under the Ingo Payments and Ingo Money brands, the company’s become a leading provider of embedded payment and check solutions for fintechs, banks, and businesses. Before starting Ingo, Drew established a Towne Services, a publicly traded e-commerce company, providing solutions to over 1,000 financial institutions, and served as the CEO and Chairman of the Board of Directors. His earlier career before starting fintech companies was management positions at the Federal Reserve Bank and the Bankers Bank of Atlanta. He additionally serves on the board of directors of Scarlet Financial, one of the nation’s first payroll card companies. Drew, thanks so much for joining us on the podcast.
Drew Edwards
Thanks for having me. Appreciate it, Nik.
Nik Milanovic
It’s great to talk with somebody who’s really seen so much of the FinTech journey since before FinTech was even really a word. For most people. It used to be just fin without the tech, but I feel like you’ve had a front row seat and a building seat for a lot of the introduction of tech and in the financial services world.
And so there’s a lot that we’ll dive into and learning more about how Ingo works, and what you offer to your customers today. But I’m curious, just even before we go into the company, in your background, was there a point where you realize that you’re going to be FinTech or financial services person? Was this always the goal? Was this always the dream? Or how did you really kind of start in your FinTech journey? By accident?
Drew Edwards
So no, I went to college just to get a degree, so I could go in the Navy and become a fighter pilot. That was my focus and mission and dream, right. And this was before Top Gun sort of messed everything up. But making everybody in their world want to be a fighter pilot, I guess, when that didn’t work out for physical reasons. I landed at the Federal Reserve Bank and a management training program in Atlanta, which is a great place to start and a terrible place for an entrepreneur to be, inside the Federal Reserve Bank. But it was those three years that got me associated with banks.
Then one of those banks, Bankers Bank, hired me right away. And that’s kind of where I got into what’s today called, it was correspondent banking, right? We but but it’s the same as fintech.
We’ve been providing tech software and other services to banks, you know, as a bank. When I went public with town, we called it ecommerce, back then. So it was in E-commerce means something different today. But back then, you know, if you were helping banks, you know, do payments or finance receivables, you were an E commerce company.
So I don’t even remember when financial technology or FinTech sort of came along. But the only thing that I have known for sure is not a regulator. And I’m not a big company guy. I’ve got the entrepreneurial disease. So I just keep repeating myself on that and banking and financial services and technology, the intersection of those just has become natural to me. So yeah, I’ve been here since the old guys, I guess.
Nik Milanovic
Well, I wouldn’t count yourself out. It sounds like you’re still building innovative products. And I think we could all use a little bit more experience and a little bit more perspective on you know where technology’s come in the FinTech journey. If I’m reading it correctly, you started Towne, and five years later took it public and town enabled electronic transactions for 1,000 FDIC insured banks across 45 states. So they can offer accounts receivable financing small businesses, is that accurate characterization of town?
Drew Edwards
Yeah, but I give it a little color. The reason it’s called town because it didn’t start out as town as you know, I was, I started that company after developing personal relationships with about 800 Community Bank CEOs. As we were doing the bankers bank thing, and you just get to know a mall. And I’m like, I’ve got to be able to do something directly with these folks. I’m driving around in small town, Georgia, which is where town comes from, with these bankers, and we’re going out to dinner or going to play golf or going fishing or whatever it is, we’re going to do And invariably, they’d stop at the gas station and pick up a six pack of beer. And they just say, put that on the banks account. He’s with the bank, right? And then next thing, you know, we’re having dinner and they’re like, put this on the bank’s account. So what I began to realize is this notion of private label house accounts still was alive in 1995 in small towns in America, and it was a burden to the small businesses and an opportunity for the bank. So we built a point of sale platform where they could do what we began to called town credit, you know, put it on the banks account is this town of credit, right. And those systems went all upload because it was sort of pre web pre internet and was right there on the cusp of it, they would dial in and feed that data and our systems and we would buy those accounts from the bank from the small business and share the revenue with the bank. So it wasn’t traditional accounts receivable financing, it was the original sort of payment process. And for us, it was, hey, they want this payment type called town credit, right. And some people strangers walked in with a Visa or MasterCard, they would take a check. But everybody that lives in those towns just put it on their account, right. And so we were just digitizing them and financing them for the small business across the country. It was cool. It was hard convincing Wall Street that still existed in America, even in 95. Well, you’re ahead of the game. I feel like Intuit QuickBooks bill.com have taken a page out of your book and are really scaled that to the masses of businesses, but it came along which later, I’m curious. What was your experience like taking a company public during the first talk on Boone?
Ah, wow, horrible and life changing and fun all at the same time. I mean, the process of going public is a lot of fun in the process of being public, is a never ending grind, especially during that day, when you’re not ready to be public. Right? If you’re FIS are fast serve and your public. Sure you know exactly what the next quarter looks like, before you get there. That’d be one thing. But we were in this hyper growth mode where I had 400 employees that 300 of which had been with me less than six months, and we were growing so fast, the paint wasn’t even dry and, you know, furniture that we were sitting on to so to speak, so it wasn’t any fun? To answer your question. It was successful. I didn’t miss a quarterly expectation while I was running it, and we ended up selling it. Ultimately it went to Jack Henry, I think two acquisitions in but it wasn’t successful in that we weren’t a good public company, we they had to sell it. Because it was too big a ramp and all around me, in Atlanta. My peers were dropping like flies, I just happen to be, you know, the first most of my investors made money if you bought in late, you know, Baja, and so long you didn’t but the public markets are not a source of venture capital. Let’s put it that way.
Nik Milanovic
Yeah, no argument there. But I would say, you know, never missing a quarterly projection probably puts you head and shoulders above most of the companies that went public around 1999.
Drew Edwards
They missed it that they the quarter I left and that one, I’m not taking credit for it. I’m just saying it was it was inevitable. You know, you could we couldn’t keep up the pace we wrote. It’s so old that that mattered. And it would blow people’s mind today. But when we went public, you know, you do a red herring, which is the Aswan effective, I mean, essentially, right, and you’re out there pitching these 25 year olds, and you get 20 minutes to do it. And you’re flying around the country on a private jet and my revenue and 98 When we went public, with a $200 million market cap, we raised $35 million. My revenue was $780,000. Trailing revenue. They’re laughing at me like throwing the book crossed, I make more money than you’d have revenue, right? But we got it done. We were oversubscribed. And 12 months later, we did a secondary offering and the revenue was 35 million. So it is that kind of slow. That’s just not sustainable, at least not in the company I had built. So that was my first big post corporate entrepreneurial lesson, right? There’s all sources of capital are not the same and better off to get smart capital than unforgiving capital, which is what the public markets are. Right. And this is all before Sarbanes Oxley and all the current you know this, you know, we had to do what was called fair disclosure back then. But there was no such thing as Sarbanes Oxley, I think it might be in jail, because we were doing it by the rules back then. But the rules have changed since then. So you couldn’t even run the business the way we were doing it then today. So anyway, it was great. It’s great learning experience, laughed and went away to the Bahamas and kicked around for a couple of years until a new idea for a game.
Nik Milanovic
You’ve done under $1,000 revenue to 35 million in 12 months, which is definitely a pretty impressive journey. And it sounds like it led you to the next aha moment from driving around with bankers in small town Georgia, to founding NGO money and NGO payments. And so we’d love to hear more about that founding journey, but maybe just before we even dive into it for the benefit of our Our listeners and our readers, I’d love to understand, you know, really your words, you know, what isn’t good money? What is NGO payments? And I know that these are effectively two separate businesses. And so we’d love to just hear kind of the overview from you of what these two businesses are.
Drew Edwards
Well, let me clarify that for you. Because it is it is quite confused. And it’s one business, it’s one company. The reason we’ve separated the brands is it’s confusing to everybody in the market. And from an SEO standpoint, we have so many consumers that our customers, so many inbound web hits, and search is an all around kind of cash my check, how do I get my money and all that it buries the more modern and go forward payment side, as far as Google some concerns. So it’s one company, it’s one p&l, it’s one business, but we’ve had to separate the go to market brands so that Google can stay over here with no money and let it be the check thing, which is still a growing part of our business and important to us. And it’s part of the core proposition of helping consumers fund their account right? So money in and money out is what Ingo is all about, we call that money mobility, it ain’t got money. So if you have a bank account, for example, you expect as a depositor to be able to put money in it from cash, you know, and a teller line and an ATM machine from checks take a picture of your cheque from maybe moving it in from Marcus into your account right so that money in we power for non banks out there and you expect about a pay bills with it you expect about a pay your friends with it, p2p bill pay, you expect about a move money back to Marcus or Robin Hood or wherever you want, right? So no money is the original account funding for the checks. And to this day, we’re built into PayPal, Venmo and green.net, spin and ADP and everybody out there in the market. And that’s really a heavy risk management play for us because checks are so risky, people need good fun, right? NGO payments was built on the notion of okay, all of these consumers that are clicking on cash my check at PayPal, that means they didn’t want the check, they’re trying to turn the check into a deposit at PayPal real money, right. So we have this platform, which we partnered with V song because they were trying to get the check cashers out from between them and their prepaid industry green.net Spin were going public, they had hundreds and hundreds of these prepaid companies out there. And so the notion there was, hey, if NGO can underwrite a check from a picture in real time, let’s give them this Octa transaction that nobody’s using in America, that was their original credit transaction. And that today is visa direct. Right?
And it was, hey, Drew, if you can underwrite that check, and we’ll buy it, we’ll give you a transaction where you can put the money directly into the consumers account wherever their count is. And that became the first use case. So we built a platform to do all of that. And then we realize, hey, why don’t we split these two apart and go to the corporate entities that are creating these checks that are sending them out to consumers, and empower them to just ask the consumer before they go to the expense of sending them a check that they didn’t get to go cash or deposit or change? Or do whatever, right? Let’s ask them where they want it. And let’s give them choices. And so that that’s where NGO payments evolved. Because it was okay, regardless of what the source of fun was, oh, hearing got money to source funds, when the check over here on NGO payments, the source of funds is generally an account somewhere else a corporate account, or a Meet Me account. And we’re just doing the Hey, where do you want that money? Is that is that make sense? So it’s one company. But for marketing reasons, one is associated with consumers, because those are our customers on that side, and the other one is a pure B2B to C play.
Nik Milanovic
That makes sense. So to say that back to maybe an as condensed away as possible. What Ingo provides is a single point of integration that allows you to translate between different payment methods from the start point to the endpoint, even if it’s just a meat and meat transaction, you actually provide the reconciliation and translation between different payment methods for paying and payouts.
Drew Edwards
This is the difference between us and a lot of people in this space today. Right? You have to connect all the networks, right? So there’s a lot of companies out there going one API, any payment tie right one API any payment route, because they are software for developer forward kind of shops that are focused on stitching together a myriad array of different rails and networks to enable this movement. That’s our Then go payments gateway, that’s part of it. But beyond that moving billions of dollars is risky, especially inbound funds that can be clawed back, etc. So the risk management component that was the core of our DNA is probably more important than we’re better than anybody at making these network rails work, especially the card rails, but you got to do it safely, you got to put risk management around it. So even on inbound, like I got an account at Chase, and I just opened moneyline account, you know, they’re not, they’re not on these platforms, I’m using them metaphorically to keep everybody confidential will enable you to pull money from that Chase account, enter that money line and count and lots of companies will do that using a visa a EFT or a MasterCard, EFT transaction or an ACH debit transaction, the difference is, will risk management and even guarantee it so that you know it’s good funds, just like we do on checks, right? So you have the gateway and you have the risk management. And then the third component is we build digital experiences. Lots of our clients are people like Liberty Mutual, Geico, Caesars, etc. That may or may not want to build a digital experience for their customer to manage all this. And so we have white label experiences so that where you were sending a check, you can send an electronic request, bring them into a branded pay and pay me you know, movement, money movement environment, put risk management out there and make it all happen without the corporate client having to build all that. And that’s in go payments, the software, the gateway and the risk management. And it’s an unlike anybody else in the market doing that today.
Nik Milanovic
It definitely jumps out to me that, you know, this company has been around since 2001. It’s been scaling since then you really started a FinTech company before FinTech was even a word even PayPal, which was started in 98, didn’t spin off from eBay until 2015. So this company has been around providing payment services for a much longer time than digital payments have been available through most of the providers that we know today. I’m curious. And the reason I bring that up is because I’m sure over those 23 years, there have been some notable inflection points where your focus has changed, the company has changed, you’ve expanded. I’m curious, what do you view today, looking back as kind of the major points along that journey in which the company really took a leap forward? What’s changed the most since then you started in 2001.
Drew Edwards
If you knew me, you know, I probably tell more than I should. But they weren’t all leap forward. Some of them were leap sideways to dodge a bullet and survive, right. So we’ve had a couple of pivots along the way, we didn’t even talk about it. And I won’t go into it. But we started as a Hispanic bank in Atlanta. So we actually had 12 branches. And that’s the first phase of this company was running, serving these Hispanic immigrants. And oddly enough, that’s where I discovered the need to cash check was all of these immigrants were coming in the door trying to send money home or pay a bill or, or get a mortgage? And they’re standing there with a piece paper that needed to be underwritten? Right, so we had to build technology to do that to run the bank. And so first phase, the bank, we sold it, it started, no one saw the bank, you know, a cap that risk management platform and didn’t want to be in the actual regulated, that’s capital intensive, hard to scale kind of business, right? started offering the capabilities, we had proven out in our Bahco to other banks and non bank providers, right. And that sort of phase two, and, you know, got profitable and life was good, except we were still making money on checks. And I knew that was going to go away someday. Now, let’s be clear, it hadn’t gone away yet. And it probably won’t go away before I’m planted into the ground somewhere. But in a lot of people’s mind, they don’t care anymore, right? We’re in an odd last couple of years, where all of a sudden everybody’s asking about checks, because they’re trying to be neobanks. And they’re realizing their customers are going to what I do with this, right and the fraud has gone through the roof, and it’s a big problem and we can solve it. But generally the 25 year olds run into money don’t care about the checks, right? The fact they don’t even think they’re I call them Jack Dorsey’s org when he was early I’ve been there three times still not a client right? But the first two times it was we don’t jack that and think checks are relevant right now rumors in the market and it’s just a rumor in America that they’re out trying to solve for checks because PayPal and Venmo did and charm and others have right so the checks we had to figure a way to get away from and that was the second sort of pivot to okay well let’s break this apart and go kill the check. Let’s break this apart and go and power corporate America to offer choice to the consumers and that’s about when the clearing house and real time payments and all people are starting to talk about all this push the card was brand new, and that’s when we brought in institutional capital and money from visa just went all in Alright, let’s create choice here and let the consumer kill the check.
Nik Milanovic
How many people still choose to use checks, though?
Drew Edwards
It’s about seven 8%. It must be generational. Right? So give them a choice. them right presented to you send them a check. And so oddly, we get a lot of inbound requests from that from some of these big giants because they’re looking for a complete set of choices, and none of our competitors produce checks will actually send a check.
Nik Milanovic
Yeah, I remember when we were building the current company that I was on the relay team that pedal in New York, we had to actually work with a cheque processor as a third party that was able to set up a mailbox receive checks on our behalf, OCR them, so that we had a record of the cheque and then actually processed the payment, so that customers had the opportunity to pay down their credit card balances and checks. And it was a surprising amount. I think you’re right. A lot of people still use payment methods that have been around for a long time, even though all the hype is around, whatever kind of the new payment method of the year is, whether that’s, you know, FinTech or something even more exotic checks are still alive and kicking in the US. And that actually brings me to key question that I wanted to ask you on this on his podcast, which is, you know, thinking about where NGO is today and where the FinTech ecosystem is today? What are the key challenges in the payment solution sector, that Ingo still addresses today, and that you view as kind of the next hurdle to clear and where you want to bring payments continually forward into the future? What are the key challenges that you’re still seeing in the payments market?
Drew Edwards
Well, we play and in this spectrum, we’re very horizontal as a company, like, you know, to have a pay is all FinTech and wanting because all insurance and, you know, FIS is mainly just financial institutions, but and faster, but broader than that, right? Well, Ingo is more like FIS and fast serve, and then we don’t have one vertical that we sort of specialize on. So the answer to your question varies a bit there on the FinTech side, they’re looking for the same thing they’re all looking for, how do I how do I enable as cheap as I can, these money flows in and out, and they may or may not even respect the risk associated with some of those transactions. But we’re getting a lot of demand from people that have tried EFT, for example, elsewhere without risk management and n are coming and going to hell, right. But if you got to the other end of the spectrum, to a big corporate, you know, smokestack company that’s got a Treasury Department, and it’s producing checks, millions of checks, they have a different set of challenges.
On the FinTech side, the challenge right now is, they’re dropping like flies, because you know, the go back to Silicon Valley Bank, and on forward, the funding dried up on a lot of those business models, and ones that weren’t proven out or falling apart. So we lose some, we don’t like that end of the market startup wise as much because you don’t know which ones will make it or not, we like fintechs, but we like the proven fintechs and ones that have volume, right. So the challenge there is just their funding and their viability, and then staying around. And now in today’s world, the compliance aspects, because everything’s under scrutiny, because of what’s happening with banking as a service. And 25% of the sponsor bank is under a memorandum of understanding that they’re with the regulators or a cease and desist. So that’s talking about that in a minute. But on the fortune 100 sides, it’s process change that’s required. And those are the big hurdles. So even though they know they want to get off the checks, even though they know what they want to modernize their payout experiences with digital experiences. And even though we can give them a turnkey platform where they can send us an API, and we will turn it into a digital experience for their customer, right.
They have multiple tech stacks that are legacy tech stacks, where all the data you need to make that transaction work when all they had to do is put a name, address, dollar amount, an invoice number or some other sort of identifier on a piece of paper and put it in the mail and they were done. It didn’t need to be in one system, right? The IRS today works that way they upload stuff and send it to their, their, their partner banks well. So it’s still a challenge on that big corporate side to get their resources lined up to modernize what they need to modernize to be able to consume a digital payments experience. And that’s still going to take years for you know, they’re the ones producing the billions of checks that are out there. And that’s going to take years, I would say the current regulatory environment is working in our favor, because a lot of people are in trouble. A lot of the you know when you’re the old guy like we are, you’ve been around a long time. You tend to be perceived in those hot market times as not a unicorn and not not the latest greatest, you know, with all the fancy buzzwords urge and you don’t have Andreessen in your on your balance sheet you have all this right and, and everybody else looks sexy and NGO looks like a small FIS right like well, but the world changed now where it’s all about safety and it’s all about Wait a minute these oh guys might be the safer place to go. So we are known in the market as is the guys that know how to do banking, right banking as a service, the banking piece is the part that matters, right? And the guys that have been around a long time through all these economic cycles, and who have clients like when I asked the ethers, who’s one of our clients, why did you choose NGO?
We weren’t even in that space, and you have all these different options in the gaming space? Why did you choose NGO? And their answers still resonates with me, which was he said, Well, we weren’t enamored with our current partnerships, right. And so we’re looking broader than that. We looked at Ingo and all the other suspects and we felt like they’re set in Go, who’s big enough, they’ve been around long enough that they’re not going away. They’re done raising money, but the client base are all these big brand names and big companies, right. And so that felt safe to them, right? So that’s sort of our lane, we don’t win as often the straight FinTech, you know, you can leave that to the moves and Phoenix’s and you know, that part of the world out there, right, that’s doing that where we tend to win is when you got a mature company, or a sizable FinTech that’s looking for scalability and resiliency, and risk management and compliance and work that does it right.
I mean, I got 250 employees, and three or four of them are lawyers, we do a lot of regulatory stuff around here, because the only way you stay out of a ditch when you’re doing payments, especially embedded banking, and we’re jumping into this bass bass, with both feet and both arms, right, so it’s, that’s the window is and it’s really paying off for us now, because we’ve got staying power.
Nik Milanovic
Are there numbers that you can share?
Drew Edwards
Three clients, I can think of that were acquired by somebody that had their own platform, right. And two of those three, were on the check side. So on the payment side, we’ve had some go away, like literally go away some of the fintechs, that just didn’t make it. We have to rebid with our large corporate, every time the contract in there’s an RFP that goes out, and you have to re win it right. So but we haven’t knock on wood lost one of those to a competitor yet. And since we’ve been doing this, I think we have a lot of volume. So we have super competitive network pricing for most of what we do. I don’t think that’s why people stay, though I think they stay because especially if you’re an enterprise, we just know how to support you. And we know how to partner with you. And that’s important. But that’s back to the Caesars magic, right? We actually take care of them and are helping them grow.
And it’s a partnership. And we’re here all the time. You know, we’re laying out performance numbers and where the problems are. And you know, which banks you’re seeing failures or returns from and all and they said something one time, like, I’m trying to keep the sanctity of confidentiality. But we’ve heard this from multiple clients that said something like, well, that bank right, there is always a problem. And we said, yeah, you want to turn it off. I don’t know what we can block, we can turn them off we are system we we control our own routing, we can control where we send it, how we send it, how we fulfill it. And if we send it right down to the merchant and the bin level, even the dollar amount level. So we just I said your other partners don’t do that for you. Now it’s like on or off and said, Well, you can tell me you don’t like loans, it’s not an illegal reason you can tell me, you’re scared of banks in Oregon, and we can turn them off. Now networks might get mad about that. But I think those kinds of interactions and relationships are at the core of our sort of, you know, our clients want to understand how this work in and they want to be comfortable that they’re optimizing it that they’re safe doing it. And today, where it’s mostly about moving money for him tomorrow, we’ll be inventing new accounts for them so that they can begin to monetize some of these payments and not just making a cost center.
Nik Milanovic
That actually is very interesting. And I’d love to hear a little bit more about the expansion into what I guess today you would call banking as a service, although I think that that’s a little bit of a catch-all term, maybe not as appropriate, but that Ingo ozone routing is really interesting that you have the opportunity to turn on and turn Often channeled payments specific to bank specific bins, I think is something that is not very common with payments providers today. And so I’d be curious to hear from you. What are some recent advancements, innovations and product launches that have come out of NGO that you’re really excited about, and that your customers have gotten excited about that you’ve launched recently,
Drew Edwards
One of the top ones right now is applying risk management and guarantee to inbound card transactions and inbound ACH transactions. So that’s, and I don’t mean like, a purchase transaction. I mean, the I got money at Chase, I just opened, you know, this mail bank account, and I’m gonna pull $500 in to the neobank count, huge fraud fraud problem, just that’s just asking for trouble, like with checks, right? So we’re getting, we know how to manage that we’ve got our own, not going to use the overused word of AI, we’ve got our own models and machine learning and data scientists and, and obviously, AI is becoming a part of that. But we’ve got experience in managing this kind of fraud. And we’ve got some partners that help us with that. And that’s getting a lot of traction, because it’s a needed piece of functionality. One of the biggest cost of any kind of new account is your is that go to the expense of underwriting and opening an account, maybe even some of them send out a plastic and then it never gets funded and it goes away. It never gets sticky, right?
So or it gets funded, but then their game and you they drain the money and it gets clawed back later and they’re gone. Right. So that’s, that’s very important to us right behind that. I have been preaching against this for the last 20 years. And now I’ve changed my mind. I have been for this whole time been saying no consumer wants another account, right? They’ve got plenty of accounts, they want to choose between their accounts, they got, you know, to get their money, you know, I get a $250 rebate from a DND don’t force a new prepaid card on me, I didn’t want to send him a $250. Right. So and we have some clients now in that incentive space, for example, that do that. But there are cases where I was wrong and what we call so you made that comment of banking as a service. I’ll tell you how we’re thinking about this though. Let’s start with issuing as a service, forget about the bank because you are banking. And but banking is a service is like a platform sale to somebody who is trying to build a neobank or something. But within our ecosystem of paying out money. Like we have hospitality clients where we’re paying out tips, we have gaming clients, we’re paying out winnings, we have insurance clients who are paying out claims or, or recurring payments for commissions to agents and all that kind of stuff. We’re calling this Cinder centric, issuing, right so these these these built in use cases where you got a restaurant that’s got 200, waiters, and waitresses and just signed on for this.
And today, for example, they’re having a, I was a waiter in college, it’s still the same, right? They want to leave with an envelope full of case they want their tips today, it’s a daily kind of model, you know, you’re talking about daily pay and active hours and all restaurant works always been a daily model. When we go into those use cases, there’s a couple of problems that we’re going to solve with issuing as a service. Some of these workers don’t have an account, they’re under age, right. And they haven’t gotten a green line account yet, but they’re under age. I can issue them a new account as a corporate disbursement in that payroll sense, even though they’re under age, as long as there’s an employee now, I’m not going to let them load it from other sources, but I can give them their tips every day. Right? And right now the restaurant is probably charging their workers to go to digital paths because it’s costing them money, right? So we’re going to create lower cost ways to monetize that with issuing. So that’s just use that one example you can apply that to insurance to Commission’s to gaming’s to college payouts.
We’ve got all kinds of programs where we all right. So that’s the first step is and we already have the beta is waiting on us right now is to start actually doing what I said nobody wants and given them a new account for this particular purpose, right, because it works for them and it’s seamless, take that one step forward. None of these restaurant operators want to become a bank. So they’re not looking to be money lion. They’re not looking to get into that but they want to participate in the economics. So by embedding this banking into their payout experience, we begin to create revenue streams for them. But we’re providing a migration path if they do get to enough scale that they decide they want to program, manage and own their own economics and do their own thing. Then we can leave them on our platform turned into a true bass deal and power with our technology and our money movement coming in and out and we don’t think this really exist. Well in the marketplace today, we literally are getting almost universal demand from our clients on that. And then you can take it one more layer, we’ve got a platform will be coming to market with it that also can empower a bank directly to have their own bass experience, right, which is kind of a trend in the market that will play into because we’re by background. I know how to sell these banks, that’s what we have always done. And we’re one of those old guys safe guys bank friendly guys trusted guys in the space. So we think we’ll do well, in that bank direct space, because we’re not two years old, or four years old, because we’re not a middleman, we own our own tech stack our own relationships with the networks or our own risk management platforms. What we’re doing here is just embedding new account experiences into our payout choice mentality, right? Where it’s appropriate. Sender centric, issuing is one of the safer ways to do it, you won’t be able to go download an NGO account and open a bank account just out of the blue, that’s not gonna happen.
Nik Milanovic
I’m gonna ask about it, because you brought it up. And I’m curious to hear your take as somebody who’s really seen banking as a service and its evolution, even before we call the banking as a service. As you mentioned, you know, there are newer entrants in the embedded banking, best space, there are partner banks that have taken on a lot of FinTech areas and sponsored platforms, perhaps gotten out a little bit over their skis. And so it’s a unique moment in that we’re seeing some of the pitfalls of fast growth, sometimes poor internal controls, sometimes partner management processes that were a little bit lacking in development. And so I’m curious, you know, what do you think the future looks like for the FinTech and banking as a service and partner bank space? I’m sure, you know, these are three different futures. But, you know, where do you see us going from here as a space? And where do you see, you know, regulatory bodies stepping in and either rulemaking or enforcing, you know, kind of what do you think that FinTech trajectory looks like from this point?
Drew Edwards
The notion of whether this is FinTech or not? Maybe secondary, but the notion of embedding new accounts in customer experiences, right. It’s it’s unassailable. I don’t believe the regulator’s can or even want to shut that down what they want. I’ve spent my whole career with these banks and their regulators and knock on wood have never gotten in trouble along this time, because we think like a banker, but what the regulator’s want is the bank, to have control of what’s going on right to have knowledge and oversight and control to make sure that their eyes are being dotted and the T’s are being crossed. Right. So what we’re dealing with right now is a shake up where banks got into the space. And while we’ve got these really hotshot fintechs that are doing that we’ve outsourced it to them, that’s a no, no, right? You don’t outsource banking, you can partner with technology companies to do banking in a distributed way, which is what proper bass is. So I believe to answer your question directly, this notion of banking as a service, or embedded banking is here to stay, and it’s going to continue to grow. And what we’re dealing with right now is a shake up where banks that have gotten into it without full respect for what they were doing are in trouble and will probably go by the wayside and fintechs that brought that to the table and didn’t keep their banks out of trouble and partner with them will go by the wayside, leaving an even healthier opportunity for the folks that are doing it.
Right. So if you’ve been watching what’s happened, you know, FIS bought bond and rebranded it, they’ll do it right. You know, faster has built their own platform. And as in market with it, I hope the good ones survive, right. That’s why we’re coming into the space we feel like it’s in need of another old guy to do this stuff right and safely. One of the trends I believe we already are there is third and fourth party risk is really hard for a bank to control. So if you’re one of these middleman guys, then you’ve got all these vendors and then they’ve got a vendor on the other side and then a Visa and MasterCard or somebody else out there. That’s a lot of layers to really exercise proper bank oversight. And because then go owns our tech stack owns our integrations directly and works hand in hand with our banks. We don’t we have two layers Ingo and the bank, both serving the FinTech client of the bank, right. We don’t touch consumers money. We don’t commingle money we we’ve got. We’re doing it the way it’s supposed to be doing and people have asked me, I didn’t know you can do that. Well, because we’ve been doing that for 20 years. When we cashed the check going back then go money, we don’t actually care.
We are a FinTech, that is a bank service sitting inside of PayPal. And when that consumer clicks on cash my check, they are enrolling with Sunrise National Bank, they become a customer of the bank. And we’re the best provider making that happen. Now, we’re not opening an account for the bank, but we’re making them a customer of the bank, and the rules are darn near the same, right. And so all of our business has always been around in the beginning, if you remember Ron, and 12 branches for another bank, like that was their original banking as a service, we stood up brick and mortar and staffed him and stood across the teller line and opened accounts. Right, that’s where we started. And then we’ve been doing it now in partnership with the network’s in these big players for the last 10 or 15 years, I guess it’s 2011. And so now to add an actual DDA account or a debit card in there, it’s just natural for us. It’s just going one more mile. And what we’re doing and we’ll keep doing it by dotting eyes and crossing the t’s and having a paramount respect for the banking piece is Jim McCarthy said, the day the banking part of banking is a service. That is, you get that right, or you’re out of the business. So the players that get that right, will enjoy a healthy growing future here, I believe in embedded banking and embedded payments. And that’s our belief anyway. Well, I’m
Nik Milanovic
curious to know, pivoting a little bit here, because we’re coming up to the end of our time, I’d be curious to hear from you. What does the future look like for Ingo? Do you see yourself? You don’t have to tell me, but do you see yourself taking another company public? Do you see Oh, not once burned twice shy?
Drew Edwards
Well, I do know, my real answer to that is we would only go public. If we were mature enough in our predictability of our future revenue streams to be public, right, you need to kind of know what the next year looks like, if you’re gonna be public. So wait, you got to kind of move out of heavy r&d mode and growth mode and blocking and tackling in that regard away. We’re not, we’re not there. So I had a smart entrepreneur peer of mine, Atlanta, who’s made more money than me and never stayed in a company as long as I have. But he gave me a piece of advice a long time ago that I’ve never forgotten, which is just run the company, like you’re gonna own it forever, like not the public markets, not the investors, not the not looking for an exit not trying to put you know, lipstick on it and dress it up, just run it like you don’t ever and we try to do that every day around here. We’ve been around 23 years, I don’t know how long I live, and how long, how much longer I’ll be around. Now I have institutional investors, and they sticking around for 23 more years, right? So if I’m gonna run it forever, there could be a recap out there in our future. And if we do that, it’s probably about 24 months out from now we’ve got plenty of capital, we don’t we’re not planning on raising any more money unless it’s to provide liquidity for our existing institutional investors. Right. So we think there’s a lot of work to be done here.
We’re having fun doing it. I think I got the best team in the space and just upgraded our Chief Compliance Officer as part of this thing. We’ve staffed up eight people, in fact, that just focused on this banking as a service stuff, because we’re taking that seriously. But that’s Ingo. We want to we want to not lose any clients and add a few more and make them all happy and our shareholders will win in the end one way or another.
Nik Milanovic
And how big is the team today?
Drew Edwards 43:53
Around 250. I don’t know the exact number. And that split kind of half in half check versus not check. It’s not financially because the payment side of the people are developers and tech people that have one pay scale. And the check side has about 80 some odd hourly people that do customer service and risk management, that type of stuff. So more than half my payroll is on the payment side. headcount wise it’s about 15 feet, so we run 24/7.
And before COVID, we had to run redundant call centers in different climate zones because we we operated last year at five nines of uptime, and you know what that means is rare in the market visa operates at five nines, I think and that’s six sigma. E. That’s not by the way our SLA is and we got we had a really great year, so we’re always at four nines, and we had to run 24/7 But COVID forced us to go remote. Not I mean, I’m still standing in our office but our call center So, I’m not a big remote fan. But that has enabled us to essentially distribute hourly customer service and risk management people anywhere in the country. across time zones, I don’t have to worry about generators and data centers and all the stuff that would go there, right, we have them working at home, we can see them, we can control them, we can we can measure them, we can monitor them, and anybody can work here, which is really nice. A lot of them are part time. So you can have mothers and, you know, people that need to be around the kids. So that that’s one of the positives of remote work.
Nik Milanovic 45:34
And just for listeners of the podcast in five nines, you know, if I am getting this correct means that the platform is up 99.99999% of the time for our customers, which is pretty impressive feat.
Drew Edwards
99.999% of the time, so we were down. Yeah. And that excludes, you know, there’s math and how you do that, right. But that excludes predetermined regular scheduled maintenance windows, which happened at like three in the morning, right? So parts of the platform do get taken down for 30 minutes here and there for maintenance, but our clients know about it, that’s not considered a downtime failure. So were we I shouldn’t my lawyers gonna be mad at me, my general counsel for voicing that because everybody will start asking for that we will not commit to five nines, that’s a little too aggressive. We’ll commit to four nines, but not five. But we try to operate at five nines. He goes with you been around 23 years. It goes with your banks trust you. You’ve never gotten anybody in trouble. It goes with you guys are really good at risk management. And you can’t tell Caesars that they can’t pay out their winnings, you know, for three hours. It just It can’t happen, right? So it goes with resiliency and redundancy. And all of that is FinTech and payments.
Nik Milanovic
Just to put that in context. What that means is that if a platform is available, or 31 million seconds a year, only 3000 of those seconds is the platform unavailable, which is a pretty impressive standard to hold to. Last question. I know we’re getting up on time here. But a lot of the hot FinTech companies in the last couple of decades, have moved to or started in San Francisco, Los Angeles, Chicago and New York. But something I think different and commendable is you all stay true to Alpharetta. And so I’d be curious to hear from you. Maybe as a pitch to potential hires who are listening to the podcast. What’s the Atlanta and Alpharetta Tech scene like other than having great barbecue?
Drew Edwards
We’re technically a financial technology company but we’re a payments company and Alpharetta is the payments capital of the world. So this is the Silicon Valley of payments. Last time I saw the propaganda the HTPC the 60% of all payments flow through Alpharetta, Georgia you gotta remember first data’s here, and finances here five serves here they’re not all headquartered here, but that’s where the core was Atlanta for summary global payments was here. Paul Garcia is a shareholder man, the whole space is here in Atlanta. So we draw on the payments talent and they’re literally down the road from us. Georgia Tech’s and awesome school there’s a lot of talent here and with work they don’t none of them want to draft Alpharetta. They want to be down in Midtown where Rob and Katherine and cabbage were right but now they don’t care because it’s it’s remote work. So without a doubt, Atlanta for whatever reason, is this an awesome place to live and one of the top number three I think in the country in Fortune 500 headquarters and but it has not had a good venture capital scene and has not had I’ve never raised really any institutional money in Atlanta.
There’s, there’s now money in Atlanta, but it’s it’s foreign firms from other states coming in and setting up right. But the city and the workforce think we’re at seven or 8 million people and if you can just if the traffic’s horrible and the climate is mild four seasons with an unbearable June and July and August, right gonna be 103 this week with a 98% humidity, right. But most of the year, I get off planes in Minneapolis and out of places and I in the summer in the winter, and I go oh my god, why do people live up here? Right? They get off the plane to Atlanta and they go what is wrong with you? All right. We’re like it’s better than Houston. of at least we’re not in a swamp. We actually have employees in Silicon Valley. I’m paying taxes in 17 states, but we don’t have any trouble finding talent in this city. It’s a great environment for payments companies, especially because I can almost always hire somebody that came from the payments industry. Here. Maybe not AI GI bill you know they’re all coming out of Stanford I guess over there but the beauty of work from home as I can hire him, cost of living here is a whole lot less than San Francisco.
Nik Milanovic
You may not have heard it here first, but you heard it here the latest Atlanta payments capital of the world. Ingo payments is hiring. So go look them up online, at Ingo Payments. Drew, thank you so much for stopping by and talking with us today. We really appreciate having you on the show. Thanks.
Drew Edwards 50:23
I look forward to following your your work as you go forward.
