Fintech
Fintech Torpago has a unique way to compete with Brex and Ramp: turning banks into customers
Fintechs often give banks a run for their money, pun intended, when it comes to using technology to improve the customer experience.
Torpagoprovider of commercial credit card and expense management services, is no different, but with one caveat: Banks are the people it builds technology for, especially community banks.
True, Torpago is often grouped with companies like Brex, Mercury and Ramp, which according to Torpago founder and CEO Brent Jackson are high-profile card and expense management platforms that have “done some amazing work.” However, they continue to do so battle for the same corporate client, He added. Jackson believes Torpago’s competitors are more like Fiserv and Finastra, both of which offer software to community banks.
“We started as competitors with Brex and Ramp, as well as American Express and Capital One,” Jackson told TechCrunch. “It also allowed us to build a great product, but we quickly realized that this wasn’t the market we wanted to go to.”
That’s when the company launched its Torpago Powered By product in 2023, which incorporates everything the company has built for small businesses, but instead of selling it directly, it’s aimed at regional and community banks, with less than $20 billion in assets, to launch its own brand cards and spend management programs.
Torpago Powered By tools and infrastructure enable bank customers to not have to abandon the bank’s brand domain to gain sophisticated fintech capabilities. The bank obtains fully branded software from Torpago that integrates with over 200 accounting systems. It can issue real-time virtual cards or physical cards. And it has a dashboard to manage all things related to both products.
For Jackson, this strategy places Torpago as a partner and not as a competitor of the banks. The banks have all the customers, and they have all the card volume, but “they have the absolute worst credit card tools and technology,” she said.
“We’re actually providing them with an experience that they can be proud to promote and that they can use to increase commission revenue, help retain deposits and just get a better customer experience,” Jackson said. “Additionally, access to data is also huge.”
Torpago says one advantage for banks over its competitors is the way Torpago shares data. “That’s one of the biggest things we kept hearing from all the banks that work with other vendors: It was difficult to get reports and get detailed information about their customers and how they were spending.”
Torpago admin panel (image credit: Torpago)Image credits: Torpago /
Torpago initially secured 2,000 small businesses as customers. Since switching to banks as clients, the number has been whittled down to 300 companies while pursuing banks’ clients. Torpago currently works with three banks and six more will be integrated in the next two quarters.
Its new market also helped the company secure $10 million in new Series B funding at a $55 million valuation, Jackson said. The round was co-led by Priority Tech Ventures, a division of Priority Technology Holdings, Inc., and EJF Ventures, with participation from BankTech Ventures and other existing investors. With the new investment, the company has raised approximately $18 million in equity funding, which includes a $6 million Series A in 2023.
Growth has also been solid over the past year, Jackson said. The company more than doubled its revenue after the Series A raise. Its revenue is generated from interchange fees. It also tracks total payment volume, which has also more than doubled compared to Serie A, he said.
Over the past year, Torpago has been rebuilding its infrastructure behind the scenes so it can satisfy the banks. The Series B will now allow the company to strengthen its implementation and compliance resources as it adds to its product suite.
Much of this will be done through artificial intelligence across broad language models meant to help with underwriting, credit notes and risk scores, Jackson said. The company also plans to pursue legacy products, such as Concur, with an AI-powered travel booking engine so cardholders can book corporate travel via Torpago’s AI chatbot. That product is available for the next quarter, he said she.
Meanwhile, Carey Ransom, managing director of BankTech Ventures, which led the Series A round, told TechCrunch that BankTech and EJF are more like strategic investors. Both have banks in their ecosystem that they will work with Torpago on introductions.
“We know this is not the type of market where there will be just one winner,” Ransom said. “This is a huge market that needs significant upgrading at all levels and our banks have both the need and the opportunity to significantly upgrade their commercial card and expense management capabilities. This is where Torpago is as capable as anyone else out there with a desire to be different. Collaborating with and through banks is a great way to differentiate their approach.”