FinTech Profile: Brex, the credit card for startups
[image: Pedro Franceschi and Henrique Dubugra...
FinTech looks at a company that has achieved a US$2.6bn valuation in just two years: Brex.
[image: Pedro Franceschi and Henrique Dubugras]
Brex was founded in 2017 by Pedro Franceschi and Henrique Dubugras who both moved to Silicon Valley in order to create the service for entrepreneurs. In 2018, Brex launched its first corporate card for startups, following a $57mn round of funding and soon introduced its rewards program, as well as announcing partnership with TravelBank that would allow Brex's users to book travel directly through its platform. In 2019, the fintech launched a corporate card for e-commerce companies, as well as announcing a number of new partnerships including one with Clear Channel, which enables it to offer discounted advertising.
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What are the benefits?
Brex is designed to assist with inventory, shipping and advertising costs. Users are allowed to have the first 60 days credit-free, allowing for free cash flow that can give startups the freedom to build.
In recent months, Brex has announced the creation of Brex Cash, a bank account replacement for businesses. With the use of this account, customers can earn a return of 1.6% or more on cash balances, which is currently the highest rate in the marketplace.
“Even before customers think about credit cards, they need a place to store their business capital. Brex Cash delivers just that - with an unmatched combination of ease of use, superior rewards, no fees and higher returns,” said Dubugras.
Did you know?
Brex is not the first joint business venture between the two founders. Franceschi and Dubugra had previously built the financial startup Pagar.me.
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CMA warns UK and Irish banks over bank transaction histories
Specifically, the CMA named prominent challenger bank Monzo, the Bank of Ireland, NatWest Group, and Virgin Money as not providing customers with records of their bank transactions within the maximum outlined timescale (40 days after closing the account).
Such information is crucial not only for ensuring a smooth transition from one bank to another, but also to provide a foundation for credit applications in the future.
According to the Retail Banking Market Investigation Order 2017, 95% of bank and building society customers should receive their bank transaction histories in at least 10 days.
Reputation: A bank’s greatest asset?
Of the 150,000 customers affected, Monzo was by far the main contributor - 143,000 (95.3%) - with the other three dividing the remaining 7,000.
The extent to which the magnitude of its mistake is attributable to being a digital-only bank is not clear, although it may give some customers pause for thought. With a superior customer experience being among the bank’s greatest assets, continued reputational damage is something that it cannot afford to sustain.
Although the CMA’s action in this instance has been to issue each bank a warning and order the immediate dispatch of all outstanding information, it has warned that future breaches will carry heavier consequences. Measures could include legally enforceable compliance audits on a yearly basis.
Helping customers get a better deal
Condemning the banks for negligence that could negatively impact customers’ desires to take out loans or mortgages, Adam Land, CMA Senior Director of Remedies Business and Financial Analysis, promised that his organisation would remain vigilant to similar behaviour moving forward.
“Banks must comply with all the rules – that includes providing a full transaction history promptly.
“We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again. The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.
Image source: gov.uk