Exclusive: Neobank Current Raises $80M Series E

Stuart Sop: M foreign.

Jason Mikula: Welcome back to Fintech Business Weekly. In this episode, I had the exclusive chance to chat with Stuart Sop and Trevor Marshall, CEO and CTO of NeoBank Current, about their $80 million Series E fundraise announced earlier today, Thursday, June 11, Stu and Trevor shared a bit about how Current has evolved in the past several years. Current's expanded product lineup and posting 70% growth for three years in a row. A reminder, if you're enjoying these podcasts, please take a minute to follow, rate and review as it really helps others to find the show. And if you want to support FinTech Business Weekly, please consider upgrading to a paid subscription or get in front of 92,000 loyal listeners by sponsoring an episode with that. Here's the show. Welcome back to Fintech Business Weekly. Today I'm chatting with Stuart Sop and Trevor Marshall, the co founders and CEO and CTO of Curt Current. Guys, welcome. You have some big news, so I will not steal your thunder. If you want to, uh, go ahead and give us the outlines of what you're announcing or what you've announced today.

Stuart Sop: That's great. Well, thanks for, for having us, Jason. So we're excited to share that we've raised our series E, um, $80 million at 1.5 billion. And it's being led by Spring Coast, a US new, um, York based investment, uh, firm who will also join the board on Observers. So we're excited to be partnering with them. Um, and so it's obviously a big day for us.

Trevor Marshall: Yeah, incredible day for New York too. Coming off the game four win.

Stuart Sop: Yes, that's right.

Jason Mikula: I, I really need to hone my sports small talk. One of my favorite geopolitical podcasts. The first four minutes are always like sports related and I just like, fast forward past it. Don't know what that says about me. Um, so, absolutely. Big news for New York, big news, uh, for Current, and big news for fintech. The last large equity raise you guys did was in April 2021, although there was a subsequent expanded debt facility with some equity in 2024. I don't think I need to tell you that a lot has changed in fintech in the past five or so years, as well as tech in general and in the world. Uh, starting with you, Stu. Can you talk a little bit about Current's journey in the past five or so years? I mean, the marketplace has evolved a lot. We've seen players go public, we've seen M and A activity. Um, what have you been focused on and what has changed and what has stayed the Same.

Stuart Sop: Yeah. How long do you have? Five years is a ah, lifetime. So a lot has changed and I think you've hit upon some of the really salient points. Um fintech, I think at the high level, fintech's promise into you know um, from the 2015 to sort of 2021 peak fintech highs, lofty valuations is still there. I think that's really important. The promise is still there. We're still building uh, affordable banking things that people need, everyday Americans really need especially uh, in this sort of macro climate. Um but we have seen some of our competition go away. I um, think what we've seen is uh, those that have product market fit have done quite well and have doubled down on that. Some have gone public, some already uh de spacked and sort of went down and then back up. I think you're sort of seeing this wheat ah and chaff um, uh sorting that has happened over the last five years. Not everyone can make it and I think you know where we put current especially with this raise is one of the, obviously one of the winners. I think it wouldn't be um, it wouldn't be a podcast and something relevant on macro if we didn't go into the AI side of things. And of course that has been a dominant feature um, not just internally but also externally. And so raising, when you have um, raising money in this, if you, if you're not throwing AI into space it's extremely hard uh to try and cut through that noise and get people excited about you know problems that people are dealing with today. Um and so I think we've done a great job improving that with our metrics and our product market fit. So I think you know if you're a company that has uh, really focused like current um, you've got real value that you're delivering. It's exceptional growth, run rate, arpu, ah and product attachment. It is possible but it's really hard out there I think. And so um, FinTech's promise is still there. Is, is my, is my TLDR.

Jason Mikula: Yeah, absolutely.

Stuart Sop: I m mean I'm sorry.

Jason Mikula: No, please go ahead.

Trevor Marshall: I was going to say. No, I was going to say just a lot in that, that period in the last five years was sort of coming to the understanding that it had to be product led growth. That was the only um gap that would exist to be able to create that separation. And that's something that you know from um, the launch of our build card in 2023 and Paych 2024 and you know our subscription last Year and a lot of other payments features sort of behind the scenes and in front of customers. Um that's been the thing that's allowed us to get uh, you know marketing paybacks really dialed in because we have really strong product value.

Jason Mikula: Yeah I mean we've seen you know through multiple years, multiple cycles of fintech hype and then sort of fintech reality like yeah, you can always grow count of users. You can grow top line revenue by shoveling marketing dollars out the door which I mean you know that's what I did at various places uh in the lending world. Um but there's a difference between spending VC dollars to acquire users and actually building a sustainable and profitable business. Uh Current has made a lot of progress on the fundamentals so ah, third consecutive year of 70% plus growth. Trevor you mentioned uh some of the products as the company has expand suite of what it offers consumers so credit building the billed card, paycheck advance uh and the subscription offering current max. Uh actually starting with you Trevor, can you talk a little bit about what it actually takes to execute on developing and offering those products from a technology perspective and then Stu, I'd love to hear you sort of supplement that with sort of the business side.

Trevor Marshall: Yeah, from a technology side I think we made a very early commitment. From day one of our product offerings we've been operating on our own core. Um and that requires a lot um, when you're coming from scratch basically and starting to build up towards a fully connected system. Um and really where our edge comes into the market. We've been doing this, we've had our banking products live um for nine years now. Um and we've learned a lot along the way. But the biggest edge you end up getting from that is your ability to launch differentiated products A fully connected way. You're not sort of tacking on and, and sort of inheriting assumptions of certain products. Like you know many times you might go through certain banking flows. Maybe some of the top 10 banks where you're, you're really like reapplying for existing features. Um, that is like hey don't you have my data? Um but then I think more importantly how it actually once you're sort of fully spun up with those features, um, how they're all connected together. Um so for example the way that we constructed our build card led to really um, like a new category of dynamically ah secured charge cards. Um which there's been you know some followers in the market now but we really paved the way for that. A lot of that is Just from the fundamentals, which is how do you think about the platform on which you're building these products and making sure that everything's sort of airlocked together to be cohesive?

Stuart Sop: Yeah, from a strategic point of view it's just myopic focus on the customer needs. Um, and we've been really consistent about that over the years and you know, Trevor and the product teams have managed to execute against, you know, that focus. Um, I would say also, uh, data uh, has been extremely important for us. We've really upskilled internally about how we uh, categorize our uh, data governance, our model governance and all those exciting things, especially with machine learning and AI, uh, tools that have come out, um, that have really accelerated our ability to execute. And so you'll see like snippets of that with our competitors. No one really wants to give the game away but like things are really um, speeding up for the fintech, um, uh, sector. I think if you've got, if you've got the sort of bull by the horns, you're really able to grow very fast in a very profitable way now.

Jason Mikula: Well, I mean speaking of speeding up, you know, we've already made multiple references to AI and sort of the, the narrative hype cycle in AI feels uh, like speed running crypto or stablecoins or fintech in that it is just so condensed where you go from, you know it's going to change everything to token maxing to uh, oh no, allegedly somebody spent $500 million on accident, which I find a little bit difficult to believe, but I guess maybe, um, but I mean you guys are actually running an operating business that it's not an AI business but like any business, it's a business where you can apply AI. So I mean Stu, what if any role has AI played in how current business has developed in the last couple of years? And can you try to sort of parse and like separate the hype from the reality?

Stuart Sop: Yeah, yeah. Incentives, uh, uh, breed outcomes. Right. And you'll see that time and time again. I think the reality, um, is somewhere in between. Obviously we're in this hype cycle where it can do everything. And when something can do everything, just much like the Internet.com boom of 99, 2000, your DCF math, your PV math means uh, that you can pay any amount of money for the potential outcome. And so when reality hits, obviously the truth is somewhere in between. And so when it comes to AI for us, I think strategically business intelligence, um, I think is going to be a real lift and What I mean by that is the ability to connect all products, all departments, um, or your KPIs, your, your caps, your, you know, all the things that are maybe detracting from the business as well as like um, you know, leaning the business forward. You're able to then uh, tie that to forecasting and modeling in a very healthy way that you can then basically ship products, uh, fixes and new product lines extremely quickly. And so that is a force multiplier for the company in, in a way that I don't think is particularly being talked about like very publicly at this point. So um, strategically I'll leave it to Trevor for the more, more uh, technical side of things.

Trevor Marshall: Yeah, I mean we, we kind of look at it into two broad buckets. Um, there is the internal productivity and we've already seen those lifts and we're investing in those lifts. And that's everything from how we design like our software development life cycle to incorporate um, AI sort of stitched throughout to help um, produce pull requests and changes a lot faster, um, and with higher confidence and things like that. But it's also being applied to quite a lot of our back office operations. You know there's a tremendous amount, I think Fintech is what makes it interesting is that there's a tremendous amount of exception handling because there's just so many ways that money can interact within the world. Um, and you have to kind of, you know, you have a lot of responsibilities in the position that we do to serve it. And that creates like a lot of room for just improvements in how you work through those exceptions. And there's you know, that comes up in sort of the way we do customer servicing, the way we process disputes, the way that we do sort of, you know, investigations and things like that. Um, and we have people here very much enabling themselves, um, you know, with, with those types of tools. And then there's the product side and we're really, actually that's the part that we're just starting to launch out. You know, in customer, uh, facing feature features you'll see some things coming through on the current side that is far more personalized. Right. We can look at, you know, for example a transaction, really understand a lot more about it. Once we have connected all the data, previous transaction history and sort of share that with the customer. Um, and you'll see a lot of things like that that ultimately result in a more personalized and more effective experience, um, based on that personalization.

Jason Mikula: So Treffer, a quick follow up on the internal side. Um, and this is Just selfishly, a question I want to ask because I see so much of this narrative playing out on, like in the media or on Twitter, and I don't necessarily always have a chance to ask technologists these kinds of questions like how do you think about the return on investment? Or I guess the new cringe phrase is return on tokens. Of using. Yeah. Of using AI within, within the organization.

Trevor Marshall: Yeah, the rot. I mean the easiest way to look at it, the art. Yeah, easiest way to look at it is as a time accelerator. And I think that's where it can also create a lot of issues. So if, for example, you are not putting the right guardrails in place, um, you know, we, we, our cfo, you know, even said yesterday you put brakes on a car so that you can go faster. I think that's actually a really important, um, concept. And so if you don't have the right guardrails in place, you can spend way more time reviewing the issues that you've just created by not applying sufficient, you know, thinking ahead of, you know, making a change for examp. But if you do get that right, you will see a collapsing of the amount of time that you would usually expect. Like, there's a, there's sort of a, in the engineering, broader engineering community that, that, that I'm connected to, there's a lot of discussion of, you know, a lot of engineering management roles traditionally have been like, hey, how do I cost something? How do I understand like how long something is going to take to complete? And that's really changed a lot, um, recently because a lot of the things that used to take a lot of time, take less time. And then a lot of the things that were more sort of like intuitive or understood in terms of like architecture, you kind, what you need to do can actually take longer, um, because it's not being applied sort of in the right order. Um, and so, yeah, what we, you know, concrete examples. We have, for example, um, some optimizations where we're able to predict if someone's going to convert into becoming a payroller. So putting their paycheck onto current. We do model iterations of that. It's a machine learning model. We were able to take the last iteration, which took a few months because you're, you're doing a lot of exploration, a lot of sort of training analysis and compress that into about 10 days. So that's like a very real, you know, 80 to 90% time improvement. And if it's done correctly, you know, you're getting good output. The big danger is you, you get that time improvement. It's worse, you end up having to go back, you're spending more time. So it's really, it's really just being very um, well grounded in what the outcome is and how to assess if something is good.

Stuart Sop: It's a really, really big force multiplier for the data science and data engineering teams. I think more specifically where Trevor was going, if I was to be uh, conspirator, um, you know, all these uh, all these LLMs, these AI companies, Frontier models are all going public and so um, of course they're pushing, you should be burning tokens as fast as possible. And I think having a slightly more sane approach, trying to work out what the real return is, is, is what we're doing here. And we're not just sort of spending tokens just to, just to spend tokens.

Trevor Marshall: Yeah, we put that, we, yeah we put that cost discipline in place right up front which is basically like we have really tight controls on our infrastructure costs. We've rolled that fully into that control process.

Jason Mikula: Yeah, I was going to say it's like any, any vendor or any, any cost center in a business. Like you have to have that cost discipline. Right. I mean to go back to the marketing analogy, it's like uh, even in, in brand marketing world you typically can't just shovel, you know, millions of dollars out the door and not have some KP to understand and assess what impact is this actually having on my business, on revenue, on you know, profitability. So it sounds like you've had that discipline from day, day one based on least the stories floating around the business press. It does not sound like everyone has taken that approach.

Stuart Sop: Absolutely.

Jason Mikula: Uh, as part of the fundraise announcement, Current also revealed you're expanding your financing relationship with uh, your bank partner, Cross River. Stu, can you share some of the specifics there and what it means for both current business as well as current customers?

Stuart Sop: Absolutely. CRBR have been a great partner, are a great partner and we're doubling down on that relationship. Um, we're expanding our warehouse lines which helps our uh, liquidity product as well as our build product. So this is really enabling the growth. You know we're seeing 70 plus growth uh, for our third year and we want to continue that. And so uh, it's ah, an absolutely invaluable uh, relationship with our partner banks. So having them aligned and so helpful has been great. Um, and so, and I would also say GC have also been extremely helpful as well. That's General Catalyst Customer Value Fund. Um, we're also like, there's other things we're working on, uh, with Cross river, um, moving uh, more of our products and things to them and so uh, excited to be doubling down on this partnership with them.

Jason Mikula: Trevor, anything to add from like a tech perspective on what that relationship with Cross river has enabled you to do or what it might look like going forward?

Trevor Marshall: Yeah, I think like the, the key thing with us is that we have such an expansive relationship where we're connected in so many different ways. And I think as a sort of, as an enterprise platform, they've really given us what we need to be able to deliver these products. And I think that's been super exciting.

Jason Mikula: So something I've been keeping a keen eye on as an American who no longer lives in the United States, uh, is the renewed interest in foreign fintechs, foreign consumer banking startups, uh, that have entered or are planning to enter the US So I mean Revolut has been in market for some time through a bank partner or through I guess multiple bank partner relationships. Uh, and now we have nubank and Bunk, uh, the Dutch Neobank that I actually use as a customer here in the Netherlands, um, going through the process of applying for OCC national bank charters. So their approach would necessarily be a little bit different than Currents, given that they presumably, it looks like, are likely to be approved for those charters. I guess. Starting with you, Stu. How do you think about the potential competitive threat posed by foreign fintechs that have entered or are planning to enter the US Market? And what differentiates Current from its domestic competitors and these foreign consumer fintechs that are looking to enter the US Market?

Stuart Sop: Yeah, we're sort of used to this. Uh, it's a great question. We're sort of used to uh, the foreign uh, fintechs coming here in waves. It's happened over the last 10 or 15 years, uh, with varying degrees of success, I should say. I think they're all gaining charters because they can. Under this White House administration, it's much easier to attain those charters. Um, that could be a solution with a problem to find in my view. Um, when you think about, um, it's an extremely, uh, well banked country, uh, especially if you have a bank, which means necessarily you need deposits and you need to then have capital ratios and lend out under certain percentages and all this other stuff. And so really it becomes a regulatory framework and box which uh, really makes it very competitive. When you talk about current, I mean we are banking people who don't fit the business model of banking. Um, they look far more like payments customers even in aggregate they don't have a ton of deposits. And that's why we're able to thrive and grow in this market in the US is because we're fundamentally picking off um, a whole sector uh, of the US consumer that the banks can't really service effectively. So um, we don't see a ton of competition especially from the people that are going after the charters at this point. Um, and of course things may change on our focus and roadmap over the years as well. So um, but you know we welcome them, we you know and uh, wish them all the best. They're, they're very high quality fintechs coming here but we don't see a ton of competition from them at this point.

Jason Mikula: Trevor, anything to add from your perspective?

Trevor Marshall: Yeah, I think Stu kind of covered the, the full gamut there. I think what's, what's interesting just from a technology perspective is that we see the success of like the revoluts and new banks and they took a very similar approach. And I think we've actually been quite inspired by the way that um, they've approached the problem which is like product led growth, put the customer first, focus on data. I think we've had a tremendous amount of time to get those learnings in and we've had the right technical strategy um, in the US to be able to execute on that.

Jason Mikula: Stu, I tend to agree with you particularly when it comes to the examples we're discussing. Nubank has built a phenomenal business but the wedge they had in Brazil and in Mexico, the two largest economies in Latam, is just a very different game game in the U.S. where to your point they're going to be competing for users, for customers that are largely already well banked and have a lot of options available. And I mean I did say I'm a customer of Bunk here in the Netherlands, but also the European market is just structurally very different in multiple ways versus the US market, at least in Netherlands. People have heard me say this a million times, so my apologies. People don't really use consumer credit the way that Americans use consumer credit. So Bunk as a company, as a bank, and it is a chartered bank here in the Netherlands, has zero track record doing credit or doing lending. So that's sort of a cold start for them in the US market. And interchange isn't really a thing in particularly in the Netherlands, but in much of Europe because debits capped at 20 bips, credits capped at 30 bps, so just sort of fundamentally different. Markets. I'll be very curious to see how these, you know, the latest wave of uh, foreign companies, you know, to what extent they're successful or not successful. But time will tell. Um, there have been a lot of news and political trends that have been top of mind lately. This is not a news and politics show. Ah, thankfully. Um, but sort of the narrative of the K shaped economy and of course, uh, affordability. Um, Stu, can you talk a little bit about what you're seeing in the data as far as how current customers are faring in today's economy? And obviously there are limits. You know, no bank, no fintech can magically wave a wand and solve the very real problems that American households are facing. But there is room to improve the products and services and you know, provide um, tools that consumers can use to sort of better manage a very, what is a very difficult time in the economy for a lot of households. So I'm wondering if you can expand a little bit on you know, what fintech's like Current can do to provide tools, products and services to households that may be finding themselves struggling in today's economy.

Stuart Sop: Yeah, absolutely. I think at uh, the high level the US economy is very resilient and I think it always surprises everyone, especially globally about how resilient it can be. Um, this K shape economy came out, this sort of narrative came out sometime in the summer last year. Um, um, we don't think it's playing out in the same way as the market is commentating on it. I know they're using various lenses to look at the economy. M. We see a healthy adoption on the other side, we do see a healthy adoption of our products. And I think that fintechs like Current are blunting maybe some of the pain we're seeing from increased gas prices, rent, food, some of the staples that everyday Americans need. And we have products that are addressing these things. And so maybe um, we're already, and obviously liquidity that helps in these things. So maybe companies uh, like Current that are growing really fast are just, just blunting some of this pain, uh, that we're seeing. But the case of account, we don't see the same kind of stresses that we see in the market commentary. Um, and so um, I think when it comes to going down in the future roadmap, do you know we don't see inflation really backing off from this point, um, given the dynamics, at least in the sort of medium term, short medium term. And so more traditional credit products is something that we're focused on, especially with this fundraise enables us to be on the front foot, to really develop up around the paycheck, um, on those products. And I think at a high level, again, I think the TAM for affordable banking and our product suite is just increasing every, every month, every year. And so that's enabling our growth. And you're seeing us being sort of pulled into this high growth, uh, category. Um, and yeah, I think that's, that's generally where how I see it.

Trevor Marshall: Yeah, I think, um, Covid had sort of like this mental shift for a lot of people of comfort with digital financial services that was like, you know, prior to that there was often like, hey, I need some place I can, you know, walk into, for example. But you know, with that, which is like a massive like cultural shift, uh, within the US that has enabled like a lot of businesses like ours to really expand. Now you're seeing. Okay, well, now that the need is potentially increasing, there are good solutions and you don't have to overcome an additional hurdle, um, that was there, you know, six years ago, seven years ago.

Jason Mikula: Absolutely. So I know that we are running out of time, uh, but I do have to ask. The fundraising announcement, uh, also mentions quote, building the operational scale, governance and financial profile expected of a public company. Um, not so subtle hint of a possible ipo. It sounds like, Stu, I'm sure you're limited in what you're able to share, but, uh, is there, is there an IPO on the horizon?

Stuart Sop: It's not so subtle, is it?

Trevor Marshall: So,

Stuart Sop: uh, look, with this raise with profitability, uh, um, ebitda, net income over the next couple of months, we're um, really excited about where the company is, all the metrics that we've managed, unit economics and metrics that, you know, we have as a company. And so it really shifts our focus, um, to public company readiness. And so you want to be ready for when the right time is and we are ready internally m to really get there. Obviously IPOs are dominated right now from these sort of mega caps. Trillion dollars, trillions of dollars, um, like SpaceX tomorrow for example, and all the frontier model guys that we've, we've previously mentioned on this, on this chat. But I still think there is demand in America for high growth companies that are solving real problems for everyday Americans today. And there's not a lot of good options for that. And I think you've seen a couple of public market competitors doing quite well. Some maybe not so well, but like high growth, solving real everyday problems. I think the public market is also ready for that. And so we are internally aligning ourselves for the right time.

Jason Mikula: All right, thank you so much, both of you, for taking the time on a very exciting day. Congratulations, and I hope to see you sometime soon in New York.

Stuart Sop: Thank you.

Trevor Marshall: Jason.

Stuart Sop: It's great to see you.

Jason Mikula: Yeah.

Trevor Marshall: Great to see you. Thank you.