13 fintech service providers that startups are flocking to as they look to cut costs

Alloy, backed by investors like Bessemer Venture Partners and Lightspeed Venture Partners, bills itself as an identity-verification company. It provides other fintechs like Brex, Petal, Ramp, and Gemini the ability to verify customer identity so they don't run afoul of know-your-customer and anti-money-laundering laws.

The company connects to data providers to verify someone's identity, banking relationships, and other information to help banks and other financial providers automate decision-making around extending financial products to customers.

Laura Spiekerman, its cofounder and chief revenue officer, said the downturn gave Alloy more opportunities and that it had received more inquiries from fintech companies.

"Marketing budgets of neobanks are going to come down, and they will need to focus on customer conversion, and that is a good opportunity for us," Spiekerman said. "Fraud also goes up during recessions or slowdowns, so it's a pretty big area for us."

Despite investors being wary of startups offering alternative financing to other companies, the segment continues to grow as startups want other options for capital. One such provider is Capchase, which raised $400 million in debt financing in July.

It provides software-as-a-service companies with short-term financing that the startups can pay back using a portion of their revenues.

Capchase's cofounder and CEO, Miguel Fernandez, said the company had seen tremendous growth in the past few years and that this year had seen an influx of startups asking about its offerings.

Fernandez, who founded the company in 2019, said the difficulty had been in fielding inquiries from SaaS companies that do not fit its predictable revenue requirements.

"We've seen application increases month to month by 50%, which is insane," Fernandez said. "July has been the biggest month by far in terms of demand."

Chargebee helps manage billing and customer-acquisition costs for subscription-based companies. 

The company, which is valued at $3.5 billion, helps track billing and pricing. It even figures out multiple payment methods for its customers.

Chargebee recently released products to help meet demand. These include a product that helps clients retain customers, a cash-flow-management system, and another that lets companies find the best way to upsell existing customers.

Gusto provides cloud-based services to help companies manage payroll, benefits, onboarding, and other human-resource functions. 

Backed by investors such as General Catalyst, Franklin Templeton, Fidelity, and T. Rowe Price, Gusto has grown to support more than 200,000 companies, according to the company. The company said it had grown "throughout the pandemic and over the last six months."

HighRadius offers cloud-based cash-management and treasury-system software for the financial officers of organizations.

Its platform uses data, robotic process automation, and natural language processing. It counts 3M, Unilever, and Hershey's as customers.

HighRadius has attracted investors like Citi Ventures, Tiger Global, and Iconiq. The global head of Citi Ventures, Arvind Purushotham, even said HighRadius "is a core component" of Citi's work in treasury-management systems.

The card-issuance company Lithic helps digital banks and other financial-services providers launch their own credit or savings cards.

Lithic allows financial institutions to choose which features they want to offer and smooths the path to bring cards out to consumers. The company partners with banks and creates the needed architecture for users to immediately use the cards physically or virtually.

Despite being in a "boring" business, Bo Jiang, a cofounder, said there was renewed interest in its services from both new banks and companies looking to scale.

"We're continuing to see a mix of companies that are new and those who are scaling," Jiang, also the CEO, said. "I think people are seeing the benefits of our modular technology, and our customers are still focused on growing their businesses."

The Israeli human-resources-management platform Papaya Global manages employee onboarding, payroll, and other human-resources programs. 

The company expects revenue to grow by three times for the third year.

Eynat Guez, a cofounder and its CEO, said the company expanded its sales team to meet the increase in customer inquiries. At the same time, Papaya plans to add features for its customers. 

"More integrations are soon approaching, as we show that Papaya Global is a critical part of the payroll tech stack to unify all the finance tools for the organization," she said.

Pinwheel, which raised $50 million in January, helps ensure lenders get the best information on their customers before extending a line of credit. 

The company shares payroll data with lenders and other fintechs to help consumers with little or no credit get loans. Pinwheel lets lenders see data they normally don't have access to, which lets them tailor financial products to their customers. 

Pinwheel's Series B round was led by GGV Capital and included investments from other backers like Coatue, First Round Capital, and Upfront Ventures.

Many companies have opted to outsource their billing to service providers like Recurly. 

Recurly manages what CEO Dan Burkhart calls "the clockwork" of billing — when trial subscriptions end or it's time for customers to renew. The company also provides data on customer loyalty so services can best market add-ons or discount offers. 

Burkhart, also a cofounder, told Insider the company saw customer growth both during the start of the pandemic and recently, as businesses want to move away from managing their billing to rationalize costs.

"When COVID started, there was an increase in subscriptions, and then there were a lot of these box-of-the-month services," Burkhart said. "But now, we're headed in a different cycle, and we're seeing many companies approach us saying they were managing their billing, but now they want to outsource and move their employees back to their core business."

Synctera makes it easier for fintech startups to launch their businesses. The company offers a platform with onboarding, verification of customers' identities, and customer and transaction data. The startup also connects community banks with fintech startups to partner to provide more financial products. 

It recently released its end-to-end banking and compliance platform, which will help customers navigate regulatory requirements like anti-money-laundering rules and the Bank Secrecy Act and manage customer disputes and fraud.

Tipalti helps companies manage their transactions by automating many of their payments.

The company, valued at $8.3 billion, raised $270 million in December from investors such as Zeev Ventures and Durable Capital Partners.

Tipalti launched updates to its automation platform that allow users to chat with each other about a bill to resolve issues faster.

Truework partners with payroll companies and data providers to help verify a loan applicant's income and employment. This information is then sent to loan companies.

It just raised $50 million in Series C funding from investors including Sequoia Capital, Khosla Ventures, and Human Capital.

Truework already has more than 17,000 lenders on its platform, including Fairway Independent Mortgage, Caliber, Guaranteed Rate, Citizens Bank, and LoanDepot. Sandler, Truework's CEO, said the company — which focuses on mortgage loans — decided to extend its income verification from mortgage to consumer lending last year. The company now verifies income and employment information for Carvana, Octane, and Figure.

Workplace benefits continue to be an area small and large businesses want to make more efficient. Vestwell, a company that helps set up 401(k) and other savings programs, recently raised $70 million from investors like Wells Fargo Strategic Capital, Goldman Sachs, and Morgan Stanley.

As the company grew, Vestwell CEO Aaron Schumm told Insider the company expanded its offerings beyond 401(k)s and individual retirement accounts. It's working with several states to provide services for 529 College Savings accounts and ABLE accounts, which are savings plans for people living with disabilities.