In times of crisis, innovation often emerges as the only way to survive. Fintech companies will continue to seek out innovative solutions to make financial services more secure, reliable, convenient, and cost-effective. 

At Cohen Circle, we look to invest in companies that take a smart and disciplined approach to their market opportunity, execute innovative ideas with strong talent—and are on an accelerated path to high-margin profitability. 

Fintech funding in 2022 dropped 46% from 2021, with Q4 of 2022 seeing its lowest quarterly funding amount since 2018. Reduced venture funding puts investors in a favorable position to find deals with better valuations and higher potential long-term returns—if they choose companies that can survive and thrive through uncertainty. 

In this article, we’ll explore the three fintech trends we’re most excited about for both market impact and investor opportunity.  

1. The infrastructure layer will drive financial innovations 

The aging infrastructure of financial services has been ripe for innovation for years. Companies that can evolve the way the infrastructure layer works are positioned for success.  

Insurance, mortgage, real estate, and much of banking and finance still rely on monolithic tech stacks that keep valuable data siloed. Not only is data locked between internal teams, but third-party apps that offer valuable add-on services to customers have a tough time integrating.  

In what is known as ‘open finance’, many companies have already started to create connections between these disparate data silos. These API-first companies are freeing up financial data from legacy systems and enabling many new financial services to emerge.  

We’re most excited about solutions for the financial infrastructure layer that are based on the following tech: 

• APIs that enable a connection layer (like middleware) to connect financial data instantly and safely between separate platforms.  
• Mobile-friendly and cloud-based systems that foster faster collaboration and data sharing.  
• Microservices architecture, which essentially allows for internal APIs that can connect a company’s internal modular tech stacks and help in the effort to evolve from monolithic tech stacks. Containers, Dockers, Kubernetes, and other aspects of microservices architecture enable applications to scale as independent, modular pieces, rather than a whole, of a company's tech stack—enabling more flexible innovation and reducing drag on shipping new products. 
• Modern tools for identity, compliance, risk, and fraud prevention. Identity theft and other compliance issues are a growing concern, as fraudsters now use more advanced tactics to fool financial companies with ‘biometric spoofs’. If they don’t adopt, for example, advanced identity verification solutions they risk falling behind the fraudster's technical capabilities.  

The infrastructure layer itself is mainly a B2B play, as B2B companies are building an API-first layer and selling connectivity-based services to B2C companies. Companies that make financial data seamlessly available to other companies are positioned to do well in 2023 and beyond.  

However, some of the most exciting solutions this emerging infrastructure layer enables are in both B2B and B2C embedded finance.  

2. Embedded finance solutions to continue development in both B2B and B2C markets 

From the new infrastructure layer emerges the new application layer—in the form of embedded finance. Opportunities are presenting themselves in both B2B and B2C markets.  

B2C embedded finance outlook 

Embedded finance refers to financial products and services that are added seamlessly to an existing online product suite. For example, an e-commerce company offering installment loans or insurance during the checkout flow has added embedded finance products to its offering. A credit union integrating an equity trading platform into their online banking tool is another example. These products are an easy choice for consumers because they are available exactly when consumers need them. They’re also an excellent way for companies to add high-value revenue streams. Lastly, these products should enable better and cheaper financial products as the financial partner has lower customer acquisition costs and this can be especially true when the financial products are optimized through a marketplace.  
 

The new infrastructure layer has made offering embedded finance solutions easier, as the financial data needed is now available in seconds. Examples of consumer embedded finance solutions include binding an insurance policy during the purchase of a car or home and Afterpay, branded bank accounts like Shopify Balance for store owners, and branded payment cards like Lyft’s debit card for drivers.  

In the B2C space, embedded finance solutions need to do three things to be successful: 

1. Reduce customer acquisition costs (CAC) by being offered conveniently and timely.  
2. Increase lifetime value (LTV) through cross-selling opportunities. 
3. Seamlessly flow with the native user experience and existing interface—not taking more than 30 seconds to complete.  

Embedded finance solutions maximize a solution’s benefits and can create more value than other options. The Lyft debit card, for example, offers Lyft drivers 7% cashback on fuel, enables them to get paid instantly after every ride, and gives them thousands of fee-free ATMs to choose from. These are perks that they can only get from the Lyft card, which is an effective way an embedded finance tool can increase platform loyalty through exclusive advantages. 

B2B embedded finance outlook 

In the B2B space, embedded finance could be a blessing for financial teams and CFOs at large businesses. These organizations often rely on Excel and various disparate systems for payroll, benefits, and expense management. B2B embedded finance solutions (powered by the new infrastructure layer) offer new tools for cash management, payments, lending, and integration.  

Embedded finance in B2B is still in its nascent stage, and opportunity is starting to emerge. Growth opportunities in this B2B space are going to be faster for fintech’s and newer companies, as they are less likely to have a large and outdated tech stack in place. They have the advantage of not having a large enterprise infrastructure that will have to be ripped and replaced with a newer, faster, and cheaper solution. 

An application can be an embedded loan platform for construction materials or equipment in a web application for managing construction invoices.  

Another area ripe for disruption is B2B payments, which are known to be excruciatingly slow (think net 90 payment terms). A B2B embedded payments platform could create a bank-to-bank connection between buyers and sellers that gets rid of the need for standard purchase orders, invoicing, and accounts payable processes that can take months to complete.  

3. High-end users present an exceptional opportunity in consumer fintech 

A modern infrastructure layer enables not just delivering embedded financial solutions more effectively, but it can also help innovate more personalized financial products and solutions. This is particularly true for high-end consumers who have a more complicated financial life. They stand to benefit from connected financial data and AI-powered insights.  

However, to be successful in consumer fintech requires a 10x better product than alternative options, which is possible with personalization enabled through the infrastructure layer. The three areas we expect to see the most opportunity within the high-end consumer space are wealth management, taxes, and financial planning.  

Wealth management 

Working with all the newly available connected financial data, AI-powered tools can gain visibility into every part of a personal investment portfolio. These tools can then use other parameters such as age, risk tolerance, and number of children to help investors figure out the best options for growth, hedging against catastrophic events, and retirement. For high-end consumers with more complex portfolios, these tools will be essential in providing convenience and peace of mind. They also offer a more cost-effective option than human-managed (and often less successful) portfolios.  

Tax planning 

High-end consumers have more complications with their taxes. Data from multiple sources of income and various investments—along with expenses, deductions, and depreciation—can all be automatically fed via the API infrastructure into tax planning tools. These tools could leverage AI and/or expert insight to help people make the right tax planning choices for their unique needs. Modern technologies are enabling the creation of tools that can handle the complexity of high-end taxes, and we are expecting growth in that space to be fueled by the added convenience and greater savings opportunities this creates.  

Financial planning 

The existing financial planning models for goals like saving for college, buying property, and passing on wealth to children, are mostly one size fits all. They don’t consider unique financial situations. The data made available through the API infrastructure layer can fix that, creating bespoke models for financial planning that include highly personalized recommendations.  

What all these areas have in common is that they access the complete picture of a high-end consumer's complicated financial life and create insights from it. We believe successful solutions will use AI, but they will complement that with human expertise to provide personalized solutions at scale.  

These opportunities are all connected by one thing 

All the most exciting opportunities in fintech are linked through the newly connected infrastructure layer, which is what open finance is about. In an open finance world, all financial data is connected through infrastructure-level APIs. Bank accounts, trading accounts, insurance platforms, and all other financial tools can instantly and safely share data. The opportunity lies in the added convenience and expanded possibilities that this data sharing enables.  

In 2023, we’re most excited about fintech companies that create solutions using this interconnected financial data. We expect them to disrupt the legacy way of doing things and win. 

Welcome to 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going. 

In this installment, we spoke with Sam Bobley, cofounder and CEO of Ocrolus, a document-automation platform that powers the digital lending ecosystem, boosting the efficiency of lenders’ financial data analysis and automating credit decisions across FinTech, mortgage lending, and other banking functions and services. 

Sam started building Ocrolus in his parent’s kitchen when he was 22-years-old. Eight years later, the company has more than 1000 employees globally, across four offices. Along the way, Sam authored a patent application and surrounded himself with a world-class team of coworkers, investors, and advisors. Sam is passionate about fintech, entrepreneurship, and NBA statistics. He was named to Forbes 30 Under 30 in Finance, Class of 2020.

1. Where did the idea for creating a document automation company come from?

Believe it or not, the original use case for Ocrolus was Medicaid application processing. When someone applies for long-term care coverage via Medicaid, they’re required to submit 60 months’ worth of financials to the government for an eligibility assessment. We were shocked to learn that machines are unable to read financial documents with a high degree of accuracy.  

The Google Books initiative digitized over 30 million books, menus, and magazines but ran into poor image quality. They snipped the words, put them into Captcha-style tasks, and convinced their users to help them correct illegible data fields. We took that insight and applied it to financial documents with Ocrolus; we used it as a component of our engine. It’s a counterintuitive concept for a software company. Our plan was to hire a bunch of people to do this verification, and because we addressed the human piece head on, it gave us a competitive advantage and catapulted us to be a category leader.  

2. How have you overcome challenges as you lead the company along its growth trajectory? 

We made a pivot to small business lending when we recognized the massive potential for Ocrolus to increase underwriting efficiency. Pivoting from the original Medicaid use case into lending was a risky decision that turned out to be extremely beneficial for the company. We did a great job of partnering with and listening to our early customers in small business lending, in an effort to evolve our product. Over time we were able to develop fraud detection capabilities and industry-specific analytics that enabled a fantastic product-market fit for Ocrolus. 

We continue to overcome new challenges through tight relationships with our customers. We have regular meetings with our Customer Advisory Board to ensure we stay well informed of market trends and needs. Letting customers lead the way is a great formula for success! 

3. How did the COVID pandemic impact your business?

When the pandemic hit, our core customer base of small business lending was paused overnight as businesses shut down. We pivoted to build infrastructure for PPP (Paycheck Protection Program) loans, helping the local pizza store, florist, and nail salon to get access to PPP capital in an efficient way. We had to adjust our roadmap, because that isn’t the recurring revenue that investors get excited about, but it was a way for us to power through a challenging time.

4. What shift have you noticed in customer behavior?

Post-COVID, convenience has become paramount. People want service as fast as possible in as convenient a way as possible. Companies must attract and keep consumers’ attention and have their preferences baked in, which is a huge paradigm shift. At Ocrolus, we’ve created user journey using technology to level the playing field. We’ve adapted to stay in line with the massive shift toward user experience being vital, and we want to be an infrastructure platform that powers that evolution for our partners who offer our technology to their customers.  

5. What do you look for in a VC partner?

Sharing our passion for business development, a great network, and a team with operational experience. We have been fortunate to work with financial partners along our journey who have been impactful in our growth. A number of our investors provided operational help and unlocked customer opportunities for Ocrolus through introductions, prior to even writing a check. Those are the types of partners you want for the long journey ahead.

To learn more about Ocrolus visit  www.ocrolus.com.

Welcome to our new series: 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going.

1. What inspired you to start Maxwell? 

The trigger was my own horrifying mortgage experience in 2014 when a mortgage lender nearly caused us to lose the home we had under contract. That kicked off deeper discovery into what I learned was an enormous ($3T/year), regulated and highly fragmented industry (20K+ lending institutions) with a complex value chain ($10K+ cost to produce a mortgage). No one had attempted what we were aiming to achieve.

2. What problem were you trying to solve in the market? 

Maxwell is building a common infrastructure layer for the small and medium-size lenders to lower their costs, improve their price competitiveness and broaden the pathway to homeownership for millions. Think of Maxwell as the "Shopify for Mortgage" -- all the capabilities, infrastructure, and capital access that a lender requires to run their business. Today we facilitate as many mortgages as a Top 5 lender in the U.S. and we're just getting started.

3. What's the best piece of advice you ever got? 

Pick your investors wisely.

4. Describe a time when you needed to change course or course correct. Why and how did you do it? 

The mortgage industry is cyclical and can be unpredictable. We've come to embrace that at Maxwell -- both the "up" and the "down" cycles create tremendous opportunities for change in our industry. One example where we had to course correct was in Q2 of 2020. At the onset of the pandemic, liquidity in the mortgage market seized up. We acted quickly, furloughing 25% of our team and preparing to manage to a forecast where half our clients went out of business. Instead, by late summer 2020 the mortgage market was on fire. We quickly built a scaling machine, growing from 35 people to over 125 people by the end of the year.

5. What are you most excited about in 2023?

We all expect 2023 to be a challenging year with the housing market in a downcycle. As mortgage lender volumes fall and their margins get squeezed, many will recognize the need for a different way to run their business. Moving fixed costs into variable costs, implementing technology to create more transparency and efficiency, and re-evaluating the structure of their third party costs. We're excited for our position in the market to be able to deliver impact to lenders across the U.S.

To learn more about Maxwell, visit www.himaxwell.com.

We recently announced a new name for our firm, Cohen Circle, founded by banking and finance pioneers and mother-son duo Betsy and Daniel Cohen.

We provide transformative capital to late-stage companies, and we invest up and down the capital stack, across both public and private markets.

A little bit of history – we were one of the earliest SPAC sponsors, with our first deal with CardConnect (later acquired by First Data) closing in 2016. Since then, we’ve raised more than $5 billion in capital and formed 12 SPAC vehicles, five of which have successfully completed acquisitions (Intermex, Paya, Payoneer, and Perella Weinberg Partners). We also make later-stage investments in innovative fintech companies like Ocrolus, Sure, and BillGO.

Previously, we operated under the name FinTech Masala, whose strong affiliation to a popular Indian dish has caused a lot of confusion over the years, leading many to ask us whether we were based in India or made restaurant investments. We do neither; we are headquartered in NYC, with an office at Columbus Circle, and while we love great food, we haven’t yet invested in it.

When our new CMO joined us this year, she conducted a brand audit to help us better communicate our team’s unique value proposition. One of her findings was that we were confusing our partners between our SPAC and venture naming. For context, we’ve used both the FinTech and FTAC prefix across our SPAC sponsors as a nod to our deep roots in the fintech and banking ecosystems. 

So, we began a journey to find a name that would better capture our firm’s unique identity. To do so, we enlisted the help of both internal and external stakeholders, interviewing everyone from our own team to our founders and investors.

We were trying to get to the essence of what makes our firm different than others in our space. Sifting through hours of interview notes, four main themes began to emerge on why investors and founders choose to work with us.

We don’t do transactions; we do relationships and partnerships. Betsy and Daniel Cohen have an uncanny ability to connect with people. Many of our investors have known our team for decades, and they come to the table as much for the chemistry and the conversation as for the compelling returns. We view our founders as an extension of our team, and we help them in any way we can. One founder mentioned how Betsy mentored his adolescent daughters in launching their first business. Others recalled how meaningful it was for the team to visit their offices in person. We hear that’s not so common these days. For us, it’s table stakes.

We see opportunities where others don't and before others see them. We are known for being imaginative thinkers and pioneers in our space. Betsy and Daniel’s careers in banking and finance are a list of trailblazing ventures—Betsy was one of the first female bank CEOs in the country, and one of the first female law professors in the U.S. Daniel and Betsy founded what is widely considered to be the first digital bank – The Bancorp, which they operated for 15 years. The duo was also of one of the earliest and most successful firms doing SPACs today. Up next: we’re gathering a group of visionary women to grow our impact investing arm.  

Our experience across public and private markets sets us apart. Our diverse strategies allow us to consider a wide range of investment opportunities, from founders raising Series A capital to companies looking to go public. We offer support and an unparalleled network and expertise at all stages of the process. As one partner put it, we are deep believers in the long journey. We have decades of capital market experience, and we have a track record of exiting companies that is hard to match in a firm of our size.  

We are operators, entrepeneurs, former CEOs, and investors with decades of finance expertise. Really. As once CEO told us when discussing the value we bring to his company: “You guys are the OGs of Fintech.” Among our management team, we have founded three banks, led muti-billion asset management firms and founded numerous financial businesses. We know more about operating companies than investment bankers, and more about investment banking than any company operator. We’ve been in our founders' shoes; we understand the unique challenges they face and how to overcome them.  

We recently announced a new name for our firm, Cohen Circle, founded by banking and finance pioneers and mother-son duo Betsy and Daniel Cohen. We provide transformative capital to late-stage companies, and we invest up and down the capital stack, across bThrough our fintech venture arm, we’ve been investing in the next generation of leaders transforming the backbone of finance and banking since 2015. We also see a momentous opportunity to use our venture arm to better the world for years to come by supporting companies solving social issues. As we expand into impact investing, we are excited to be partnering with a group of visionary women leaders to provide capital to companies solving critical health and business challenges in underserved areas.  Follow us for more news on this front.oth public and private markets.A little bit of history – we were one of the earliest SPAC sponsors, with our first deal with CardConnect (later acquired by First Data) closing in 2015. Since then, we’ve raised more than $5 billion in capital and formed 12 SPAC vehicles, five of which have successfully completed acquisitions (Intermex, Paya, Payoneer, and Perella Weinberg Partners). We also make later-stage investments in innovative fintech companies like Ocrolus, Sure, and BillGO. Previously, we operated under the name FinTech Masala, whose strong affiliation to a popular Indian dish has caused a lot of confusion over the years, leading many to ask us whether we were based in India or made restaurant investments. We do neither; we are headquartered in NYC, with an office at Columbus Circle, and while we love great food, we haven’t yet invested in it.When our new CMO joined us earlier this year to support our growing business, she conducted a brand audit to help us better communicate our team’s unique value proposition to our investors and our founders. One of her findings was that we were affiliated with so many names between our SPAC and venture activities that we were inadvertently diluting our brand equity, as well as genuinely confusing our partners. For context, we’ve used the FTAC prefix (Fintech Acquisition Corp I-V) and Greek mythology references (Athena, Parnassus, Olympus), across our SPAC sponsors as a nod to our deep roots in the fintech and banking ecosystems as well as the Cohen family’s academic pursuits in the classics. So, we began a journey to find a name that would better capture our firm’s unique identity. To do so, we enlisted the help of both internal and external stakeholders, interviewing everyone from our own team to our founders and investors.We were trying to get to the essence of what makes our firm different than others inour space. Sifting through hours of interview notes, four main themes began to emerge on why investors and founders choose to work with us.We think these themes capture our vision pretty well. We also know part of what makes us unique is our ability to change with the markets. Identifying capital needs is a creative process, both ongoing and iterative. We spend a lot of time thinking about the 'negative space,' or spaces that are not being served today, and we find ways to serve them.  

Through our fintech venture arm, we invest in the next generation of leaders transforming the backbone of finance and banking. We also see a momentous opportunity to better the world for years to come by supporting companies solving social issues. As we expand into impact investing, we are excited to be partnering with a group of women leaders to provide capital to companies facilitating critical health and financial services to the underserved. Follow us for more news on this front. 

We thank our current community for supporting us and look forward to bringing new innovative leaders into our circle in the years to come.

The below transcript has been transcribed from the Houlihan Lokey Financial Services Summit, which took place at Lotte New York Palace in New York City on October 26, 2022.

The keynote was introduced and moderated by Justin Abelow, Managing Director at Houlihan Lokey.

Justin Abelow: No one is more identified with innovation in fintech than Betsy Cohen. She is viewed widely as a visionary in three broad areas: law, real estate, and banking.

A brief summary. In 1974, when Eric Clapton was singing ‘I Shot the Sherriff,’ Betsy had started a bank called Jefferson Bank, becoming the first female CEO of a bank in Pennsylvania and one of the first in the country. She took Jefferson Bank public and sold it in 1999. She then founded The Bancorp- an internet-based bank providing banking services to non-banks, which is credited with being a critical piece of the backbone supporting growth in the fintech sector.

Today, Betsy is the Chairman of Cohen Circle. Her firm has 12 SPAC vehicles and has taken five companies public via SPAC mergers. She has served on numerous corporate and nonprofit boards, including Aetna, The Asia Society, The Metropolitan Opera, and The Metropolitan Museum of Art.

While Betsy’s career is nonlinear, it has a theme of innovation throughout finance and fintech.

[The question and answer period is transcribed below.]

Justin Abelow: You first had a brief career as a lawyer where you had the trifecta of founding a law firm, clerking for a federal appeals judge, and being a law professor. You were the second female law professor on the east coast after Ruth Bader Ginsburg, who was the first. How does your legal training inform your investing perspective?

Betsy Cohen: It was enormously helpful. I could not have accomplished what I did without that background. It gave me two things – information about how things were to be done or could be done, or might not be done, and the confidence to talk with the professionals I would then hire. I make a better client than a lawyer. You need to be able to push back, to evaluate and to understand. Those were two valuable lessons.

You need to be able to push back, to evaluate and to understand. Those were two valuable lessons.

Justin Abelow: As an innovator in fintech, what were some key insights that led you to success as an investor in the tech sector?

Betsy Cohen: My husband would tell you that I think like a computer. But that's not the full answer. I was always interested in how people thought about their money. What drove decisions, what was important to a customer or a colleague. And that led me to really look forward. In the 1990s, when we were all talking about tech before it all fell apart, it gave me the opportunity to think about what tech would look like 10 years out. One of the reasons I sold Jefferson Bank, which was the largest locally owned bank in a wide range of geographies, was that I felt that the adoption curve for the use of technology and computers was going to expand tremendously. And if we could look 10 years out, I thought about what was not being done, and how it would be done. I call this finding negative space. Spaces that are not being served today.

Driving my interest in the marriage of customer behavior, desires, and needs with the level at which technology can deliver and satisfy those needs. This has driven my investments and the identification of companies that I think will be good companies for the next 5-10 years.

Justin Abelow: Of the investment models you facilitated, are there business models you are particularly proud of or think are interesting?

Betsy Cohen: The model needs to match the vertical. I have a soft spot for recurring income. I like to see a company that not only is acquiring companies but is maintaining that relationship and finds a variety of different ways to do that. There are markers rather than business models.

Justin Abelow: There is nothing cookie cutter about your career. You identified highly varied opportunities over the years. Can you speak to the SPAC structure and what brought you there?

Betsy Cohen: Moving from structure to structure is the result of both external and internal factors. The world moves on and a particular structure is not good for all companies. You must balance the needs of companies with the needs of investors in the market. If you think about SPACs in terms of history, starting in the 1990s they provided capital to the steel industry when we were coming out of recession. Some of you who will admit it may remember the recession of 1992. There was no way for the steel companies to raise capital, so this was devised to raise capital for a company.

In 2006 to 2008 there were other capital needs to be funded and the [SPAC] model came back. In 2013 and 2014, we recognized that tech companies were growing quickly and needed additional capital and access to the public markets that the SPAC structure would give them. Part of that insight I got from starting the Bancorp in 1999 - I was a bit too early.

One of our first clients was Paypal. We were able to help them, and they remain a client. Several other small startup fintechs worked with The Bancorp. I was with Bancorp for 15 years, and when I left as CEO, we had 1,600 companies on the platform, which is like raising 1,600 children. Imagine that. Some made it, some didn’t. By the time I was thinking of moving on, some companies were mature enough to meet the criteria required of public companies, so I thought it was my opportunity to be helpful again.

Justin Abelow: Most people forget the early history of SPACs. They think SPACs emerged from the head of Zeus a few years ago. Moving on to a question about the present, I hear a lot that the IPO window is closed. Are SPACs still relevant?

Betsy Cohen: There will be a period in which SPACs will not serve the growth market in the same way, and that’s due to both internal and external factors. Every market has its opportunities. We think today’s market is a great one for companies ready to go to the public markets, it's also a wonderful time to be in venture capital, and a good time to look at new companies and think about where tech will be five to ten years from now. What are customer expectations? At Cohen Circle, we invest up and down the capital stack. We try to match that with the market as we see it and find the opportunities there.

We think today’s market is a great one for companies ready to go to the public market...At Cohen Circle, we invest up and down the capital stack. We try to match that with the market as we see it and find the opportunities there.

Justin Abelow: We work with management teams often with companies looking for capital partners. When we have a team looking to partner with a SPAC sponsor, how should they think about partnership? Are all SPACs alike? What should one look for in a partner?

Betsy Cohen: I’ll give a prejudiced view. Here’s how I think about it. The difference is on the sponsor level - do you have a knowledgeable and experienced partner? One that can bring to the table fresh ideas and ways to think about investor presentations? Do they have relationships with investors? What companies have they underwritten to date and how have those companies performed in the market?

Justin Abelow: Your career has been very global. You started businesses in Brazil, Spain, and Hong Kong. As you look at the world today, are there regions where you see more opportunities or threats?

Betsy Cohen: When we started, the continents were separate, the theme of us moving to the markets was unified. We were looking for opportunities in our areas of expertise- finance- that had not yet been regulated. In Brazil you could be a leasing company, until the Brazilian government began requiring an application form for leasing companies. I aways look for holes - the negative space to fill with solutions.

Today we have learned from the pandemic how unified the world is. Especially with technology. There is great work going on in Singapore, in the UK. Israel is a massive market. But the US remains very rich in innovation, not just in San Francisco and New York City, but in Minnesota and Kansas too. We have opportunities to gather people globally on one screen and stimulate a cross-country discussion.

Today we have learned from the pandemic how unified the world is...We have opportunities to gather people globally on one screen and stimulate a cross-country discussion.

Justin Abelow: As people have gone back to work and travel, what is your philosophy on remote work? What meetings need to still be in person?

Betsy Cohen: I travel to meet people when it’s the first opportunity to meet them. Subsequently, I lean on video conferencing more than I should as it allows me to get more done in a day.

Justin Abelow: Looking at FinTech as a sector- what does the investor community get right about fintech, and what do they get wrong?

Betsy Cohen: The retail investor is a short-term one and is looking for movements in the market. They don’t have enough information to be deep in their decision making. Institutional investors are in a very different place. They look at product, they look at scale, they look at income generation, and management. That’s not always as visible as it could be. There are so many choices that if you focus on even a few you may get some of them right.

Justin Abelow: We are headed into a period of prolonged inflation and higher interest rates. What does this mean for opportunities in financial services broadly – how is it shaping investments you gravitate towards in the next few months and years?

Betsy Cohen: Stay away from companies dependent upon credit as their livelihood. With rising interest rates and narrowing spreads combined with the performance of loans that have been made in the past or credit that has been extended in the past. There are risks in every business. Yesterday’s opportunities must be overlaid with todays’ risks. There are a number of companies that serve as credit market technology is moving to the next level. There is greater capacity and understanding of clients to manipulate and adapt to doing things virtually and digitally. There’s a whole new level of expectations. In our VC portfolio, we look at companies that specialize in embedded finance. The customer does not have to wait to be redirected, and they fill an instant need as attention spans get shorter. There’s a real demand by customers to be able to enter a site and do whatever they need to do in that context without leaving.

Justin Abelow: Lots of your success is driven by correctly reading regulatory opportunities and decisions. What do regulators get right and wrong about the financial services environment?

Betsy Cohen: Just focusing on fintech, they got a lot wrong. They got it wrong because of an attitude toward risk which isn't well based. They were not prepared for technology to move banking along and by pushing back and examining banks in a way that was unrealistic, they did not have the knowledge or the staffing – which hindered the development of the banking industry in the U.S. The industry is moving from being valued and viewed to one as more dynamic and retail oriented with many more transactions, and regulators need to make a shift, which they have not made.

Justin Abelow: Are any regulators getting it right?

Betsy Cohen: The Comptroller of the Currency has a good understanding of fintech. They were the first regulators to talk about allowing a license for a bank that specializes in financial technology but does not take deposits and have been much more forward thinking. Many others may be more insurance regulated, like FDIC.

Justin Abelow: With midterm elections coming up, a question on politics: Would a Republican controlled congress change how you might view the investor landscape in fintech and financial services relative to a democratic congress?

Betsy Cohen: I won’t be speaking to politics today. There are certainly differences, but the world of finance generally goes with the flow. They [tell us] the rules and we have to figure them out.

[At this time, the discussion was open to audience questions. Alexandra Lebenthal, Senior Advisor at Houlihan Lokey, asked a question]

Alexandra Lubenthal: You’ve been in finance during a time when there were very few women, which is still true today. The SPAC market opened an interesting opportunity by asking women to be on boards. We’ve seen growth in women-led companies. Where do you see opportunities with women in that sector? How can we attract and retain women in finance in leadership positions?

You name it, I was the first.

Betsy Cohen: I started in law school as one of six women in a class of 200 students. That number has changed. I was on a public board during my team at the bank where I was the first woman, and the first Jew. You name it, I was the first. I’m able to look at these things from a distance. There has been progress. At Cohen Circle, we have all women boards. We want to provide as many women as possible with the opportunity to participate in and understand this space. Indeed, some have gone on and done their own transactions. We have to continue to work at it. There’s no easy answer. We all bring our baggage to the table, and if that baggage can't be changed, the progress is slower. External governmental requirements have always been helpful. They are different in Europe than in the US. In France, I think, they require one-third of boards to be made up of women. Public perception is important.

I come from so far back – there has been progress, but we may say not enough. Someone I spoke to recently did a venn diagram of funds and equity provided to women-led companies. Inside the venn diagram there was only 2.5% or so. On the positive side, more women are leading businesses today.

But the perception of risk related to any group is a prejudice that has to be overcome. It’s what led to women starting in the 1970s a series of women’s bank. Was that the right thing to do? Was it a statement that access was not available? Absolutely. That’s a lesson we can learn.

Women in the working world today, even though there’s parental leave, we need to make work rules to accommodate women and people with kids. Organizations that express their understanding of the lifecycle of a worker or a participant in the business in a constructive way will be the winner in terms of talent.

[This concludes the transcribed portion of the keynote.]