A quiet but profound revolution is reshaping the financial landscape, empowering businesses far beyond traditional banking to offer sophisticated financial services directly to their customers. Imagine buying a coffee and realizing the chain handles billions in customer balances, effectively acting as an unofficial bank. This very concept is at the heart of what Miami-based fintech company Zūm Rails, under the leadership of CEO Miles Schwartz, is making a reality for companies worldwide. Zūm Rails is building the essential technology that allows any business to seamlessly integrate bank-like functionalities into their existing operations, marking them as true Trendmakers in the embedded finance space.
The Ubiquitous Demand for Embedded Finance
This transformative shift is known as embedded finance or Banking-as-a-Service (BaaS). At its core, embedded finance involves integrating financial products and services directly into non-financial platforms, accessible via Application Programming Interfaces (APIs). The appeal is multifaceted, driven by both consumer expectations and strategic business advantages. Customers increasingly demand a frictionless experience, expecting to access financial services conveniently within the apps and platforms they already use for everyday activities. This eliminates the need to navigate external financial institutions, making transactions and financial management more intuitive.
For businesses, the benefits are substantial and immediate. Embedded finance opens up lucrative new revenue streams through transaction fees, lending interest, or insurance premiums, without the immense investment and regulatory hurdles of becoming a fully licensed bank. Companies can enhance customer retention and loyalty by offering a comprehensive suite of services, keeping users engaged within their ecosystem. Furthermore, embedded finance solutions offer a significantly faster time to market and reduced upfront costs compared to developing in-house financial infrastructure. This integrated approach also provides businesses with invaluable customer data, enabling more personalized product offerings and targeted marketing. Real-world examples abound, from ride-sharing apps like Uber embedding seamless payments to e-commerce platforms offering “Buy Now, Pay Later” (BNPL) options.
Zūm Rails: Powering the “Bank in a Box” Vision
Zūm Rails stands at the forefront of this evolution, providing an all-in-one payments gateway that expertly merges open banking with instant payments. Their multi-rail approach supports a diverse array of payment methods, including Interac, Electronic Funds Transfer (EFT), Visa Direct, ACH, credit cards, and the U.S. Federal Reserve’s real-time payment system, FedNow. This comprehensive solution ensures businesses can push and pull funds in real-time with enhanced speed and efficiency.
Beyond basic money movement, Zūm Rails offers robust fraud prevention capabilities, incorporating features like name matching, risk checks, Know Your Customer (KYC) verification, and advanced Anti-Money Laundering (AML) monitoring. The company also integrates Visa Secure with EMV® 3-D Secure (3DS) to bolster security and reduce card-not-present fraud. Miles Schwartz’s vision for Zūm Rails is to provide a complete “bank in a box” solution, allowing clients to issue their own branded prepaid or secured cards (both physical and digital), manage deposit accounts, facilitate bill payments, and even offer savings options. This entire suite of capabilities is accessible through a single API and platform, a significant advantage over the traditional method of piecing together services from numerous different providers.
Zūm Rails serves a diverse clientele, including investment brokerages like Questrade and Robinhood, various marketplaces, lenders such as LoanPro, and even crypto exchanges like Coinsquare. The company also collaborates with financial services giants like Visa, Mastercard, and Fiserv to support the entire payments journey. The goal is to simplify and accelerate the integration of these sophisticated financial capabilities, positioning Zūm Rails as the financial operating system of record for businesses.
Explosive Growth and Strategic U.S. Expansion
Zūm Rails has demonstrated remarkable growth, underscoring the strong demand for its solutions. The company’s team has expanded from a mere six employees to approximately 75 in the last year, with about 20 based in the U.S. Initially bootstrapped since its founding in 2019, Zūm Rails closed its first external funding round in February 2024, securing a CAD$10.5 million Series A led by Arthur Ventures. This funding injection is earmarked for accelerating product development, fueling U.S. expansion, and further enhancing its Banking-as-a-Service capabilities.
The company’s revenue has nearly tripled, driven significantly by its U.S. expansion and the introduction of its card issuance offering. Zūm Rails reported achieving $10 million in annual recurring revenue (ARR) last year and added an additional $5 million ARR in the subsequent six months, processing over $1 billion in payments monthly across its platform. The U.S. market has been a key focus, seeing a 75% increase in Zūm Rails’ U.S. business in the past year, with projections indicating that at least 50% of its overall revenue will originate from stateside operations within the next 18 months. Miles Schwartz’s permanent relocation to Miami further cements the company’s commitment to leading its U.S. growth initiative from this strategic hub.
Miami: A Hotbed for Fintech Trendmakers
Zūm Rails’ decision to establish its U.S. headquarters in Miami is no coincidence. The Magic City has rapidly emerged as a prominent global financial and fintech hub, attracting significant investment and talent. Recognized as a top-11 global fintech hub, Miami boasts over 500 fintech companies and has seen its fintech industry grow by an impressive 63% over the past two years, with startups raising a remarkable $965 million in 2023 alone.
Several factors contribute to Miami’s burgeoning status. Its strategic location serves as a crucial gateway to Latin American markets, offering convenient access and fostering international partnerships. The city’s business-friendly policies, lower cost of living compared to traditional tech centers, and a growing influx of tech talent, partly due to the Silicon Valley exodus, create a fertile ground for innovation. Miami’s supportive ecosystem includes various venture capital firms, accelerators, and tech events that further fuel its growth. Within this vibrant environment, Zūm Rails and its leadership are undoubtedly Trendmakers, shaping the future of financial services from their Miami base.
Navigating the Future: Regulation and Evolution
While embedded finance offers immense opportunities, it also presents complex challenges, particularly concerning regulatory compliance, operational risk, data sharing, and security. BaaS providers and their sponsor banks bear significant responsibility for adhering to financial regulations, including Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, and ensuring robust data protection measures.
Miles Schwartz’s strategic vision for Zūm Rails acknowledges this intricate landscape. He believes that the future lies beyond merely moving money, which is increasingly becoming a commoditized service. The competitive edge, he asserts, comes from layering on sophisticated software, ensuring rigorous compliance, and providing comprehensive value-added services. This includes a full compliance suite and advanced fraud detection beyond basic checks, all integrated seamlessly. By constantly innovating and adapting, Zūm Rails aims to stay ahead of market demands, providing businesses with everything they need to operate like a bank without the burden of stitching together disparate vendors.
This trend of businesses acting more like banks, facilitated by companies like Zūm Rails, is fundamentally transforming how consumers and enterprises interact with financial services. It represents a future where financial capabilities are seamlessly woven into every digital interaction, making finance more accessible, convenient, and personalized than ever before.
