Lessons from Loop, Canada’s #1 Business Banking Platform with Cato Pastoll and Nik Nampalli

In this episode of FinTech Layer Cake, host Reggie Young speaks with Cato Pastoll (Co-founder & CEO) and Nik Nampalli (Head of Strategic Projects) of Loop—Canada’s #1 business banking platform. Loop offers multi-currency credit cards, global payment tools, and financial services that save SMBs thousands each year.

Cato and Nik break down how Loop evolved into a fintech solution for Canadian businesses with cross-border needs, why multi-currency capabilities matter, and what makes Canada’s fintech landscape uniquely challenging.

Whether you're navigating card issuing, expanding across borders, or curious about what’s next for Canadian fintech—this episode is packed with insight and inspiration.

Transcript

Reggie Young:
Welcome back to Fintech Layer Cake, where we uncover secret recipes and practical insights from fintech leaders and experts. I'm your host, Reggie Young, Chief of Staff at Lithic. On today's episode, I chat with two great fintech minds from Canada's number one business banking platform, Loop. I'm excited to be joined by Cato Pastoll, Loop's co-founder and CEO, and Nik Nampalli, Loop's head of strategic projects.

Lithic recently started supporting their card products as their issuer processor, so I've come to appreciate the great business they're building. And on top of that, I used to work at Bluevine, so I have a soft spot in my heart for any fintech that's making SMB banking better.

Loop offers credit cards, bank account products, expense management, bill-based services, and more. They've built a product that not only delights customers, but also saves users around 40,000 a year, which we get into the details of in the episode. Cato and Nik share their wisdom on the best opportunities to compete in credit cards, the hidden and lucrative benefits of multi-currency capabilities, and much more.

Fintech Layer Cake is powered by the card-issuing platform, Lithic. We provide payments infrastructure that enables teams to build better payments products that improve lives. Nothing in this podcast should be construed as legal or financial advice.

Cato and Nik, welcome to Fintech Layer Cake. Really excited for our conversation today. Maybe the best place to start is just at the beginning. How did the company start out, and how did Loop evolve into what it is today?

Cato Pastoll:
Yeah, for sure. Loop originally started out as a small business lending platform. So we worked with many different small businesses across Canada, helping them get access to capital. One of the things that we learned building an SMB lending platform is that there's a very wide variety of different challenges that companies have beyond just access to capital. And so when you look at how traditional banks serve many small businesses, it creates challenges and pain points for them in their everyday lives.

One of the things that we learned that is a very acute challenge that many businesses face every day is when they transact in other countries. They're starting to sell products to customers internationally, or they're buying internationally. Traditional banks often let them down, both in terms of the products, the services, and the costs associated with doing those types of transactions. And so we found that that was kind of a natural extension jumping off point to building a platform that was kind of not just focused on lending, but providing a more broader service offering to SMBs.

Reggie Young:
Love it. Yeah, makes sense. A lot of opportunity. We were chatting before recording, coming from Bluevine, I appreciate there's a lot of opportunity to improve the banking experience for small, medium, and all types of businesses. So it makes sense.

Nik, this one's probably aimed more at you. I know SMB credit cards can be a pretty competitive space, at least in the US. Most fintechs are trying to break in face tough competition from existing players like Amex. So what opportunities do you see for fintechs to come in and compete? You have some background relevant for this and probably have some strong opinions, I expect. Where do existing small business card alternatives not serve business as well? Where are the opportunities, the wedges to break in?

Nik Nampalli:
Yeah, absolutely. Just kind of take a philosophical view of this, ultimately, credit cards or any payment mechanism facilitates commerce. Sometimes I feel like fintechs and then financial services in general forget that you're just a payment mechanism. The business is actually trying to do something else, which is grow whatever it is that they're selling or the service they're providing. And so when large financial institutions or fintechs lose sight of that and they start building features on their card that is just copying what others are doing because it's the easiest thing to do, because it's easy to add on a credit on a card or to give away airport lounge passes, it all starts to become commoditized.

I think the differentiation that fintechs, especially in the credit card space, can go after is really figuring out what it is that their customers most need from that card product. In some cases, it is expense management because it's maybe a very sales-heavy team or a small, medium-sized business, and they really want that expense management side of things. And that could be a part of your base.

A different part of your base really just wants better payment terms, so more flexibility in repayments rather than just a standard statement, due date, and then you have to pay. You have ways to provide flexibility on repayments or offer other products on top. And some of buy now, pay later, etc., or converting a credit card into a terminal, they're the things you can do, but they're not done organically. It's not a seamless experience for a lot of these businesses.

And so if you can build those sorts of things that make sense for the businesses you're serving, I think you get there. From Loop's perspective, our thing was, and has always been, global- global payments, how do you make sure your card is accepted everywhere. Good news is all three brands, at least the three big ones, Amex, Visa, Mastercard, accepted globally. Some have better acceptance than others, but then there’s FX fees, there is the fact that now most businesses earn revenues in multiple countries and multiple currencies, and then they also have expenses in those local markets.

So if you're in the US and Canada, you're paying Canadian dollar for shipping Canadian product, US dollar for shipping US dollars. But you're also collecting Canadian and USD, but your card is probably stuck doing just USD or just CAD. This is the sort of innovation that we've brought to the market. And I think businesses and fintechs thinking about what do small businesses really need, I think you can start to then chip away and design the right solution for those sorts of customers.

Reggie Young:
I want to return to the multi-currency thing in a few questions because there's a lot there to unpack. The acceptance thing is a really good one, right? We talked about at Lithic, I'll give my personal cards- they'll get one chance to not work. But if it doesn't work twice, I'm like, I'm probably never using that card again, right? That's super important. And I can only imagine on a global scale, that problem is so much harder across countries, across currencies. So I love that you're talking about workflows, too. People talk about Ramp is this expense management card, but it's really an expense management workflow. The card is just the mechanism for doing it. So it's an important and insightful reframe.

Nik, let's talk about customer savings. On Loop’s site, you talk about how Loop saves customers an average of 40,000 a year. Seems like a no-brainer for businesses that want to sign up with you all. But what drives that savings? What are the components that enable you to do that? I think this might be where the multi-currency stuff starts fitting in. Any thoughts? I'm curious to pick into it.

Nik Nampalli:
Yeah, no, absolutely, Reggie. It really is about the multi-currency platform that Loop has. And our target business is a business that's operating in multiple markets. And so the way the savings numbers that we publish, around 40k, is based on actual customers usage. We're currently on the Loop platform, and it's them using their multi-currency card. And so they're saving anywhere from 2.5% to 5% on FX that credit cards charge. So that's a significant amount of savings. So if you're doing $1 million or $2 million on a card, that adds up very quickly.

And then there is conversions, because again, you may be headquartered in one market where you have a majority for your staff and your expenses. And then another market, you may have just a sales team, and then you may have expenses out in production markets where you're producing goods, etc. And you might need to convert some of your revenue currencies into expense currencies. And again, there- today, traditional banks, they have a pretty high markup on doing FX. The alternative is to try to use another fintech or another FX provider, but that also adds friction and there's time lost, etc.

So purely just from that FX fee savings, which we provide because it's all integrated, again, clients can see anywhere from another 2% to 3% savings on those FX conversions. And then this 40k that we publicize is just those two things, talk nothing about the time value of money and the time saved there. That's just kind of incremental on top.

Reggie Young:
Great. Yeah, it makes sense. The multi-currency thing is just fascinating to me because it's a good example of the feature versus benefit. I think in a lot of fintech, the headlines can get focused on the feature and ignore the benefit, because multi-currency is kind of this niche concept that if you never thought about it, you may not understand the secondary, tertiary consequences of. So really good illustration of you can help your cardholders save a lot of money with that.

Cato, let's talk about US first, because I know you're familiar with both fintech spaces. How do they compare? Are there any strong similarities or differences that come to mind? Other than there generally being fewer sponsor banks and fintechs in the relative markets, are there other key differences or similarities you see?

Cato Pastoll:
Yeah, for sure. Starting data point, I'll maybe share for US listeners here is we've got 40 banks in Canada, and I think it's something in the range of 1,600 banks in the US. That's not including credit unions, that's just banks. So I think you can tell just the distribution of market from a banking perspective is significantly more concentrated in Canada than the US.

I think maybe to add to that, and I think it's directly related, the regulatory environment and regulatory barriers to entry are quite a lot higher than the US and Canada. And I think one of the things that that's created is an environment where in order to start or do business here in Canada, there's kind of a much higher bar to get started. I think like if we look at the last 5 or 10 years in the US, a kind of explosion in the number of fintechs building products and services, and some of them don't even touch things like compliance. They don't even know how compliance and AML regulations work because they've outsourced those components. It's basically impossible to. In Canada, you almost have to set yourself up as a regulated financial services business from day one.

And so what that's created is kind of a very big difference in the types of fintech companies that get started in Canada versus the US. And I think we've seen quite a lot of successful Canadian fintechs building in the US or expanding into the US. One of the reasons for that, I think, is that maturity that it brings. Being in the Canadian market, obviously, a little bit biased here being at being Canadian company, there's pros and cons to that because I think like what you on the flip side could say is in the US, you're seeing a lot more and you're seeing people focus on very specific niches that, frankly, both from a market size and from an environment perspective, you probably wouldn't even be able to build in Canada.

So I think you're seeing a dynamic of Canadian businesses building really robust businesses here, but also maybe learning from some of the things that have been happening in the US about what's worked, what's not worked, and then taking those best practices and applying them to building strong companies. I think at the end of the day, the one thing I'd say is that our banking systems, while they're different in size, are actually quite similar in the way that they function. Our payment systems, in many cases, are modeled off the US payment systems. The way card programs work is quite similar across the two versus in Europe, it's totally different. So I think for that reason, there's a lot of synergy and a lot of ability to innovate across both sides of the Canadian and US border.

Reggie Young:
Yeah, I love it. I'm always torn on the barriers to entry, because the lawyer in me is like, this is money, and it's highly regulated, and it's important, you can't mess it up. But then the start-up operator in me is like, but innovation, and there's so much potential. So it's a balancing act.

You kind of hinted at the regulatory environment being a hurdle. I'm curious if there are any other big hurdles that you see for fintech founders and operators in Canada. I think in the US, finding a good bank partner is a really big hurdle, for lack of a better word. It's a really important thing that is hard and not all fintechs can do it right now. So I think about that as a big hurdle for fintech in the US.

I'm curious, maybe, Cato, we'll start with you, and Nik, if you've any other thoughts to share, what do you see as the biggest hurdles for fintech founders and operators in Canada?

Cato Pastoll:
You mentioned, it's hard to find a bank partner in the US, 1,600 versus 40 banks. So I think that problem is exacerbated here in Canada. And I think it's very, very challenging, frankly, to start a company in the Canadian space. It often takes quite a bit of capital, use of honing your craft in the space to understand how to build a business here. For sure, day one, companies, I would say, here have to have a higher degree of maturity than companies in the US in this space, just given how much more difficult it is to partner in the market here.

And I would say that that's a general answer. There's more nuanced answers in particular spaces. Actually, in lending, I would argue it's somewhat easier to start a lending company in Canada than the US because, as you probably know, for most lending products, you need a bank to originate credit. In Canada, you don't require a bank to originate credit. You don't require that type of licensing. It's much easier to get your own licenses in originating. So there's more nuanced answers, depending on what product subset you go down. But I'd say, as a generalization, it's definitely a lot harder to come into the market in Canada than it is in the US.

I could maybe extrapolate that out to other countries, too. One of the issues that we have as well in Canada is in many cases, there's not clear regulatory frameworks on how to operate. I think that we share with the US, whereas the UK, for example, they have very clear granular breakdowns. If you want to be a payments company, you do this. You want to be a lending company, you do this. You want to store customer deposits, you do this. We are moving towards that in Canada, and we're starting to get more clarity on that. But I think that's another thing that Canadian founders have to navigate building fintechs here.

Reggie Young:
Nik, I'm curious if you have any additional thoughts on what some of the big hurdles you think are.

Nik Nampalli:
I'll add two more things to this. One is market size and opportunity. Canadian economy, on average, is about one-tenth the size, maybe one-ninth the size. And so the size of pie essentially is smaller. And so when you start to build in Canada and you think about what does your growth look like, what would maturity look like, you have to think differently.

I think that's somewhat challenged as well by the fact that because it's such a consolidated financial services industry, the education for both consumer fintechs and business fintechs, the businesses and consumers are less educated about what is possible, what could be good, because they're used to seeing the top 5 banks, and then the 30, 40-odd banks out there in Canada operate a certain way. It all was lockstep. There's no one bank that's super innovative compared to the other.

A fintech can come in and show that super innovation. And you would think that would allow you to stand out in the market, but then getting that word out and getting people to trust that you can take on this experience and experiment with it, there are a few early adopters, but that's it, there's only a few. It's always the case, right? There's always fewer early adopters than not. But given the population size, given the size of the economy and everything else, the pie where you start is small, and then to penetrate deeper in and to get more established businesses to come in, you get challenged. So I'd say that's another thing that's a little bit different, Canada versus US. And then US, A, market's bigger, B, you can do innovation and then go after specific niches. So as a result, there's opportunities to grow.

And then the last one I'd say is probably funding. VC capital, also challenging. Cato, as having founded a couple companies now, knows this really well, that pool is also, A, smaller, and B, just because of the nature of industry that I've just described, investors are also aware that the growth plan needs to be really strong for them to invest in the thesis, because they know eventually, all companies or fintechs may hit a ceiling, and how will you break through that is a question you need to have some sort of inkling when you get started.

Reggie Young:
Yeah, it's a testament to Loop being a quality company, because I feel like Loop getting to the stage you all are at versus an equivalent company in the US, harder, again, because market considerations, all that stuff. The education point, too, I think that's under-discussed in fintech. It's definitely an issue you see in the US.

I agree, it's probably a bigger hurdle in Canada. I think there's this funny correlation between the more innovative and genuinely value-adding a fintech is, the more education you have to do because you're trying to do something more novel. It's a really hard problem. Financial services, it's like the multi-currency thing we're talking about. Not every small business can be like, ah, yes, I want multi-currency capabilities, and that's going to save me money. So requires some education, unique fintech problem, I think.

Nik Nampalli:
Yeah, indeed.

Reggie Young:
Looking forward, in Canada, at a high level, what do you all think the Canadian fintech scene is going to experience in the next three years, let's call it? What do you think is going to evolve and change? Cato, maybe we'll start with you.

Cato Pastoll:
I'd say maybe two major trends that I think we'll start to see happen. I think, one, I was briefly alluding to this before, but with regulatory change on the horizon here, I think we're going to start to see some more clarity in terms of the rules of the game in terms of how you operate in certain spaces. I think we're going to start to see things come to fruition that we've been talking about around, like payments modernization and banking modernization.

I think that's going to mature the market a bit and make companies stronger. It's probably going to, at the same time, narrow down the field a little bit. And so I think you might see some consolidation in the fintech space as well in the next three to five years. But I think what will come out of that if we get that right is stronger and more robust companies that are more able to compete with the 40 banks that we have in Canada, because I think right now, it's very stark in terms of the size of our biggest five, six banks in Canada relative to everybody else in the industry.

And I think if we start to open up the playing field for some of the other providers in the space, and we're starting to see that now, I think you'll start to see more growth out of the incumbent fintechs in Canada and more opportunity to go a little bit more head to head with banks. More specifically, we've seen in Canada, KOHO is a large fintech that is in the process of getting a banking license here. Wealthsimple has kind of gotten direct access to payment networks and interact, which is one of our most frequently used payment transfer mechanisms here.

Those are just a couple examples. But to illustrate, fintechs are starting to be welcomed into the financial services ecosystem, which I think is good because even if we go from 40 to 60, that's a 50% improvement for consumers and the choice that they have when it comes to their day-to-day banking.

Reggie Young:
I'm really curious to see how the KOHO bank charter pans out. In the US, fintechs have had mixed results, both on ability to get a charter and then whether that actually benefits the company in the long term. So I'm curious to see how that plays out in Canada.

Cato Pastoll:
My personal view on that, I don't necessarily think you need a bank charter. I think that that is a general signal that there are abilities now for you to offer a more diverse set of products. Maybe bank charter is the fit for some. I don't think that everybody should just go out and get a bank charter unless it makes sense for your particular business model. But it's more the sentiment that you can start to do things yourself without relying on those 40 FIs that exist.

Reggie Young:
Yeah, it's a very seductive thing to look at and say, oh, the US, we should go get a bank charter. I don't know, if you look at the multiples of companies with bank charters in the US versus tech companies, I'm not sure for your option value, if you want that in the US. It varies. I think it comes down to your point, Cato, around how do you actually use it. I know Square is very thoughtful on what products, how do we leverage this to give us more upside rather than just, oh, we have a bank charter, and we're a serious player.

Nik, I'd be curious for your take on how you think the fintech Canadian scene is going to evolve over the next two or three years.

Nik Nampalli:
One, I agree with Cato and his perspective on the consolidation. I also think the other thing that at least I'm already starting to see, and I think this is somewhat accelerated, is people are starting to build specific fintech or services for specific use cases. And that is something that people have figured out that that's a better way to go rather than try to just build a general-purpose credit card for consumers or a general-purpose thing. And there's a lot more founders who are going after niche use cases and really going deep with it, whether that be foreign students and their ability to move money and make payments. There's a lot of integration as well coming into Canada, like helping immigrants move money, get credit in this market using their credit that they had from where they're coming.

So I think that I see an explosion in that experimenting with niche use cases. And then that triggered with the consolidation piece. Where I project somewhat is you will find players start in one place and start expanding to others. And this is something that I think US fintechs have done. And I just argue, I don't know, the Canadian fintech space is maybe 10, 20 years behind the US, wherein you start with a niche, and then you slowly go in and add other verticals and diversify.

And so next three, four years, I think you'll see the established fintechs diversify, and then very new fintechs come in trying to attack a very niche space because they recognize that's the best way for them to compete.

Reggie Young:
Yeah, makes sense. You start selling books, and then you become Amazon that sells everything. You don't start out with everything. Makes sense.

Nik Nampalli:
I was going to add one other interesting dynamic, I think the US and Canada benefit from this, is just given the amount of immigration that happens in both markets, and then people come from different backgrounds. And it's true, Cato and I, we come from different backgrounds. And so we've seen what payment innovation can look like. I’m originally from India. In India, UPI and those things are talked about. Every time I go back to India, I'm just amazed at how much more and further payment innovation has gone.

So I think people like myself, being here in Canada, like, hey, if this can happen there, I wonder if there's a use case for me to build this thing in Canada and experiment that.  I'm just one of many, many immigrants who's here. And with the space opening up, and there being opportunities, I foresee a lot more innovation coming in both markets, US and Canada, the dynamic exists in the US as well, where people have seen what's possible on the other side and bring that to their new markets.

Reggie Young:
I love it. I think my wife is very sick of the amount of time I spend when we're abroad, like reading every screen on a point-of-sale checkout, or read all the fine print on the ways to pay. Because it's fascinating, you go to other places, and you just see how you can do things very differently than it's done where you normally are.

Let's talk about looking forward for Loop for a second. What's on the road map for 2025? Cato, I'll hand that to you.

Cato Pastoll:
Yeah, lots of exciting things for sure. As a start-up, you're always trying to trace a lot of things at the same time. I think probably the most exciting things that I can think about at the moment are we are building a lot of new features to service our customers better and help them. As we spoke about at the beginning, we help companies manage their money across different markets, and we want to double down on the things that we do to enable companies that transact internationally. Many of our customers today transact across Canada, the US, UK and Europe. We've got things on our road map to help make it easier to transact across those countries, increase their activity and volume across them, and then also potentially expand outside of those markets. Those are the things that I get excited about from a product expansion perspective.

The other thing that is on our road map or our aspiration is we serve companies that have global aspirations. And I think as a business, we have international global aspirations ourselves. So I think, over time, we definitely want to see Loop help companies grow internationally, and we want to help companies over different markets grow internationally as well. That's definitely something that we're thinking about.

Reggie Young:
It's a great example of what Nik was talking about a second ago of focus on a problem of multi-currency globally as an issue, solve it in Canada, and then take it globally yourself. Cool. Exciting to see what you all do this year.

My favorite wrap-up question that I'll hand to both of you is, what are you thinking about a lot that you think folks in fintech aren't talking about enough? Nik, we'll start with you.

Nik Nampalli:
 I'd say the top of mind for me is, I know it's the buzzword of the day, but it's AI and data.

Reggie Young:
I was like, is he going to go AI or stablecoin? I don't know which way.

Nik Nampalli:
For me, it's more the data piece of it because people have talked about data for so long and said, look, you should be able to use data, do some interesting use cases, build it around it. And the problem has always been, okay, once you get the large data sets, you need data scientists, etc. And then you've got to build a product around it or figure out how you're going to use that data to build the right sort of product.

And so what I keep thinking about is, okay, with the power of AI, will this become easier? Will it get democratized somewhat? Because not everybody has to be a data scientist. And could AI help every person on the team, whether they're in customer support, or whether they're in engineering or in product or in marketing, really be able to go harness the data that a fintech, a bank, whoever it is, has, and then figure out how they can make their function better or come up with ideas that are for another function in the company?

The thinking about marketing isn't relegated just to the marketing team. Everybody can think about it because everyone's able to quickly access data and get to those insights based on an experience or interaction they had with their customer and say, huh, I wonder if this is a bigger problem. Let me go look at the data. Oh, it is. Hey, marketing, it's not just look at the data. It's like, here, I've written a whole thing up on how I think we could go do some interesting marketing campaign or target a new audience or whatever it is. And it's ready to go for the marketing team to run with.

That's what I'm thinking about, is how will fintechs and others get this light and be able to dive into this. And we're trying some of this with our customer support, as an example. We're trying to use AI to see if we can automate some of that and then learn from that. I think those are baby steps towards this grander hope, at least for now.

Reggie Young:
It's exciting, we're talking about AI a lot at Lithic as well. It's like, there's so much opportunity, but it's so new that you don't exactly know what that opportunity is going to be. And so you got to start somewhere small, like you're just saying, and expand from there and figure it out as we go. We're moving very fast with it in two years, but the journey from here to there is going to be a lot of false starts and learning and figuring things out.

Cato, how about you? What are you thinking about a lot that you think folks at fintech aren't talking to enough?

Cato Pastoll:
It's sort of related, but different to the point Nik brought up. I'm really thinking a lot about how the interaction with financial services companies is going to evolve in the next few years because of the changing technology. We went from basically bank branch interactions in finance services, where you still go into a branch, sit to do your banking, and you interact with a teller, and you deposit, you send wires through a branch. And by the way, people in Canada, believe it or not, still do that today.

Web 2.0 version, which is I log into a portal, and I essentially do the same things that I was doing in 1.0 but by clicking a bunch of buttons to get there, I think that that is going to start to change because of technology. I don't think that when you're initiating a payment, someone's going to send you an invoice, and you're like, okay, I'm going to log into my banking portal, and I'm going to go type the invoice information and the payee information and send it. I think that is going to evolve where that whole workflow is very much integrated.

I think we kind of touched on it, but I think that's very much what I'm thinking about, is like, what is that layer of interaction between a business owner or finance team and their financial services products actually look like? Because I don't think that current UIs that anyone has really built are the future. I think that's the present. I'm not specifically saying that it's going to be like a chatbot you talk to that does all this type of stuff. But there's going to, through that technology, be more engagement, more interaction between how you're doing your business to the point that, I can imagine, getting an email in my inbox for a payment, and I click a button in there and the payment is magically made. I think that doesn't seem that far away with the technology and tools that are available to us now.

Reggie Young:
I like that framework of banking 2.0 and heading towards 3.0 and don't know exactly what it'll look like.

Awesome. If folks want to check out and hopefully sign up for Loop, where should they go?

Cato Pastoll:
Our domain is bankonloop.com with a financial provider that you can bank on. Right now, available to businesses in Canada and hopefully more markets in the relatively near future.

Reggie Young:
Love it. Great URL that lends itself easily to your pitch. Awesome. Well, Cato, Nik, thanks so much for coming on. This has been a wonderful conversation.

Nik Nampalli:
Thanks for having us.

Cato Pastoll:
Thanks, Reggie.