For any fintech company operating in the United States, obtaining money transmitter and lending licenses in all 50 states can be a daunting and time-consuming task. However, BitGo, a Palo Alto-based digital asset custody and services provider, has found a way to streamline this process using artificial intelligence (AI). BitGo has partnered with fintech startup Brico to employ AI-driven automation to consolidate the cumbersome 50-state licensing workflows into a single checklist, significantly reducing the time and effort involved in the process.
Revolutionizing Licensing Workflows with AI
When Rita Stephenson joined BitGo in 2017 as the regulatory licensing manager, the process of obtaining these licenses was laborious. Every task, from filling out a form to uploading it to the Nationwide Multistate Licensing System (NMLS) portal, required a substantial amount of time. “One task can pretty much take an hour and a half and imagine if you have 50 states with 20 to 30 tasks you need to do,” Stephenson explained. “It’s a full-time job, literally.”
With the introduction of Brico, this process has been significantly simplified. Brico uses AI to automate the application and maintenance of state licenses. The company has managed to consolidate all tasks and requirements into a single licensing checklist. “Fast forward to today, and Brico has consolidated all of these tasks and requirements into a single licensing checklist that has made my life so much easier in regards to simplifying the process, being organized, and not having to do so many extra steps,” says Stephenson.
Growth and Expansion of Brico
BitGo is not alone in its reliance on Brico for licensing work. Other fintech companies, including Better, Marqeta, Bilt, and Tilt (formerly known as Empower), are also utilizing Brico’s services. This growing traction has resulted in a significant 600% year-over-year revenue growth for Brico, according to co-founders Snigdha Kumar and Edward Swiac.
Brico recently closed a $13.5 million Series A funding round led by Flourish Ventures, with participation from existing investors Restive Ventures and Pear VC. The new funding will allow Brico to expand its license coverage, launch predictive compliance tools, and build licensing agents to handle regulatory workflows. The company also plans to double its team size over the next year to meet the increasing customer demand.
Brico’s AI-driven Approach to Licensing
The process of obtaining state licenses is notoriously complex. Brico has developed a system that uses AI to gather regulations, requirements, and statutes from all 50 states for fintech and banking licenses. The software assists customers in creating documents and automates the form filling and notarization process. Brico also creates first drafts of the quarterly and annual reports that state commissioners require.
While the use of AI is integral to Brico’s operations, it is used conservatively in the tech stack. “Because we are building for a regulated entity, and if you get something wrong, it’s a massive erosion of trust, and can have a big impact on the company,” Kumar explained.
Brico’s system not only helps companies to apply for licenses but also automates the ongoing work needed to maintain licenses and stay in compliance with state requirements. As a result, every quarter, companies need to do less to maintain their compliance. “That’s actually what the biggest value prop is: faster speed to market, less effort on the side of the team, and then honestly, one-tenth of the cost people have to pay right now,” Kumar added.
Looking Ahead
Flourish Ventures, a major investor in Brico, believes that the startup’s ability to “go deep in niche workflows and reinvent them on these foundational models” will be crucial to its success. As the demand for financial licenses continues to grow and new categories of financial licenses emerge, Brico’s AI-driven approach to licensing could prove to be transformative for the fintech industry.
Though Brico is not currently handling bank charters due to their complexity, this could change in the future if bank regulators simplify the process. As Kabir Kumar from Flourish Ventures put it, “There’s documentation. You have to aggregate internal company documents to apply for a license,” Kumar said. “Why can’t software handle that? You need to gather fingerprints. Why can’t software handle that? You need to fill in the application based on the internal company data. Why can’t software handle that? Fundamentally, those functions remain the same regardless of the license type.”
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