Ramp, a six-year-old fintech startup, is making a significant foray into digital banking territory with the launch of its new product, Ramp Treasury. This move marks a notable expansion for the company, which has built a reputation in the corporate card and expense management space, having raised over $1.2 billion in venture funding.

Ramp Treasury is designed to give businesses a way to earn money on their stored cash, rather than just saving it. According to CEO and co-founder Eric Glyman, the product was created in response to the realization that the majority of clients' linked checking accounts were earning 0.00% interest. Ramp Treasury allows businesses to store cash in a business account and earn 2.5% interest or invest in a money market fund for potentially higher yields.

The product is designed to work alongside customers' existing bank accounts, not replace them. Ramp is partnering with First Internet Bank of Indiana on the cash deposit account and Apex on the investment side, emphasizing that it is not a bank itself. This move is significant, as it positions Ramp as a one-stop shop for its customers, allowing them to keep more of their cash in one place rather than moving it between different entities and accounts.

Ramp operates in a crowded space, competing with the likes of Mercury, Brex, Navan, Rho, and Mesh Payments. Brex, a notable competitor, had previously applied for a bank charter before opting not to pursue it. However, Ramp is not aspiring to become a digital bank, instead focusing on providing a comprehensive financial management platform for its customers.

The launch of Ramp Treasury is expected to boost the company's bottom line, with Glyman noting that it will earn a spread from its bank partners on aggregate balances across all funds held in a customer's business account. Ramp will pass a significant portion of this back to customers in the form of the earn rate, while maintaining some economics to ensure profitability.

Ramp has seen significant growth, with over 30,000 customers, up from 15,000 this time last year. The company has powered over $50 billion in purchases across cards and bill payments, with revenue growth of 4x in 2022 led by its fastest-growing segment of bill pay. Although the company is staying mum on its current revenue figures, it crossed $100 million in annualized revenue before its third birthday in March 2022 and passed $300 million in annualized revenue in the summer of 2023.

Ramp's business model is diversified, with revenue streams coming from interchange fees, transaction fees, SaaS revenue, foreign exchange, and affiliate fees. The addition of Ramp Treasury will provide an additional revenue source, further solidifying the company's position in the fintech space.

Despite the current market conditions, Ramp has managed to avoid layoffs, and its valuation has held relatively steady. The company crossed the 1,000 employee mark by the end of 2024, up from 730 at the time of its raise last April. Looking ahead, Glyman expressed that Ramp is eyeing an IPO in the long term, stating that the company is focused on building a great business, regardless of whether it's private or public.

The launch of Ramp Treasury marks a significant milestone for the company, as it continues to expand its offerings and solidify its position in the fintech space. As the company looks to the future, it will be interesting to see how this new product contributes to its growth and success.