WASHINGTON, DC – MARCH 27: U.S. Vice President JD Vance leads a Fraud Task Force meeting in the Indian Treaty Room at the White House on March 27, 2026 in Washington, DC. Vice President JD Vance held the Fraud Task Force Meeting with aims to reduce federal spending by identifying misuse of federal funds. (Photo by Heather Diehl/Getty Images)
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Ask Tyler Traudt whether a stranger could invoice a city for services never rendered and simply get paid, and he does not hedge. “People are stealing money,” he said on the On The Margin podcast, “and it’s an even greater problem if you’ve got vulnerable systems.”
The evidence is fresh. In April 2026, the city of Aurora, Illinois lost nearly $1.1 million after an employee took a phone call from someone posing as a bank representative and handed over account details. More than a year earlier, Arlington, Massachusetts sent four straight monthly payments totaling $446,000 to a criminal who had impersonated a real vendor and asked to switch from paper checks to electronic transfer. The town noticed only when the actual vendor complained it had not been paid. The FBI’s Internet Crime Complaint Center logged $3.05 billion in business-email-compromise losses in 2025 alone.
Traudt runs DebtBook, a Charlotte software company that sells treasury tools to the least glamorous corner of American finance: the state governments, counties, hospitals, school districts and water utilities that manage public money. His bet is that the same technology unnerving finance chiefs, artificial intelligence, is what finally drags that sector into the modern era. On June 25, DebtBook launched Insights, an AI layer built on top of its existing software.
‘You can’t be 10% better’
Public finance is one of the last major industries still run on spreadsheets and disconnected systems, and Traudt argues that habit is expensive. “You can’t be 10% better, you gotta be 10x better,” he said, describing what it takes to pry a government finance team off a manual process it has used for decades.
The pool of money involved is enormous. State and local governments held roughly $7.9 trillion in cash and security holdings as of 2020, according to the U.S. Census Bureau’s most recent complete count. Traudt offers a narrower figure from his own market-sizing: “The thousand largest have over, I think it’s three trillion dollars of cash and investments, something something like that on their balance sheets.” A single city, he notes, might run a water system, a sewer system, an airport and a transit agency as separate enterprises, spread across ten banks and fifty accounts. “Who knows what waste is in there?” he said. “Who knows what fraud is happening inside the organization?”
Traudt spent a decade in that world, starting in Citigroup’s public finance investment banking group, before he quit in 2019 with his wife pregnant with their first child and no salary. “I took fifty thousand dollars of my own money and I asked my dad to put fifty thousand dollars of his,” he said. He pre-sold the product before it existed. “We had about 25 customers sign contracts before we launched our first product,” he said. DebtBook has since raised more than $22 million, led in its Series A rounds by Boston’s Elephant Partners, and says it now serves more than 2,100 organizations.
‘Trust has to come first’
“Public finance teams manage public money under audit scrutiny, so trust has to come first,” said Brendan Mannion, the company’s VP of product. Insights is built around that constraint: it does not let the AI do the math. The layer gives finance teams a daily briefing across cash, debt and investments, flags items that need attention like excess cash or an upcoming bond payment, and includes an assistant called Marty that answers plain-language questions such as which bonds are callable next year. The underlying numbers are computed with conventional, audited logic, not generated by a model that might hallucinate a figure.
“AI has the opportunity to transform public sector finance, but only if it’s applied correctly to address the unique needs of our customers,” Traudt said in the launch announcement. He told trade publication The Bond Buyer that customers “have to have software that they trust that performs the same calculation the same exact way every single time,” while still using AI to “move faster or derive insights that you otherwise wouldn’t be looking for.”
The framing echoes a broader shift others in finance are watching. Chandler Fang, founder of t54 Labs, said on the On The Margin podcast that “our entire financial ecosystem was primarily human-centric,” a design that so much back-office finance is only now being rebuilt to move past.
‘Hope is not a strategy’
The fraud risk is what gives the pitch urgency, and security operators say institutions are late to it. “Attackers understood that before infrastructure teams and before security teams,” said Ido Sofer, founder of custody firm Sodot and a former Israeli finance ministry official, on the On The Margin podcast. He expects those hard-won lessons to “meet the entire financial realm in the next years.”
Traudt has watched the scams up close. “They’ll reach out to you and they’ll claim that the wire instructions for a certain vendor have changed recently,” he said. “And they’ll try to change the wire instructions.” The staffing gap makes it easier: 60% of public finance workers are over 45, according to a GFOA study, and officers rank talent retention as their top concern. Ron Shultz, an executive at payments firm ACI Worldwide, said on the On The Margin podcast that the old way of moving money was faith-based. “I called that click and pray. So you made the payment and you just sit there. And I would also say hope is not a strategy.”
DebtBook is private, so its cash-flow-positive claim, its 30% to 40% growth rate, and Traudt’s $3 trillion market estimate all rest on his own word rather than any public filing.
Traudt thinks the software wins anyway. “AI actually will be a compelling event for many of them,” he said. “They’ll see such meaningful productivity gains. They’re gonna wanna go capture it.”