Embedded finance – revolution or the end of fintech as we know it?

Your company may not be in the payments business, but eventually, a payments company will be in your business. For the next generation of consumers, banking will be something that you ‘do’ with your favorite brands.

For too long, fintech has been characterized by brutal competition and a comparative lack of co-operative or collegiate working.

Stripe has recently made headlines with its entrance into the banking world with Stripe Treasury. The news follows Google’s banking and payments statement along with IPO bound companies such as Airbnb, DoorDash, and Affirm all mentioning “financial services” in S-1 filings. Twitter is discovering ways for users to receive tips from their followers. Rumors have been around since their acquisition of Revue, a service like that of Substack where writers/creators get paid from their audience. OnlyTweets, an experiment from Stir Money (which is raising their Series A at a 100m valuation led by Andreessen Horowitz) also adds fuel to this emerging content creator economy. On Twitch, followers of any gamer can subscribe for $5 per month or send small donations during live gaming which may add up to thousands of dollars per day. Clubhouse, an audio streaming app, recently announced to embed payments into to the user journey.

But is embedded finance something that large tech companies will snatch away from large finance firms? Far from it. There is still a widespread idea within fintech that there is one ‘big prize’ – to be the next neobank unicorn. This is going to change. There will be a greater focus on ‘downstream’ products, and less fixation on building the next world-beating bank. 

Vertical apps such as Toast for restaurants, Squire for barbershops and Shopmonkey for car repair shops will deliver financial services to businesses in the future rather than traditional, stodgy financial institutions. Simple, elegant APIs, developer-first product approaches, and a focus on interoperability are all combining to reduce the resource burden related with building products.

Simple. Elegant. These were the keywords we had in mind when building Verso, a decentralised marketplace for the regulated financial service industry. Verso provides financial service providers with access to previously inaccessible consumers. Verso also allows those consumers access to exciting new product offerings through whichever wallet they already happen to use.

What does this mean? For businesses such as e-wallets it will mean access to vital new revenue streams, along with the opportunity to generate additional revenue from existing products. It will allow non-financial brands to use their expertise in experience design and the troves of data they hold on their customers. At the heart of embedded finance is the benefit of enabling any brand or merchant to rapidly, and at low cost, integrate innovative financial services into new product offerings and customer experiences.

How is Verso capable of ensuring compliance amid connecting several, highly regulated industries operating internationally? Verso maintains strict regulatory compliance by ensuring that products are only displayed to consumers who fit the eligibility criteria.

The sensible fintech founders of the future probably won’t be thinking about banks, or at least not in the sense that we currently imagine them. Instead, they’re more likely to be thinking about relatively niche use-cases for specific Embedded Finance technologies. Embedded finance is far from being the end of fintech. Embedded finance is the true revolution of fintech.

To know more about how Verso intends to make embedded finance a possibility for every consumer app our business out there, head onto verso.finance or read our White paper.

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