Checking in on Embedded Finance
A peek into our 2023 prediction.
Hi there,
Today’s newsletter lands on June 21st, which is special in a few ways:
It’s the summer solstice, a.k.a. the official half-way marker of the year 🤯
It means there’s no better time to take a peek at what we penned for our 2023 FinTech predictions 👀
One key theme across both our piece, and many others, was the future of embedded finance.
2022 started off strong for embedded finance. The subvertical continued to earn VC backing, and many held the stronghold that everything really could be FinTech if it just tried hard enough.
Our post hypothesized that unique data and insights would continue to paint a more accurate picture for consumers, leading to superior financial products. It also caveated, however, that embedded finance saw heaps of capital get poured into it with no true product-market fit established.
Six months into 2023 and a lot has happened, including the unprecedented March Madness: Banking Edition.
Banks that provided debt or “loaned” their charters have gone the way of the dodo. And because of this, consolidation, acquisitions and lay-offs in the embedded finance space have taken over many headlines. (Rize, Bond, Synapse, etc.)
A spicy conversation at the 2023 FTT Conference in NYC this week also identified a real risk: As embedded finance removed friction, there is absolutely the increased risk consumers are buying financial products they don't need and/or understand.
Is what we’re seeing now with embedded finance some healthy consolidation, or premature demise? How does this supply and demand balance itself out?
At April’s Empire FinTech Conference, five VCs took the stage to answer questions on what they had right and wrong. We pinged one of those panelists, Adam Nelson, Partner at FirstMark Capital, to answer the question above.
“Embedded finance is one of a number of categories where consolidation is needed to manage a venture funding environment that created too many competitors. A focus of consolidated players will give the embedded platforms the depth of functionality and scalability that's been missing; where much of the software falls well short of the marketing promise.”
It’s clear that a few key embedded finance players will, however, end on top. I’ll be curious to know which will, and what factors differentiate them for the rest.
Cheers,
Jon
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🗞🎧 The latest news in FinTech.
Reads
❌ Crypto Payments Firm Wyre Shuts Down — Users Told to Remove Assets From Platform | Bitcoin.com
Wrye’s decision to shut down was made in order to “protect the best interests” of its stakeholders and customers.
🌈 LGBTQ Americans are still struggling to achieve financial equality | American Banker
A study from the Center for LGBTQ Economic Advancement and Research showed that LGBTQ Americans were twice as likely to have "poor" or "very poor" credit scores as non-LGBTQ respondents.
🏢 Breaking down barriers for fintech and bank partnerships | FinTech Magazine
Former Group CEO of Barclays and Founder of 10x Banking, Antony Jenkins, details how his company can bridge the gap between fintechs and banks.
🤖 Majority of consumers trust generative AI for financial planning | Finextra
The majority (53%) of consumers trust generative AI technology to be used for its financial planning, suggests recently published research.
🤝 Pay-by-Bank Rewards Programs Can Build Stronger Consumer-Merchant Bonds | PYMNTS
52% of bridge millennials and 50% of millennials said they would be very likely to use online bank transfers to earn rewards.
Listens
💳 Enabling access to credit in Emerging Markets | Wharton FinTech Podcast
Russell Matambo hosts Shivani Siroya, Founder and CEO of Tala, a global technology company expanding access to credit and financial services in underserved markets.
They discuss how Shivani’s built Tala on the basis of her micro-lending activity from her own savings, the importance of trust when lending in Emerging Markets, the socioeconomic impact of credit in Emerging Markets, and much more.
🧑💻 Bye Bye Metaverse. Hello Metaverse. | OneVision
While the metaverse and web3 are receiving less airtime compared to the likes of generative AI, the ecosystem is still thriving and rapidly evolving — especially after the Vision Pro announcement by Apple. But what exactly is the metaverse, beyond the hype, and why do we care?
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