Hi folks

thanks for your patience. This edition was supposed to be in your inbox last week, but I overestimated the work I could get done when my daughter’s daycare is closed.😪

But I do have some exciting news for you: We are hosting our second Embedded Finance event on October 12th in Berlin. We are partnering with the B2B SaaS conference ARRtist and our event will be part of their very first Berlin SaaS Week.

I would love to meet as many subscribers as possible during the Embedded Finance Event so make sure to sign up. If you are working for a B2B SaaS company that offers financial services and are interested in sharing your story, please get in touch. There will be a few more updates about this event in the next couple of newsletter editions, but let’s dive into the news of the past few weeks.

Thank you and all the other 510 subscribers for supporting my work. Do you know a friend or coworker who is interested in Embedded Finance? Please share EF Review with them.

Big Tech doubles down on Embedded Finance

In the past few weeks, we haven’t seen a big non-financial brand enter Embedded Finance with their first product launch; however, our usual Big Tech suspects have made multiple Embedded Finance moves:

Amazon: Amazon discontinues their co-branded Credit Card in Germany but launches one in Brazil in partnership with Bradesco. Due to a strategic change at Amazon’s banking partner in Germany, Amazon was forced to find a new one but likely could not find one that offered the attractive terms Amazon was asking for. A co-branded credit card seems to be the only choice for Amazon when it comes to payment and banking, but personally, I would love to see a truly embedded card offering from them.

Apple: That Apple’s banking partner, Goldman Sachs, is looking for a way to get out of the Apple Card product was already public knowledge. It is interesting that even Goldman Sachs is not able to make a profit with a partnership with Apple, but this is likely due to the detailed requirements from Apple. Probably none of us are really surprised that Apple is a company with complex demands. Additionally, the US company is looking to increase its footprint in India. Tim Cook visited the country a few months ago to celebrate the very first Apple Store opening in Mumbai; therefore, it is not surprising that the tech company is in discussion with Indian bank HDFC to launch a co-branded credit card.

Shopify: Our Embedded Finance role model launched a charge card in the US, which seems like a sensible extension of their existing Shopify Balance banking product. Both products are powered by Stripe, and, like many other US companies recently, Shopify decided against a traditional credit card (where a balance can be carried forward) but requires the card owner to pay the full balance at the end of the month.

Twitter: The iconic Twitter bird is gone, and we welcome a big X to our smartphone screen. While this change seems small, it represents the intended move by Elon Musk to add financial functionalities to Twitter. So far, the company has received four financial licenses in June and July.

Uber: Uber teams with Cover Genius to Insure Brazilian Drivers. Uber’s banking product is often used as an Embedded Finance example, but the mobility platform is also moving into insurance products.

Other Non-Financial Brand News

🇺🇸 Car IQ partners with Visa to enable in-vehicle payments and sparks the discussion of how many in-car payment use cases there will be in the future.

🇺🇸 Nordstrom’s Dennis Bauer on the blurring banking-commerce line and how Embedded Finance can help with customer loyalty.

🇦🇪 The Kuwaiti food delivery platform Talabat, which is fully owned by Delivery Hero, launches a co-branded credit card in the UAE. Delivery Hero is known for various Fintech activities, so maybe this card product is just the first of many and other countries will follow?

All Eyes on BaaS

Similar to the non-financial brand section, there was not a single major announcement from an infrastructure provider that stood out from the rest. Nevertheless, the majority of the infrastructure news pieces that I found relevant were from banking-as-a-service companies, so let me give you a rundown:

🇩🇪 Solaris: The German infrastructure provider announces a fresh round of funding, but ‘only’ €38 million and purely from existing investors. This is not the strong funding announcement that you hope for; however, Solaris’ challenges around compliance and growth are publicly known. The company will need to prove that it is able to solve these problems and then potentially aim for an exit. (Solaris is not only BaaS; but I still included them here.)

🇵🇱 Verestro: A new name in town; the Polish company Verestro unveils their Banking-as-a-Service platform, which seems to be built on their experience working on various Fintech projects around the world. Their offering sounds compelling, but it will be interesting to see if they have a chance to win some relevant deals.

🇺🇸 American Express: The US card provider launches Sync, which aims to make it easier for software firms to embed its APIs. While this is not the traditional BaaS offering, it might be very appealing for software companies that serve existing American Express customers who might be unwilling to switch cards.

🇪🇬 BKN301 Group: While the infrastructure provider BKN301 is based out of Europe (San Marino to be precise), its focus is on emerging markets. The company announces the expansion of their BaaS product to Egypt, which includes a local office and team as well.

Other Infrastructure News

🇬🇧 HSBC joins forces with Tradeshift to launch an embedded finance business.

🇩🇪 Insurtech Hepster expands Notebooksbilliger's insurance offering.

🇺🇸 Mastercard introduces automated receivables for virtual cards.

🇺🇸 Lula aims to be the ‘Stripe for insurance’ and just raised $35.5 million.

Hot to win with Embedded Finance

I invite you to read Matt Brown’s post about the iron triangle of Embedded Finance where he describes the complexity of finding a Fintech infrastructure provider that checks all your boxes.

While the post is great, my favorite statement is right at the beginning when Matt describes that product innovation is a necessary condition but not a sufficient one.

To put it simply, the best product will not always win, and actually, non-financial brands with an existing business and customers could be in a good position to win over young players entering their market who focus on the perfect product.

But the split is hard, as this doesn’t mean non-financial brands can win with bad products. Especially when it comes to financial products, there are often certain features that we as potential users (consumer or commercial) request, and we will not be willing to use a new service if it is missing an important feature for us. Non-financial brands have to find their (!) answers to the golden questions: (1) how good does the financial product need to be and (2) how to create an unfair advantage by combining this financial product with the core business.

From what I am seeing in my activities in the Embedded Finance world, there are more and more non-financial brands who understand this; however, I think many more are currently still standing on the sidelines because they believe that they can only win with a superior product.

Insightful reads

🏦 Embedded Finance Is the Biggest Growth Opportunity Banks Have

📈 How to drive revenue growth with embedded finance

⤴️ Banking-as-a-platform market revenue set to grow to $49 billion by 2028

💰 Profitability In Embedded Banking: Three Key Conditions For Success

🎢 Embedded insurance is poised for exponential growth

🛍️ Retailers adopting embedded finance following shift to online shopping

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