Hi friends

This is weird for both of us. Embedded Finance Review on a Sunday? I have been sending this newsletter out on Tuesdays for the past few months, but I wanted to test other dates. Therefore, I will be sending the newsletter out on Sundays for the rest of the year. I will decide then how to continue in 2024. If you have any preference for a specific day, let me know in the feedback at the end of the newsletter!

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Vertical or embedded—who will win the market for medical professionals?

Fleming, a German financing provider for doctors and other medical professions, has launched a bank account and debit card product in cooperation with embedded banking provider Swan. And before you wonder, yes, this is not a true embedded finance product, since we cannot classify Fleming as a non-financial brand. Fleming launched its original financing product in 2021 when it partnered with embedded lending provider Banxware. Doctors could apply digitally for a loan for example, to take over a medical practice or for other expenses up to five million euros. The banking product is likely aiming to increase touch points with their customers and might enable Fleming to launch other adjacent products in the future.

But coming to the question, why do I cover this story in the newsletter if it’s not truly embedded finance? You might remember that I have blogged about vertical vs. embedded banking in the past and I believe that vertical fintech solutions can succeed in certain areas. It doesn’t have to always be a non-financial company that is winning by combining financial activities with non-financial activities. It can be the other way around as well.

Especially in Germany, we have seen a number of startups launched in the past few years that are aimed at medical professionals, from startups that offer banking products (Cure Finance) and invoices and payments providers (Nelly) to treatment planning tools (Roger) and, of course, financing (Fleming). All of them are new tools for a doctor in addition to their medical practice management software, the main software a doctor is using. This software is old-school and, for us digital natives, probably very hard to use; nevertheless, it contains all the necessary features and functionalities a doctor’s practice needs. Startups will have a hard time winning against these software providers since they cannot offer all the functionality from day one (and some startups don’t even want to compete with these providers for other reasons). Thus, they need to start somewhere else and likely integrate this practice management software in order to succeed. They have to pick their wedge (click here to understand this better) before broadening their scope.

I am not an expert when it comes to medical professionals. But if it’s true that practice management software is impossible to replace but already covers many of the non-financial activities, then a vertical fintech product might be the best way into the market before extending into non-financial activities.

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Non-financial brand news

🇬🇧 Xero has launched a bill payment and e-invoicing tool aimed at assisting U.K. small businesses in managing their cash flow more effectively.

🇬🇧 Apple Pay users across the UK can now aggregate their card and account balances from within the Wallet app. I am not making any forecasts, but do you remember how Apple launched Apple Pay in cooperation with banks before launching Apple Card?

🇫🇷 Apple has announced that businesses based in France can now accept in-person and contactless payments via Tap to Pay on the iPhone.

🇺🇸 US Shopify partners with Vertex so their merchants can automate tax calculation and compliance on a global scale.

🇧🇷 Mercado Pago, the Fintech unit of ecommerce provider Mercado Libre, receives USD$466 million for further expansion (check out my previous coverage of Mercado Libre if you missed it).

Adjacent embedded finance news:

🇬🇧 When brands build fintech products, should banks build non-fintech products? NatWest has launched a hub to help UK homeowners make energy-efficient changes to their properties.

🇬🇧 Lending company Funding Circle partners with Enfuce to launch new business credit cards for small businesses.

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Why Brands should(n’t) build fintech products

If you haven’t read Matt Brown’s piece “B2B payments aren’t payments, they’re workflows”, you should really do so. He makes a great point that companies that want to win B2B payments shouldn’t aim for that in the first move but rather create “an overall 10x better product” while focusing on adjacent needs around payments.

The post made me think. And I realized something about a number of non-financial brands I interacted with over the past few months. Some of these non-financial companies should build fintech products, but they also shouldn’t build fintech products. This sounds confusing, doesn’t it? When I say they should build a fintech product, I mean that they should go down the road of embedded finance and offer financial products (no surprise here). When I say they shouldn’t build fintech products, I mean that they shouldn’t build a separate fintech venture but rather a truly embedded experience.

Some of these non-financial companies decided to build and launch a fintech product, and many of them aimed to build a superior fintech product. But they did spend very little or no time at all building the bridge between their non-financial product and their fintech product. While doing so, they are likely running into the same problems that pure fintech companies have faced before. So if you are embarking on the journey of building a fintech product at your non-financial company, please make sure that both worlds are linked and supporting each other’s growth.

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Infrastructure provider news

🇬🇧 Regulators are cracking down on banking software startups. It’s not lack of funding that’s keeping fintech CEOs awake at night; it’s their software providers

🇳🇱 Swan has announced its expansion into the Netherlands and the launch of localised Dutch accounts.

🇫🇷 Mangopay, a payment provider for marketplaces and platforms, announces the launch of its end-to-end FX solution, designed to support the international growth of platforms and marketplaces.

🇱🇺 Banking Circle has partnered with Ant Group to work on a new liquidity management project.

🇬🇧 Embedded lender YouLend boosts SME approval rates by 90% with Plaid’s help

🇺🇸 Modern Treasury has launched instant microdeposits leveraging the Federal Reserve's FedNow and real-time payments.

🇺🇸 Goldman Sachs is preparing to sell off its General Motors credit card program as part of its wider retreat from the retail market.

🇦🇺 Adyen has launched Capital, a solution that allows platform customers to access funding for their SME users in Australia.

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Insightful reads

📒 Capgemini report: Unlocking the $500 billion opportunity with embedded finance

📙 OpenPayd has released a report that suggests a forthcoming surge in embedded banking services.

🧑‍💻 PayFacs, like Square, Stripe or PayPal, boost revenue by improving the customer experience.

🎙️ Podcast corner

1️. Paul Staples delves into the shifting role of banks within digital ecosystems and its long-term implications.

2️. IBM’s Ramamurthy discusses embedded finance, open banking, and how FIs can approach new regulation.

3️. Demystifying embedded banking success with Chris Dean and Chris Tremont.

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Job Board

1️. An early-stage startup (with funding!) at the intersection of fintech and mobility is looking for a COO.

2. Head of Compliance at a vertical embedded banking provider.

Does one of these roles sound interesting to you? Hit reply, and I will tell you more!

Are you hiring? Submit your vacancy and get featured in the next edition.

Are you looking for a new opportunity? Submit your profile and we will send you suitable opportunities (we won’t share your name with anybody).

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