In this episode of the Embedded Finance Review podcast, host Lars Markull explores the evolution of embedded finance with industry veteran Paul Staples, who built embedded banking offerings at HSBC and Clear Bank. Five years after Angela Strange's provocative claim that "every company will be a fintech," Paul shares critical insights on why many non-financial brands are failing at financial product integration. The conversation reveals that success in embedded finance isn't about slapping financial products onto existing offerings—it's about solving specific customer problems and creating seamless experiences that add genuine value. From utility infrastructure to enterprise solutions, Paul explains which sectors show promise and how banks must evolve their skill sets to thrive in this rapidly changing landscape.
The Evolution of Embedded Finance Since 2020
- Paul challenges Angela Strange's 2020 claim that "every company will be a fintech," suggesting it oversimplified the opportunity
- The last five years have seen the simplification of banking into primitives with increased accessibility
- Modern embedded finance is actually an ancient concept—banks have always gone where customers are
- Success requires understanding three key elements: simplification, accessibility, and creativity
- Recent market dynamics have pushed both banks and non-financial companies toward embedded finance solutions
Why Brand Power Alone Doesn't Work for Financial Products
- Non-financial brands that launch financial products purely based on brand trust are failing
- Post-2008 research claiming people trust brands like Apple more than banks was misinterpreted
- When asked who they'd trust with $10,000, consumers still choose banks over retail brands
- Proposition research is critical yet often overlooked—"research can save millions in wasted effort"
- Metro Financial Services' shutdown highlights the dangers of offering financial products without solving real problems
- Successful integration requires teams with deep knowledge of both the core product and financial services
The Jobs To Be Done Approach to Embedded Finance
- Success requires solving actual customer problems rather than simply offering financial products because you can
- Co-branded cards succeeded historically because they drove loyalty through tangible benefits like airline miles
- Geographic considerations matter significantly—solutions that work in one market often fail in others
- Card issuance alone is no longer a differentiator as consumers already have numerous payment options
- The utility sector shows promise due to inefficient financial infrastructure and specific pain points to solve
- The future lies in cost efficiency and infrastructure improvements, not just new revenue streams
Banks' Evolving Role in the Embedded Finance Ecosystem
- Traditional banks are transforming from distribution models to consultative partnerships
- JP Morgan, UniCredit, and SASEB are examples of banks taking more active roles in embedded finance
- Banking-as-a-Service is becoming a "hygiene factor" for banks, particularly at the B2B enterprise level
- Banks have a unique advantage through their longstanding client relationships and historical data
- The corporate banking salesperson of the future will need new skills—understanding digital user journeys and friction points
- Banks and EMIs (e-money institutions) will likely see greater divergence in their embedded finance approaches rather than direct competition
The Next Wave of Embedded Finance
- The coming wave will focus on efficiency gains rather than just revenue opportunities
- Utility sectors, wholesale energy markets, and supply chain optimization show particular promise
- Paul predicts increased specialization with infrastructure plays becoming more important
- Embedded finance will move beyond consumer applications toward B2B and enterprise solutions
- Success requires a willingness to build new skillsets and a deeper understanding of customer needs
- For businesses considering embedded finance, understanding "jobs to be done" remains the critical success factor