In this insightful episode of the Embedded Finance Review podcast, host Lars Markull interviews Sophie Guibaud, a Fintech veteran with extensive experience at companies like Bankable, Fidor Solutions, and Fiat Republic. Sophie shares her deep knowledge of the Banking as a Service (BaaS) landscape globally and offers unique perspectives on Saudi Arabia's rapidly growing FinTech ecosystem, where she recently relocated. As the author of a book about embedded finance, Sophie brings authoritative insights as the conversation explores how BaaS has evolved over the past decade, the role of traditional banks in this space, and the ambitious Vision 2030 plan transforming Saudi Arabia's financial landscape.
The Evolution of Banking as a Service
- BaaS has transformed from primarily enabling FinTechs to "unbundle the bank" around 2010 to now supporting diverse business models
- Today's landscape features more specialized providers focusing on specific payment types, deposits, lending, or industry verticals like e-commerce or crypto
- Regulatory scrutiny has increased as BaaS use cases have expanded faster than regulatory frameworks could adapt
- The economic context and interest rate environment have made the BaaS business model more viable compared to the negative interest rate era
- The variety of BaaS providers today offers more options, but creates challenges in selecting the right partner for non-financial brands
Traditional Banks vs. Fintech Startups in BaaS
- Different types of banks approach BaaS differently: tech-focused challenger banks, pure BaaS players, and traditional incumbents
- Banks bring valuable assets to BaaS: established reputations, robust balance sheets, regulatory relationships, and operational capacity
- For incumbent banks, execution remains challenging due to cultural differences between retail banking and B2B tech services
- Strategic considerations include "build vs. buy" decisions, as seen with Société Générale's purchase of Treezor
- First-mover advantage exists in territories where BaaS is still developing, while mature markets like Europe are already well-served
Saudi Arabia's Vision 2030 and Fintech Revolution
- The Saudi government has established a goal of 525 Fintech startups by 2030 as part of the Vision 2030 plan
- Current progress is impressive, with approximately 250 Fintech startups already established
- Infrastructure development includes a Financial Academy to address Fintech skills gaps and the Macken program that provides ecosystem support
- Grants of up to 1 million per startup are available for cloud infrastructure development
- The regulator is taking a proactive approach to creating the necessary ecosystem, unlike the more protective stance often seen in Europe
Comparing European and Saudi Fintech Markets
- Saudi Arabia's early FinTech development echoes Europe's 2012 era, but is progressing much faster
- Digital adoption among consumers is high, creating favourable conditions for embedded finance
- Advanced infrastructure exists in some areas, including instant payments and government-linked KYC systems
- Companies like NIM card are already catering to both FinTechs and non-financial brands
- The interchange fee structure provides better revenue opportunities for BaaS providers compared to Europe
Future Outlook and Sophie's Current Focus
- Sophie predicts embedded finance will become ubiquitous in Saudi Arabia due to high digital adoption
- Saudi regulators are learning from global experiences to potentially take a different approach to BaaS regulation
- Banks in Saudi Arabia have an opportunity to take a more active role in enabling the FinTech ecosystem
- Sophie now advises B2B FinTech founders globally on sales and marketing while helping banks launch embedded finance solutions
- She maintains involvement in European, UK, and US markets while focusing on making an impact in Saudi Arabia