The US embedded banking provider Unit announced that it has signed two more US banks as partners for their direct-to-bank product offering (Fintech Futures). If you have been following the US banking-as-a-service industry, you are likely aware that the various consent orders from the regulator requires banks to have a stronger oversight in their relationships with fintech companies and non-financial brands. In the years before that, most unregulated technology providers (like Unit) had various partner banks included in their offering. But in this tri-party setup, banks outsourced too much of their work to the technology companies, leaving the banks unknown about the exact risks and compliance issues. With Unit’s new product, these banks are now empowered to control more and have better insights. Previously, Unit’s competitor Treasury Prime has announced a pivot to fully focusing on their direct-to-bank offering.
Clearly, the markets in the US and Europe are different and the absence of an e-money licence makes US banks a crucial partner in many fintech offerings. That being said, European banks have a big opportunity within embedded finance but so far only a few bold ones (namely UniCredit acquiring Vodeno, and SEB building an in-house solutions) are making big waves. Thats what made me wonder, do we need additional type of providers in Europe to bring more banks into embedded finance? Please share your thoughts or company names who do that today already.
