Reflections from FTT Embedded Finance & Super-Apps Event

We are back on the road again for in-person client meetings, industry events, and even getting together with colleagues, and it feels great! A couple of weeks ago, I again had the privilege of being invited to moderate a panel at the FTT Embedded Finance & Super-Apps 2022 event at the County Hall in London. If such a hot topic wasn’t enough to pack the crowds, the event was co-located with Future Identity Finance, so not surprisingly the place was buzzing with excitement!

I did manage to catch up with a few old and new friends from the Identity world but spent most of my day at the Embedded Finance event. Simon Torrance, CEO of Embedded Finance and Super App Strategies, opened with a keynote sharing his vision for embedded finance: "financial wellness baked into the everyday lives of everyone”. Indeed, embedded finance models are expected to democratise access to financial services, expanding reach and financial wellness for more people than ever.

Incidentally, we’ve lately seen a number of different attempts to estimate the size of the embedded finance market. They all seem to coalesce around the figure of USD7 trillion, but opinions diverge as to what it represents. Some view it as available revenue pools - something that our analysis indicates would be very ambitious and an unlikely scenario. It was good to see Simon confirming that, according to his analysis, it’s the expected market value of all companies engaged in the sector by 2030.

What will determine whether any of these estimates are correct is how many companies and in what industries will find the genuine need to embed financial services into their propositions. As highlighted by one of the early panels, the importance of starting with the customer need and figuring out how financial services can help solve it should not be underestimated. Lawrence Bennett, head of Financial Services at eBay, shared that their customers don’t typically have explicit demand for FS, but FS can help solve real problems, for example, by embedding insurance policies into purchases to facilitate easier returns.

This was echoed throughout the day; one of the sessions focused on embedded wealth asked, “what is the point when customers recognise the need for wealth management services; who is best placed to do it?” Could it be a department store, for example, armed with the knowledge that a customer just bought a pram, a cot, and some baby clothes, and assuming it’s a family that may be interested in investing for their child's future? This is not a hypothetical scenario – John Lewis recently partnered with Nutmeg to offer investment services.

Non-bank firms can’t do this alone and need partners, such as companies that provide Banking-as-a-Service (Baas) capabilities. To succeed, BaaS companies need to partner and cocreate with clients. They must deeply understand their clients’ industries and their challenges, so that they are solving problems and improving across the entire end-to-end value chain, not just specific pain points, like access to payment rails. Alex Mifsud, a co-founder and CEO of weavr.io, even described it as the structural challenge facing the BaaS market – integrating financial services into other apps requires deep understanding of the context. That matters especially when trying to right-size risk and compliance approaches. Will the next generation BaaS offer compliance-as-a-service?

It’s impossible to summarise all the takeaways from such rich conversations in a short blog. I would like to close by thanking my fellow panellists, Diana Carrasco, Managing Director, Merchant Services at Lloyds Banking Group, and Emma Davis, VP of Product at Divido, for their deep insights and a fantastic dialogue we had on stage discussing how the industry is Shaping the Future of Payments. And a big thank you also to Victor Cruz, Lisa Moyle, Flora Pleguezuelos, and the rest of the FTT team for inviting me again, it was a pleasure, until next time!