Founder & CEO at Fintech Wrap Up | Payments | Wallets | AI
65,205 followers
From embedded to orchestrated finance All technology innovation tends to go through phases of unbundling and re-bundling. After the best niche opportunities have been exploited, the market becomes fragmented and difficult for consumers to navigate. Subsequently, successful entities expand and offer more products. This process is cost-effective as it promotes cross-selling. The standard playbook for startups, sometimes called ‘land and expand,’ is to go to market with a niche product that a small company can viably execute well enough to defend itself from existing players and where the unit economics work - particularly if some efficiency in either operation or distribution can be gained from a modern, digital approach. From this defensible beachhead, an expansion into further markets can be launched. As fintech matures and winners begin to emerge, we are now in a phase of re-bundling, creating a particular market opportunity for bancassurance - a model that is, by definition, a bundling of insurance with banking. The rebundling phase creates both the supply and the demand. The demand comes from platforms becoming aggregators, multi-product platforms like Revolut, which are searching for embeddable services, including embedded insurance, to add to their offering. The supply comes from successful niche fintech products, looking to grow the addressable market (and lower customer acquisition costs) for their product(s) by tapping into others’ distribution channels, and to lower average costs by spreading production costs over larger volumes. On the demand side, Wise is a good example. The fintech conspicuously renamed itself from Transferwise to Wise so that it could cross-sell other products and services without being boxed into currency transfers. On the embedded finance supply side, Currency Cloud provides embedded currency transfer services for other companies, such as Revolut. These products already extend to bancassurance, where, for example, Qover provides embedded insurance for Revolut customers. As the larger fintechs move first to expand their range of offerings, existing banks can and will follow suit. For banks, the embedded approach becomes more attractive than traditional, pre-internet bancassurance as it allows for greater segmentation and personalization, leading to increased customer loyalty and growth. While larger banks that can afford significant development costs and are subject to increased security and regulatory constraints may still opt for in-house solutions, the trade-offs between build vs. buy are rapidly diminishing. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source Aperture / Alicia #fintech #embeddedfinance #banking Thomas Leda Timothy Alex Ali Carlos