At the Vertical SaaS & Embedded Fintech Pre-Cocktail Reception, OMERS Ventures collaborated with Recall Capital and Gusto Embedded for a discussion on success in a world beyond payments. The event brought together venture capitalists, entrepreneurs, and tech leaders to discuss the evolving landscape of embedded fintech. Recall Venture’s Somrat Niyogi moderated the panel, which included Dan Chandre, SVP of Commercial at Squarespace, Laura Collinson, VP of Payments and Fintech at Jobber, and Fred Helou, CEO and Founder of Vagaro.
Here’s some of what they discussed, along with some additional color.
Unveiling the Future Beyond Payments
🤖 AI: Shaping the Future of the Customer Experience
Many media and content creators perceive AI as a threat, while SMBs and entrepreneurs consider it a savior. For them, AI presents a solution to the daunting task of building out engaging content from the get-go. AI tools offer a shortcut on design, copywriting, support, and even coding – providing a starting point on which to build.
🥞 The Rise of Full-Stack Offerings
In an era where point solutions are becoming obsolete, full-stack offerings are gaining momentum. Once dominated by specialized solutions, vertical markets are witnessing a shift towards comprehensive platforms beyond payments. The key lies in understanding the starting point and how subsequent expansions align with the company’s DNA.
For the end customer, verticalized SaaS offers tailor-made solutions for a specific industry, rather than the one-size-fits-all tech stack that’s dominated the space for years. All the tools you need to run, say, a doctor’s office, in one place – that’s also compliant with privacy and data-sharing laws.
👩💻 Navigating Technical Integration Challenges
Despite promises of simplicity, technical integration of embedded solutions remains a complex endeavor. Legacy codebases pose formidable challenges, often defying the notion of “two lines of code” integration. Could AI emerge as the hero in this narrative, streamlining the integration process with its prowess?
Insights from Vertical SaaS & Embedded Fintech Leaders
🏦 The BaaS Conundrum
The buzz around Banking-as-a-Service (BaaS) continues unabated, with speculations rife about the survival of contenders in this competitive space. Regulatory complexities loom large, serving as both a barrier and a catalyst for innovation in fintech.
While it’s difficult to predict what will happen next, the relationship between the underlying banks and the fintechs that partner with them will likely change under increased scrutiny and customers’ desires for greater integration.
🔄 Embracing the Pivot
In an uncertain era, adaptability emerges as the key to survival. Companies across sectors are pivoting operationally and philosophically, charting new trajectories to navigate the ever-changing business landscape.
Some are hard pivots – a shift in business model – and others are market expansion, like growing from an exclusively B2B (business-to-business) model to a B2C (business-to-consumer) or B2B2C (business-to-business-to-consumer) model.
🖇️ The Great Consolidation
As the fintech landscape matures, consolidation becomes inevitable. Startups vie for limited funding alongside contenders, while incumbents capitalize on acquisitions to strengthen their positions.
Advice to Vertical SaaS & Embedded Fintech Product VPs
🔋 Harnessing the Power of AI
AI is here to stay, and it will only get better. In particular, GenAI’s role in overcoming creative blocks and AI analytics’ potential in predicting customer churn are the most exciting developments.
🧭 Charting the Course Forward
As we navigate the relatively new worlds of embedded fintech and vertical-specific software, certain truths emerge: the importance of differentiation, the power of AI, and the inevitability of consolidation. As the velocity of software development increases, it’s important to know what makes your product unique and double-down on that – because others in your space can copy the basic functionality.
💡 Crafting a Narrative
Embedded fintech leads face the onus of internal ‘salesmanship,’ strategically crafting narratives to secure buy-in from internal stakeholders, potential customers, and often the board. Navigating skepticism and apprehension is a core competency – some people may even have horror stories from prior experience with fintech apps, particularly those with a heavy technical lift. To showcase the potential of vertical SaaS and embedded fintech solutions, these leaders must articulate compelling value propositions that resonate with cautious decision-makers.
🔍 Targeting Customer Needs
Understanding and addressing specific customer segments emerge as a linchpin in product development, ensuring alignment with market demands and optimizing value propositions. Cohorting customers and tailoring solutions to their unique requirements is essential for success in embedded fintech and vertical software. Vertical SaaS has a unique advantage here, because you’re typically building for a specific use case.
🔄 Adapting to Disintermediation
The relentless pace of technological evolution necessitates a focus on delivering truly differentiated value, steering clear of redundancy given a plethora of off-the-shelf alternatives. Tech features are being rapidly disintermediated, underscoring the importance of identifying areas where unique value propositions can thrive.
Unanimous Acclaim
🍬 Oh, those Candied Walnuts!
One thing everyone on the panel could agree on: the candied walnuts were delicious!
The Success in a World Beyond Payments event offered an opportunity to hear directly from tech leaders on where they see the world of SaaS and embedded finance headed. From the transformative potential of AI to the imperative of regulatory compliance, the event underscored the dynamism and complexity defining the fintech landscape. Adaptability and innovation will remain paramount as the industry evolves, ensuring resilience amidst shifting paradigms.
