Welcome to the SMB Tech Innovators podcast, powered by Gusto. We explore the intersection of financial services and vertical SaaS strategy and discuss how software combats the rising complexity of running a business. We aim to share stories, advice, and best practices from the leaders and investors behind today’s cutting-edge platforms. In this episode, Mauricio Comi, former CEO of Dutchie Insurance Services, LLC, covers why there is so much opportunity in the insurance space and how to build your core offering properly before expanding to additional embedded fintech products.
Highlights include:
- What is an MGA?
- The framework for thinking about modern embedded fintech products and risk.
- The right time to add an embedded finance product to your core offering.
- How should founders price their digital products?
- What is the most exciting thing in fintech right now?
- Advice to SaaS providers thinking about partnering with an embedded product.
The Untapped Potential of Embedded Fintech Products
The landscape of business revenue streams is changing as the revenue generated from embedded fintech products in some companies outweighs that from core services. This tipping point has become crucial for businesses to recognize and leverage. Recognizing this potential and knowing when to act on it is key. The financial benefits of offering embedded fintech products, like insurance, often surpass those derived from standard service fees.
Mauricio Comi, an expert and leader in financial services, has navigated various fintech products and has led the creation of successful insurance ventures at Intuit and Dutchie. His journey highlights the moment he recognized the immense potential for an insurance partnership while showing the product partnerships team at QuickBooks.
The foray into embedded fintech began by identifying untapped opportunities. Mauricio spoke about a partnership where revenue from insurance sales, though modest, hinted at an enormous opportunity. This inspired him to propose a deeper exploration of insurance within the company.
The initial steps involved exploring different avenues, from lead generation to establishing a Managing General Agent (MGA) model. This MGA approach allowed for substantial revenue growth without excessive financial risk.
Insights into Establishing Embedded Fintech
- Identifying Opportunities: Mauricio emphasized the substantial opportunity within small businesses spending over $100 billion on property and casualty insurance premiums in the US. Understanding the market size and technological gaps in the industry before venturing into such initiatives is crucial.
- Industry Evolution: Insights were shared on progressing from lead generation to brokerage and finally to the MGA model, focusing on a seamless digital customer experience. The MGA model revolutionized customer interaction, enabling sales under QuickBooks’ brand without assuming the financial risk of claims.
- Managing Risk: The discussion illuminated the balance between business and financial risks in embedded fintech. Earning the right to sell secondary products to primary customers is critical, emphasizing the importance of a seamless experience as a competitive advantage.
- Gradual Implementation: Mauricio advocated a gradual approach, using lead generation to understand customers’ needs before heavy investment. Timing and building a robust core product foundation are essential before integrating additional financial services.
- Success Metrics: Mauricio highlighted adoption rate as the primary measure of success, emphasizing the need for a top-notch user experience to convert interest into purchases.
- Pricing Strategy: Insights into pricing strategies emphasized the value of convenience and the potential for customers to pay a premium for a seamless, integrated experience. Experimentation and understanding customer preferences are crucial for fine-tuning pricing models.
Mauricio’s insights provide a comprehensive roadmap for businesses aiming to incorporate embedded fintech into their products. Understanding the market, managing risks, gradual implementation, defining success metrics, and crafting strategic pricing are essential pillars for success in this evolving landscape. Understanding customer needs, navigating regulatory complexities, and creating seamless experiences is paramount for businesses venturing into this domain. Success in embedded fintech products ultimately relies on delivering value, convenience, and a superior customer experience.
Listen to The easiest way to stand out in the insurance industry through tech podcast and connect with Mauricio on LinkedIn.
Learn more about embedded payroll for fintech products.
