Money 20/20 Recap: Embedded Fintech is the Future

Embedded Partners
Money 20/20

Another Money20/20 is in the books, and it did not disappoint. With a packed agenda and so many great speakers and exhibitors, it was the best learning experience in fintech. We connected with partners and other innovators building embedded fintech products and enjoyed being in-person (and in Vegas). Money20/20 was a great place to connect, share ideas, and learn. While there is still so much I don’t know — several themes came up over and over:

Embedded Fintech is the Future

 Unlike last year, it felt that everyone was talking about embedded. Adyen launched new platform capabilities, Marqueta delivered seven new banking products, and Unit had a huge presence. In addition, dozens of new entrants across the embedded finance landscape, from credit to bookkeeping, invoicing, and payroll.  

Embedded is No Longer Just About Payments

Payments have generally been the first embedded finance product that software platforms build to create value for customers. This year as I chatted with leaders, especially those leading vertical SaaS platforms, the conversation turned to the full embedded roadmap. 

Embedded lending, in particular, was top of mind, and the number of players has significantly increased in the last year. The common theme I heard was a question: “What is the difference? Why do you think [partner X] is better than [partner Y]?” While choice is great for software platforms, communicating clear differentiation will continue to be essential for embedded players.

Sequencing the Embedded Fintech Product is the Challenge

As one executive shared — roadmaps are like a wheel of options, but without a logical sequence, the wheel spins and spins, and what’s next is constantly changing.

Looking 3-to-5 years out, leaders expect every software platform will have a complete set of in-app financial products — payroll, lending, card, checking, savings, and invoicing. We’re hearing this from dozens of partners; it’s not a question of “if”; it’s “when.” 

The challenge is that these products are new. Software platforms serving small businesses are knowledgeable about the critical problems to solve for their customers. But there’s not yet a template to follow, so these businesses have to place bets (pun intended) with their embedded finance roadmap. We are still very much in the early days. 

We see this often with embedded payroll. Companies in the same space can have very different priorities for their embedded finance roadmap. Consistently it’s: i) an increasing desire to go beyond payments and ii) no clear playbook. For example, one executive at a vertical SaaS company shared that adoption of their in-app banking products is not (yet) as strong as they expected. As this leader said, “If you’re my customer, you would only switch from your existing bank to our banking solutions if there’s something about it that’s clearly better.” 

The good news is that more embedded fintech options make it faster and easier to build in-app financial products, so feedback loops get faster. And while many Product leaders don’t feel that their customers are screaming for specific embedded finance features, as my friend Blake from Jobber said, “Customers today don’t have time to go to multiple platforms or six different places to run their business” (video to follow).

The Message is Clear; There’s an Opportunity For Those Willing to Take the Plunge

When you combine faster feedback loops, a clear signal that a suite of embedded finance features is part of every software platform’s future, and many embedded options but no tested playbook, the result is the first mover advantage for those willing to invest and iterate.

Updated: December 7, 2022

Somrat Niyogi Somrat is the Head of Business for Gusto Embedded Payroll and previously oversaw Gusto's strategic partnerships, technology ecosystem, distribution partnerships and the developer ecosystem. Prior to Gusto, Somrat ran Business Development at Clari and founded two venture backed companies -- Miso, a pioneer in social television, and Stitch, a smart sales assistant which sold to SugarCRM. Somrat graduated from The University of Texas at Austin with a BS in Computer Sciences.
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