Broadly speaking, there are four ways to launch embedded finance. Which you choose will significantly impact your required investment, your time-to-market, and the quality of the financial products you can offer your customers.
- Bank-direct. It’s possible to work directly with a bank partner. Many early fintechs did so because there weren’t any other options. But doing so requires an enormous investment of resources, both up-front and on an ongoing basis. Plan to spend at least 2 years and $2M, as well as hiring a large, dedicated banking team.
- Middleware. This term describes older tech companies (e.g., Galileo, Marqueta) whose primary business is card processing. They represent a step in the right direction, providing about 40% of the necessary banking technology. But you’ll still have to invest heavily in bank relationships and compliance.
- Payment processor. In recent months, several payment processors (e.g., Adyen, Stripe) have started offering embedded finance as an add-on to their payment services. In general, embedded finance is not a priority for them; as a result, their products are less complete, their evolution is slower, and support is hard to access.
- Financial infrastructure platform. When you partner with a dedicated , you can access a more complete and reliable set of financial products. These products will grow and scale with you, and you’ll receive premium service and support. That’s because banking is core to their business.