I bought a plane ticket on my phone the other day. Took all of 30 seconds. I didn’t have to open my banking app, didn’t have to dig out my credit card. I just tapped a few buttons in the airline’s app and boom, done. The payment part was so smooth it was practically invisible.
That’s the future of finance. Not another app you have to download, but a seamless, integrated experience woven into the fabric of the apps and services you already use. We call it “embedded finance,” and it’s a trend I’m betting big on as an investor.
For years, we’ve been trained to think of banking as a separate chore. You go to a physical bank, or you open a specific banking app. That’s all changing. The next wave of fintech is about making financial services a natural part of other activities, whether you’re buying a coffee, booking a vacation, or running a business.
As someone who’s been in the tech game for over two decades, I’ve seen these shifts before. I’ve built and sold two companies, and I’ve invested in over 200 startups, including some of the biggest names in AI like Anthropic, OpenAI, and Scale AI. I’m telling you, embedded finance isn’t just another buzzword. It’s a fundamental change in how we interact with money.
So, What is Embedded Finance, Really?
At its heart, embedded finance is the integration of financial services—payments, lending, insurance, you name it—into non-financial businesses. Think of it like electricity. You don’t think about the power grid when you turn on a light switch. It just works. That’s what embedded finance is doing for financial services.
It’s the “buy now, pay later” option you see when you’re shopping online. It’s the insurance you’re offered when you book a flight. It’s the instant loan you can get for a home improvement project, right from the contractor’s app. These are all examples of embedded finance in action.
This is a huge leap from the old way of doing things. In the past, if you wanted a loan, you had to go to a bank, fill out a mountain of paperwork, and wait for weeks to get approved. Now, you can get a loan in minutes, at the point of sale, with just a few taps on your phone. That’s a massive improvement in the customer experience.
The Tech Behind the Trend
Why is this all happening now? A few key technologies have converged to make embedded finance a reality.
First, you have APIs, or Application Programming Interfaces. These are the messengers that allow different software applications to talk to each other. In the world of embedded finance, APIs are what allow a non-financial company to connect to a bank’s infrastructure and offer financial services to its customers.
Second, there's the cloud. Cloud computing has made it possible to build and scale complex financial applications at a fraction of the cost of traditional infrastructure. This has lowered the barrier to entry for new players and has led to a Cambrian explosion of innovation in the fintech space.
And finally, you have AI and machine learning. These technologies are being used to personalize financial products, assess risk, and detect fraud. For example, when you apply for a loan through an embedded finance provider, AI algorithms are working behind the scenes to analyze your data and make a decision in real-time. This is where my investment in companies like Scale AI comes in. High-quality data is the lifeblood of these AI models, and Scale AI is at the forefront of providing that data.
Real-World Examples from My Portfolio & Beyond
I’ve seen the power of embedded finance firsthand, both as an entrepreneur and as an investor. When we were building RemoteTeam, a platform for managing remote teams that was later acquired by Gusto, we were constantly wrestling with the complexities of international payroll and benefits. If embedded finance had been as mature then as it is today, we could have integrated services to handle currency conversion, tax compliance, and benefits administration seamlessly within our platform. That would have been a huge win for our customers.
At MovieLaLa, my second company which was acquired by Gfycat, we could have used embedded finance to allow users to buy movie tickets or merchandise directly from the app. Instead of just being a discovery platform, we could have become a one-stop shop for all things movies. That’s the power of embedded finance: it allows you to create new revenue streams and deepen your relationship with your customers.
I’m also seeing this trend play out in my portfolio. I’m an investor in several companies that are using embedded finance to disrupt traditional industries. These are companies that are making it easier for people to get access to capital, to get insurance, and to manage their money. They’re not just building another financial app; they’re building a better customer experience.
What This Means for You (The Consumer)
So what does all of this mean for you, the consumer? In a word: convenience. Embedded finance is making it easier and faster to do all the financial things you need to do. No more jumping through hoops, no more dealing with clunky interfaces. Just a seamless, integrated experience.
But it’s not just about convenience. Embedded finance is also giving you more choice. You’re no longer limited to the products and services offered by your traditional bank. You can now get financial services from a variety of providers, all competing for your business. This is leading to more innovation, better products, and lower prices.
The Business Opportunity: Why I’m Investing Heavily in This Space
As an investor, I’m incredibly excited about the opportunities in embedded finance. The market is massive, and it’s still in its early innings. Some estimates say the embedded finance market could be worth over $7 trillion in the next decade. That’s a huge number, and it’s why I’m putting my money where my mouth is.
I’m looking for companies that are using embedded finance to solve real problems for their customers. I’m looking for founders who have a deep understanding of their industry and who are passionate about building a better customer experience. And I’m looking for businesses that have the potential to become the invisible bank of the future.
The Invisible Bank
I believe that in the next 5-10 years, the concept of a standalone bank will become obsolete. We won’t go to a bank to do our banking. We’ll just do it, as a natural part of our daily lives. The bank will be invisible, but it will be everywhere.
This is a profound shift, and it’s one that I’m incredibly excited to be a part of. The future of fintech is embedded, and it’s going to change the world. The only question is, are you ready for it?
Frequently Asked Questions
How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.