Every Company Will Become a Fintech
The most consequential trend in financial technology is not a new bank or a new payment app—it is the embedding of financial services into non-financial platforms. Shopify offers merchant cash advances. Uber provides drivers with debit cards and instant payouts. Toast, a restaurant POS company, now generates more revenue from lending than from software.
This is embedded finance: the integration of banking, lending, insurance, and payment capabilities into the customer journey of non-financial businesses. The economic rationale is compelling. Platforms that control the customer relationship can capture the margin that traditionally flowed to banks.
The API Layer That Makes It Possible
Embedded finance is fundamentally an API story. Banking-as-a-Service (BaaS) providers like Unit, Synctera, and Treasury Prime expose regulatory infrastructure—charter access, compliance programs, ledger systems—through developer-friendly APIs. This allows any software company to launch FDIC-insured accounts, issue cards, and originate loans without becoming a bank.
The architecture typically involves three layers:
- Provider layer: Chartered banks that hold deposits and manage regulatory relationships
- Middleware layer: BaaS platforms that abstract compliance and ledger operations into APIs
- Distribution layer: Consumer and business platforms that embed financial products into their UX
Risk and Regulatory Considerations
The rapid growth of embedded finance has attracted regulatory scrutiny. When a fintech platform fails (as several high-profile BaaS intermediaries have), who is responsible? The partner bank? The middleware provider? The consumer-facing brand?
Regulators are increasingly demanding that each layer maintain independent risk management capabilities, not merely delegate to the chartered institution. This will likely slow the growth of thin middleware layers and favor platforms with deeper compliance infrastructure.
