FIS: Embedded Finance in “First Inning” of Payments Evolution


The evolution of finance in the digital era has given rise to various transformative trends, with embedded finance emerging as a significant paradigm shift. Matthew Valente, head of product strategy at FIS, believes that while the FinTech revolution sparked by the financial crisis is still in its infancy, embedded finance is merely in its “first inning,” indicating its nascent stage in the evolution of payments.

Embedded finance represents a collaborative effort between traditional financial institutions and FinTechs to democratize access to financial products and services through digital channels. Valente emphasizes that we are just beginning to witness the potential of embedded finance, which aims to seamlessly integrate financial offerings into the consumer experience.

To understand embedded finance better, Valente distinguishes it from banking as a service (BaaS), a concept that some may confuse with embedded finance. According to him, embedded finance refers to the actual experience delivered to individual consumers or corporate clients, whereas BaaS serves as the underlying infrastructure that enables embedded finance to function.

This distinction highlights the pivotal role of BaaS in facilitating the integration of financial services into various consumer touchpoints, underscoring its importance as an enabler of embedded finance.

The adoption of embedded finance represents a natural evolution in the financial industry, driven by the increasing digitization of transactions and the growing demand for seamless and convenient financial solutions. While companies like Uber have led the way in seamlessly incorporating payments into the customer experience, Valente notes that other sectors, including restaurants, software platforms, and retail outlets, are also embracing embedded finance.

Furthermore, Valente highlights the growing interest among banks in providing BaaS solutions, particularly those leveraging FIS services. This underscores the recognition among traditional financial institutions of the need to adapt to the changing landscape and offer innovative financial products and services.

Despite economic headwinds, Valente remains optimistic about the future of BaaS and embedded finance. He notes that organizations, both large and small, are recalibrating their investment strategies for the coming year, with expanding financial services, payments, and lending capabilities ranking high on their priority lists.

In conclusion, embedded finance represents a transformative shift in the financial industry, offering enhanced accessibility and convenience to consumers and businesses alike. As the ecosystem continues to evolve, the collaboration between traditional financial institutions and FinTechs will play a crucial role in driving innovation and shaping the future of finance. With embedded finance still in its early stages, there is vast potential for further growth and development in the years to come.