Page 28 - GS210402

Education

StreetSmarts SM

Embedded Finance: The Time Is NowThe Time Is Now
Embedded Finance:

WITH JOHN TUCKER WITH JOHN TUCKER

The fintech waves

By John Tucker technologies such as telegraphs, railroads and
TreviPay steamships were used for rapid transmission of
financial information and data across borders.
ngela Strange, a general partner at the venture This led to great financial innovations such as the
capital firm Andreessen Horowitz, crystal- electronic funds transfer and the eventual creation
lized a timely issue in payments when she of the credit card.
A said that as we go forward, "every company" • Fintech wave 2 (1967 – 2008): During this period,
will become a fintech company. This will occur through
the process of embedding financial services into the the growth of financial institutions paved the way
for a shift to digital technologies. This led to great
everyday experience of customers in a way that is almost
ubiquitous. financial innovations such as the ATM, financial
markets with electronic trading, online banking,
mobile technologies, along with the internet and
And Strange isn't alone in her hypothesis: many payments, the eventual rise of ecommerce.
banking and other finance leaders believe that embedded
finance is fueling the next wave of fintech. Indeed, Simon • Fintech wave 3.0 (2008 – present): The current
Taylor, co-founder and head of ventures at transformation period actually begins right after The Great
and advisory services firm 11:FS stated, "Fintech is only 1 Recession and is what many people associate with
percent finished." fintech today. As society began to distrust the
traditional financial services system and believed
Since my theme as quarterback of Street SmartsSM this that not only did it tank our economy in 2008, but
time around is to home in on embedded finance, I'll begin it also historically left many in our society behind
this article's discussion by examining the three waves of in terms of adequate financial services, the current
fintech. I'll examine how (and why) we got to the point era is all about the entrance of various startup
where embedding financial services is the present and the disruptors.
future of fintech. I'll also explore what this could mean for
the payments industry in general going forward. While some startup disruptors entering the market are

The term 'fintech' is not new endeavoring to work alongside the traditional financial
services providers, research shows the bulk of them
Many believe that the term "fintech" didn't arrive until the are coming in as alternative players to either steal away
aftermath of the Great Recession of 2008, but in actuality, market share or create brand new market share by
the term has been around since 1866. According to reports bringing financial services to under-represented areas of
from leading researchers at The University of New South society.
Wales, one of Australia's leading research institutions, the
following are the three waves of fintech. Every company becomes a finance company

• Fintech wave 1 (1866 – 1967): During this period, Today's 3.0 wave of fintech is at the point where software/
technology companies, media platforms and other non-
28