The Only Limit to Embedded Finance is Human Creativity
December 14, 2020
Galileo CEO Clay Wilkes kicked off Day Two of Tearsheet’s Embedded Conference, focusing on looking around the corner of embedded payments. Here’s an excerpt of his lively conversation with Zack Miller, Tearsheet’s co-CEO and founder.*
What, if anything, does the merger between Galileo and SoFi portend for embedded payments?
SoFi has done a great job creating a membership-based distribution of fintech-related products, largely based around lending. Galileo is dominant in banking and payments. The intent of bringing the two companies together is to address our clients’ roadmaps—to commercialize and productize some of those lending products around our enterprise-grade APIs and make those available to the broader ecosystem.
Where this comes together with the theme of your conference is the ability to embed banking-like products into environments, access those products and make them available as additional consumer services in places you wouldn’t necessarily expect to find a financial application. It’s eliminating the friction largely due to legacy-based constraints in our banking system and the way we’ve grown accustomed to interacting with our money—how we earn it, spend it, save it and invest it.
What does the combined entity mean in terms of competitive dynamics in the marketplace?
With Galileo’s infrastructure capabilities, combined with the capabilities of SoFi, we can power many embedded finance applications across multiple geographic areas, which is an important differentiator for Galileo.
We’re dominant in North America—including the U.S. and Canada—and recently certified and operating with great success in Mexico. We’re currently certifying in Colombia and Brazil and additional LatAm markets. The ability to work across multiple geographies and banking regulatory environments is an important part of embedded payments.
One of the most interesting things Galileo brings to the deal flow is powering so much of the marketplace—both with large incumbents and smaller companies. What are you seeing on the demand end? Who’s entering this marketplace now?
Thinking about embedded finance, the only limitations are really the human spirit and creativity, which I believe are nearly infinite.
To me, it’s not about what the current fintech leaders are doing; it’s about what brilliant minds from all corners are doing, as reflected in the amazing results of several prestigious hackathons we recently had the privilege to sponsor.
One of the things that most excites me as a product is Galileo Instant, which has the ability to reduce the friction required to get in and conceptualize innovative ideas—creating an environment where innovative ideas can germinate and be fostered quickly.
Are non-FIs aware they can work with an embedded platform, like Galileo, and enter the market with a banking product?
That concept is nascent, and there’s a lot to do to bring that awareness to the marketplace. But we have had around 1,500 signups in the Galileo Instant Dashboard, so the need and interest are clear.
Purple is one of those companies. They’d raised some capital and came to us with a product idea for serving disabled persons. Before Galileo Instant, we might not have been able to qualify them as a client. But now we can and it makes up proud, because the product is one that should be in the marketplace.
Having a technology partner that can deliver those services is really important.
So, do embedded payment change the historic role of the payment players, like issuers and acquirers and the networks?
Absolutely, this is one of the most important transformations that will occur, because roles break down in an embedded finance world.
For example, let’s look at the notion of wallets on mobile devices. A customer walks into a retailer to buy a TV for the Super Bowl. As the mobile wallet provider, I detect they’re in the store and have a mobile device—so I present a credit offer to handle payment. What role was the merchant playing? What role is the issuer playing? Or were they one and the same in that transaction?
That’s all to be determined, but we’re seeing this kind of blurring already with marketplace-type and gig economy applications.
Want more of Clay and Zack? Click here for the full conversation!
*Questions and responses have been edited for clarity and brevity. Click here to listen to the full Tearsheet podcast.
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