Decoding the future: Insights from our embedded finance luncheons

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At the beginning of December, Toqio held its Second Annual Partner Luncheon in London, just a week after its counterpart event in Madrid. Both were extremely enlightening with regard to the state of embedded finance in the market today and where it’s headed. We thought we’d share some highlights of the events to offer a glimpse into what industry leaders are actually discussing.

The Madrid event

In Madrid, we played host to some of our key partners, including companies in the finance and fintech arena as well as consulting firms that have included Toqio as part of their corporate embedded finance toolbox. The conversation, lubricated with some excellent Spanish wines and fueled by tapas, began when Mike Galvin, Toqio’s CCO, discussed Toqio’s vision for the future of embedded finance. Guests slowly digested the implications of what was being conveyed. Many had questions for other participants as they began to share their own visions for the market and the use cases they considered to be paramount for success. These seemed to revolve around corporate lending, improving the agility of payments for suppliers and distributors, and developing long term strategies for creating safe and beneficial corporate ecosystems.

As part of the discussions, Eduardo Martínez, Toqio’s CEO, delved into how embedded finance can help SMEs, and in particular how large companies using Toqio can leverage the platform as an SME retention/loyalty tool. That led to a flurry of questions and the examination of further use cases specifically dealing with SMEs and how business ecosystems could be developed to foster success among smaller players, with many questions responded to by our VP Sales, Michael Pierce.

The conversation highlighted the impact that fintech is having on traditional banking. Most agreed that the emergence of companies like Toqio has put incumbents on alert but that they will continue to have a business niche where they’ll coexist with new players.

According to comments among participants, banks are slowly learning to focus on their core values, as, in a very real sense, large companies are becoming the new disruptors. Competition will become more significant as the nature of a disruptor changes from a fintech to an empowered corporate entity. Hence, the future of core banking is likely to strike a balance between fintech-driven companies and incumbents. While large financial institutions will endure, their role is evolving. Their strengths are assessment, management, and specialized services.

In the end, the session seemed to be edifying for everyone in attendance.

The London event

Similar to the Madrid event, the focus of this meeting was on the current accelerated evolution of embedded finance. Expected growth of the concept in the corporate arena and how it would affect the existing finance landscape were explored extensively.

Mike Galvin once again led the discussion by introducing specific points related to the embedded finance paradigm.

According to Mike, the corporate embedded finance narrative has been affected of late by incumbent banks getting involved, such as HSBC’s recent announcement related to appointing a new CEO of embedded finance, as well as other salient points.

Next, an attending representative from one of the world’s most influential banks took the floor and talked about embedded banking being brought to wider communities to foster financial inclusivity. The real challenge, according to the speaker’s research, is figuring out what companies expect, want, and need from embedded finance, especially considering that they might not know anything about it. Many attendees agreed that this was indeed a challenge for them as well.

Another point discussed was that of consolidation. When the finance market began to soften in 2022, one of the common expectations everyone in the industry had was that the market would consolidate, with winners taking greater market share or being absorbed. Thus far, the theory has panned out, as consolidation in this space has seen Visa both acquiring scaled market leaders like Currencycloud, Tink, and Pismo, as well as investing in many of the companies in attendance at the luncheon.

Mention was made of a recent report covering the current state of retail payments and initiatives related to that state, while seeking to answer the question, “Is the UK at the forefront of innovation?” The report detected a desire for alternatives to cards and that currently, innovation was somewhat haphazard and carried out in silos with no unified vision. The report clearly recommended open banking, improved user experiences, more rigorous regulatory oversight, and financial service simplification, with a huge potential to deliver better outcomes with payments. Attendees in the finance space were gratified to learn their suspicions related to the importance of embedded finance were confirmed.

Lessons learned

In a nutshell, there’s a lot going on in embedded finance, from large companies starting to recognize the opportunities embedded finance offers, to incumbents and other large financial institutions making bold moves in the space. In the end, attendees were gratified to have a support network available upon which they could depend to discuss strategies and share knowledge.