Are Niche and Embedded FinTechs the Future?
Ellis Odynn, MBA2 min read·Just now--
There were two interesting FinTech announcements recently that seem to typify trends occurring in the FinTech space.
One was the news that Railsr, the London-based embedded finance FinTech, is filing for bankruptcy protection. Railsr was once valued at US$1 billion and was one of the earliest embedded finance FinTechs.
Embedded finance FinTechs are important because they are a bridge between tech and finance, and if well-designed and operated, they provide friction-free experiences for customers of non-financial businesses.
FinTechs that provide embedded finance as a service, build and operate APIs for other service companies. It includes payments, banking, lending and insurance. The Starbucks app is the world’s most widely-used embedded finance product.
Every study and market analysis tells us that embedded finance is expected to grow, so what happened at Railsr could be simply a reflection of the economic downturn. Canada has fallen behind in FinTech in recent years but there is ample room for growth in the embedded finance space.
The second, and one of the most interesting announcements that I’ve seen in a while, was the financing in Pakistan of a FinTech designed for the transportation industry called “Truckr”.
It’s important because workers in the transportation industry in Pakistan are often undocumented, and unbanked, so it solves a financial inclusion and services problem for a niche group of people. Many transportation industry workers have cell phones but not bank accounts, and it allows them to enter financial services, often for the first time.
Niche FinTech is expected to grow in the years to come. In the case of Truckr, it services large transportation companies in Pakistan and their employees alike, and because of the national nature of transportation, the app is available country-wide, enabling users to access finance from Pakistan’s largest cities to its remotest villages. The rebuilding of Pakistan after the floods will result in an increase in transportation and provides growth potential for this FinTech.
In these uncertain economic times, the FinTechs that focus on a large niche sector or can position themselves as a vital part of the financial services chain, such as embedded finance FinTechs, are the best placed to thrive in the years to come.
Originally published at https://letstechnow.substack.com.
