In a recent fireside chat, Udayan Goyal, Co-founder and Managing Partner at Apis Partners, shared his expertise on embedded finance trends, the future of financial services, and the importance of understanding the ecosystem participants.

Background and Experience: Goyal has a rich background in investment banking, having worked at DLJ, Credit Suisse, and Deutsche Bank. He co-founded Anthemis Group, one of the first early-stage investors in fintech, and later started Apis Partners, a later-stage investor in financial services and technology.

Defining Embedded Finance: Goyal defined embedded finance as the integration of financial services into non-financial products or services, making it a meta-sector that is growing at a rate of 10% annually. He explained that embedded finance is not just a sector, but an ecosystem, and eventually, it will become an asset class within financial services.

The Evolution of Financial Services: Goyal shared examples of how financial services have evolved from discreet products to contextual financial services and finally to embedded finance. He cited the example of Jaguar Land Rover’s Pivotal service, which offers a subscription-based mobility-as-a-service model, including financing, insurance, and maintenance.

The Role of Orchestrators: Goyal emphasized the crucial role of orchestrators in embedded finance, who ensure the sanctity and quality of each input that creates the subscription product. Orchestrators, like Jaguar Land Rover, collect data, aggregate it, and provide it to underlying providers, creating a robust ecosystem.

Data Collection and Customer Ownership: Goyal discussed the importance of data collection and customer ownership in embedded finance. He explained that companies like Jaguar Land Rover want to own the customer directly, which is why they are becoming orchestrators, collecting data, and creating personalized services.

Regulation and the Future of Embedded Finance: Goyal believes that the regulatory environment is relatively favorable for embedded finance, with open banking and data protection regulations in place. He expects more regulation to come, but doesn’t think it will be unfavorable to providers.

Building a Fortress in Embedded Finance: Goyal emphasized that building a strong presence in embedded finance requires deep knowledge of the ecosystem participants, investment themes, and networks. He believes that Apis Partners’ unique approach, which involves mapping markets, identifying trend lines, and investing in companies that play those trends, has created a high barrier to entry for others.

The Apis Brand: Goyal hopes that the Apis brand is seen as a thoughtful and knowledgeable partner that helps grow companies in the intersection of financial services and technology. In the future, he wants Apis Partners to be recognized as the global leader in this space, with a global presence and reputation for success.

Key timestamps:

00:08: Introduction
00:34: Background and Early Career
01:58: Formation of Apis Partners
02:59: Insight into Market Trends
04:49: The Significance of Connectivity
07:31: Embedded Finance – Sector, Ecosystem, or Asset Class
13:03: The Future of Embedded Finance
13:26: Ensuring Integrity in the Ecosystem
16:55: Customer Contact and Data Collection
18:12: Shift from Ownership to Experience Economy
20:03: Transition to Recurring Revenue Streams
21:36: Regulatory Environment and Open Banking
23:53: Barriers to Entry and Investment Strategy
26:52: The Apis Brand and Future Vision