Is Embedded the Future of Banking? with Renata Caine

In this episode I sat down with Renata Caine, who leads Embedded Finance for Green Dot. 

How does Starbucks offer it's reward card? How does Amazon provide a credit card? All these "embedded finance" programs have banks behind them who help the brands onboard customers, provide oversight, and act as the buffer between the brands and the regulators. 

I went into this conversation thinking that standing up an embedded finance program was mostly about choosing 1 great partner and making sensible decisions around compliance. Now I know how wrong I was! 

• A bank getting into BaaS is a bit like a contractor building a house. They may do everything - the plumbing, the electrics, the painting - or they may outsource all those things to others. Deciding what skills you have as a bank, and therefore what you can offer, what you can build internally, and what you need to contract, is step 1. 
• We got into detail about the pros and cons of For the Benefit Of (FBO) v Ultimate Beneficial Owner (UBO) account types. An FBO account is a single pooled account at the bank on behalf of a brand or a fintech, whilst a UBO structure means every end consumer (or business) is an actual customer of the bank. There are distinct pros and cons to both set ups, and again, the bank should work out where its skills lie to decide which route to take. 
• Making money is harder than it seems! You might make revenue from interchange, interest and/or program management fees, but the size of those buckets varies hugely depending on the type of brand or fintech you work with. Diversification is the key, and scale is needed to make any meaningful revenue. This isn’t an area you can “try out”. You either go hard, or go home. 

For so many more great insights, listen in here.