Okay, so we're still talking about "embedded finance." Let's be real: isn't that just a fancy way of saying companies want to squeeze even more money out of us?
These vertical SaaS platforms – Boulevard for salons, Slice for pizza joints, Housecall Pro for the plumbers who never show up on time – they're being called the "operating system" for their industries. Give me a break. My phone is an operating system. My brain is barely an operating system some days.
But they want us to believe these platforms, because they handle scheduling and payments, are somehow the key to unlocking a new era of financial services for small businesses. They've got "live, transaction-level business data," see? It's the new gold! According to Contextual Banking: How Vertical SaaS Cracks the Code of Embedded Finance, this data allows SaaS companies to offer unique financial solutions.
Translation: they know exactly how much money you're making (and how much they can take).
SMEs are adopting vertical software, blah, blah, blah. Adoption rates are going up. Okay, fine. But what does that really mean? It means more businesses are trapped in these walled gardens, handing over even more control to companies that probably don't have their best interests at heart.
And now they want to be banks too?
The article talks about SaaS vendors needing to offer a "better holistic value proposition" than commercial banks. What does that even mean?
It means bundling a bunch of crap together and charging you more for it. Banks already do this, and now software companies want in on the action. Great.
They say SaaS providers have "access to real-time cashflow data" that allows them to "underwrite more thoughtfully." Oh, really? So, they're going to be nicer lenders than the big banks? I seriously doubt it. More likely, they'll use that data to justify even higher interest rates and fees because, hey, they know you're desperate.
And the user experience? Don't even get me started. I tried using one of these platforms to book a haircut last week. The app crashed three times, and I ended up calling the salon anyway. But offcourse, I'm sure their embedded finance products will be flawless.
Here's the thing they don't want you to think about: embedded finance adds risk. The article admits it! "Embedded finance products... come with more macro- and microeconomic exposure (such as business cycles and credit risk)." Moving Embedded Finance from Promise to Practice discusses the importance of managing these risks effectively.
So, if the economy tanks, who's going to be holding the bag? The small businesses that are already struggling to stay afloat, that's who. These SaaS companies will be just fine; they'll just raise their prices or sell your data to someone else.
Then again, maybe I'm the crazy one here. Maybe this is all a brilliant plan to revolutionize the financial industry and empower small businesses. But somehow, I doubt it.
