Solaris' rescue deal and Visa's creator push

_{Welcome to Embedded Finance Review. I make embedded finance more accessible with the weekly newsletter, biweekly podcasts, and events.}

_{This newsletter went out to 1,426 subscribers. If you want to support my work, you can upgrade to premium or become a sponsor.}

Hi embedded finance friend

Happy New Year! I hope you had a lovely end to 2024 and a good start to 2025. We stayed in Berlin and celebrated with friends at home - at least until the massive amount of fireworks woke up our daughter :-/

It is still early in the year, so there isn’t much major news - except one. Nevertheless, I screened the news over the past two weeks, picked the most essential stories, and added a few older ones I had missed beforee.

This edition covers

• Podcast with Sam Boboev, Founder of Fintech Wrap Up

• SBI Holdings to take majority stake in Solaris

• Why Visa is homing in on the creator economy

• Gusto and the power of embedded finance

• Short stories

And in case the new year means you are looking for a new job, a German-based company in my network is looking for a Product Manager in Financial Services. The company is a well-funded, large SaaS provider in the sports industry. Does this sound interesting? Get in touch.

And now let’s dive in 👇

_{Advertisement:}

Is 2025 the year you want to start or grow your embedded finance offering? But you lack industry expertise? Get in touch, and maybe I - or somebody from my network - can help!

Podcast episode #15 with Sam Boboev, Founder of Fintech Wrap Up

In the last podcast episode of 2024, I spoke with Sam Boboev, founder of the Fintech Wrap Up newsletter, about the six most prominent trends in embedded finance in 2024. We covered retailers, incumbent banks, banking-as-a-service, and vertical SaaS.

You can find the episode on Spotify, Apple Podcasts, and YouTube.

From unicorn to rescue: SBI Holdings to take majority stake in Solaris

What happened: In early December, I covered that Solaris had avoided liquidation, and shareholders were working on new funding plans. Just a day before Christmas, the German banking-as-a-service provider shared internally that a breakthrough in funding discussions has happened. Yesterday, we learned what this likely means: according to different sources, existing Japanese investor SBI Holdings will provide most of the new funding (expected to be € 100-150 million) and become the majority owner, with an ownership in the 70-80% range. And the valuation drops from unicorn status to a “low three-digit number” (Manager Magazin; German and paywall).

My comment: In German, the saying goes, “Better a horrible end than an endless horror”, and it seems to fit perfectly in Solaris’ situation. I have written several times about their journey from being one of the first movers in banking-as-a-service to being the problem child in the industry. After the announcements in December, it was expected that SBI Holdings would likely be both the saver and the new majority owner. The deal is not final, but it seems the only way out - unfortunate for the other investors who will likely not get any return for a startup that was previously a highflyer in their portfolio.

Why Visa is homing in on the creator economy

What happened: The creator economy has been one of the fastest-growing industries in the past few years. However, the financial services it offers are often not the right fit. According to Visa, even though creators are often small businesses, they are treated as individuals. Visa aims to change this and intends to partner with various platforms and solution providers, targeting creators to provide tailored financial services with a strong focus on payouts via its Visa Direct services (American Banker; Paywall).

My comment: Creators are an ideal target for embedded finance solutions. Firstly, they use different software solutions where adding financial services can create additional value, and secondly, most creators struggle with their current financial service providers. The big challenge is that creators are spread around the globe. If you are a non-financial brand with creators on multiple continents, it is not easy to offer full-fledged financial services. That being said, some areas can be more easily targeted than others, and perhaps payouts on existing debit or credit cards via Visa Direct are possibly one of them.

Gusto’s views on the power of embedded finance for vertical SaaS platforms

What happened: The US payroll provider Gusto embarked on the embedded finance journey in June 2021 when it announced the launch of Gusto Embedded. With Gusto Embedded, companies can embed payroll functionalities within their product and streamline the workflows for their business customers. In this The Paypers article, Gusto Embedded General Manager Yi Liu shares their views on the embedded finance opportunity and how Gusto has approached their decision to launch Gusto Embedded.

My comment: The article covers a few general points on embedded finance. My favorite part was the example of their customer CleanCloud, a software provider for dry cleaners and laundries. The company has to manage unique wage calculations, such as employees being paid by the pounds of laundry they fold. No payroll provider has a solution for this, and it is unlikely any provider will have one as the market size is limited. With Gusto Embedded, however, CleanCloud can build this independently on top of the existing payroll infrastructure. Their customers can replace their previous payroll provider with a unique industry solution.

Short stories

• Europe

  • UK neobank app downloads surpass legacy banks for the first time (Finextra)

  • Modulr secures its first-ever contract with HMRC (UK's tax, payments and customs authority) for confirmation of payee services (Fintech Finance News)

  • Not strictly embedded finance, but POS provider SumUp launches Cash Advance product for its merchants (SumUp)

  • Also, the French fintech and accounting tool provider Pennylane is not strictly embedded finance, but their partnership with embedded lending provider Defacto is still relevant (LinkedIn)

  • The Scandinavian banking-as-a-service unit SEB Embedded highlights another of their technology partner: Enfuce for cards (Finextra)

• US

  • Anatomy Financial raises $19 million to expand billing solutions for healthcare practices (PYMNTS)

  • Tesla pushes real-time payment adoption into the fast lane (American Banker)

  • Lithic releases revolving credit API (Finextra)

  • Embedded finance infrastructure firm Parafin reports $100M series C (Crowdfund Insider)

  • Former BaaS bank cited again by regulators (American Banker)

  • What fintech companies and banks are doing differently post Synapse's collapse (American Banker)

• Articles

  • How 'Uberization' drives embedded payments (American Banker)

  • The regulatory winds, they are not a-changin’ (Fintech Futures)