Stablecoins vs. BaaS: The battle of 2025? Help me write embedded finance history!

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Hi embedded finance friend

Welcome to your weekly 5-minute digest of all things embedded finance. The first proper work week of 2025 has passed, but it still feels a bit slow - at least from an embedded finance news coverage point.

On my side, I am spending considerable time preparing two embedded finance events for the next few months: one in Frankfurt and the other in Berlin. The Frankfurt event will be announced very soon, so stay tuned. Additionally, I am starting two projects these days, and there might be a chance that I can share some insights about them soon.

This edition covers

• Podcast: How can banks fight back in embedded finance?

• How will stablecoins impact banking-as-a-service?

• X plans to launch its payment product in 2025

• Is every company a fintech company by now?

• In other news

But now let’s dive in 👇

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Podcast episode #16 with Hessel Kuik: How can banks fight back in embedded finance?

Neobanks, accounting platforms, and banking-as-a-service providers are all attacking traditional banks. They compete for the bank's SME customers in various ways.

But there's hope! With Bizcuit, banks can embed accounting features directly in their apps to stay competitive. In our newest podcast episode, I speak with Bizcuit founder and CEO Hessel Kuik about why banks still have an advantage, how embedded finance changes banking, and Bizcuit's success with a Dutch bank.

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

How will stablecoins impact banking-as-a-service?

What happened: If you have read a couple of fintech newsletters lately, chances are you have read about stablecoins. My favourites were Matt Brown’s intro article to stablecoins, Simon Taylor’s piece on why Stablecoins are better but not necessarily cheaper, and perhaps this LinkedIn post highlighting a couple of providers in the space (incl. the startup of the post’s author).

My comment: There is not enough space in this newsletter to go through all these details, but if you ask me about the impact of stablecoins on fintech, I would paraphrase Simon Taylor and say, “It’s not the question of ‘if’ but rather ‘how’ and ‘when’”. Perhaps stablecoins will transform our industry; however, I would be careful when making statements like stablecoins will replace banking-as-a-service (I remember this piece). While there may be many things you want to improve in banking-as-a-service, not all of them can be achieved with technology alone. I would argue that stablecoins can improve fintech and, thus, banking-as-a-service, but that’s likely more of an evolution than a revolution. Especially when you remember that much of the friction in the banking-as-a-service industry is created by regulation, which will not necessarily be much better with stablecoins. So remember, when you compare stablecoins to banking-as-a-service, you often compare the reality of banking-as-a-service to an ideal scenario of stablecoins.

X plans to launch its payment product in 2025, likely before getting the required license in all US states

What happened: As previously covered, X has spent considerable effort securing multiple money transmitter licenses in the US to fulfil Elon Musk's dream of turning the social media company into a super app. X’s CEO Linda Yaccarino shared that X Money, the name of X’s payment product, will be launched in 2025. While this is later than Elon Musk’s previous timeline of 2024, it is confirming that a launch is planned for later this year (Social Media Today). Additionally, in the source code of a new version of X, it can be seen that X money is likely being launched before securing licences in all US states (error message for users that live in states where X does not have a license yet).

My comment: After many years of being a very active Twitter user, I deleted my X account last year after Elon Musk publicly endorsed a German far-right party. While this was the main trigger, I wasn’t using the app anymore, as most of my notifications were triggered by apparent bots. That being said, X’s commitment and investment in the launch of X Money are impressive, especially despite the layoffs. You can probably see that writing about X’s fintech product is hard for me, ignoring everything else around it. However, I will take a closer look at their fintech product once it is announced, but I wonder if enough real users are left on the platform for a payment product to succeed. 

Five years later: Is every company a fintech company by now?

On January 21st, 2020, A16Z partner Angela Strange published her famous post, ‘Every company will be a fintech company’ (A16Z). I left the open banking space in early 2019 and was looking for my next fintech focus area. Since Matt Harris' post ‘Fintech: The Fourth Platform’ (Bain Capital) in November 2019, I have focused on banking-as-a-service and embedded finance. I think it was around the time of Angela Strange’s post that I committed myself full-time to embedded finance and eventually joined an infrastructure provider later that year.

This means five years have passed since these two embedded finance primers were published. Right after the publication, COVID-19 hit, and digital platforms grew massively. Many of them fast-tracked their embedded finance projects to provide companies in need with better access to financial services. But in recent years, we realised regulators did not have time to investigate all new developments, especially in banking-as-a-service. They started to catch up, which resulted in intense scrutiny and programs being shut down.

How have you seen embedded finance evolve over the last five years? I am writing a stand-alone article on this topic and would love to include different perspectives. If you are interested in contributing, please send me a few bullet points of your thoughts, and I will see how to incorporate them.

In other news

News

• ClearScore buys embedded credit marketplace Aro Finance to expand beyond D2C model (Fintech Futures)

• Banking Circle boosts international expansion with acquisition of Australian Settlements Limited (Fintech Futures)

• Thailand to pilot cryptocurrency payments for tourists in Phuket (The Paypers)

• Uruguay’s dLocal lands API licence from FCA, paving the way for UK expansion (Fintech Futures)

Insightful stories

• How Shopify simplifies financial services for entrepreneurs: In this “must listen” podcast, Product head Vikram Anreddy explains how Shopify empowers entrepreneurs with Shopify Balance, Capital Loans, and automated tax management. (Tearsheet)

• What will B2B embedded payments look like in 2025? In this piece, multiple experts discuss together opportunities and challenges in the market (Tearsheet)

• How BaaS can open new revenue streams for banks (Fintech Finance News)