Toqio, a company in our portfolio, is building what they describe as an embedded finance platform for SaaS businesses — the infrastructure layer that allows a software company to offer banking, payments, and credit products to its own customers without becoming a financial institution itself. When we first spoke with the founding team in early 2021, the primary objection from potential customers was not technical — the APIs existed — but commercial: enterprise software procurement teams were not yet accustomed to thinking of financial product capability as a SaaS add-on. By mid-2021, that conversation had changed. The pandemic had compressed several years of digital-first behaviour adoption into a twelve-month window, and enterprise buyers who had moved their own operations to remote, API-connected tools were far more receptive to embedding financial products in those same workflows.
The structural conditions for the embedded economy are now in place. API-first banking infrastructure — BaaS providers, payment institution programme managers, e-money scheme access — has reached a level of reliability and commercial maturity that supports production deployments. Open Banking connectivity, while still imperfect at the individual bank API level, is sufficiently consistent for business-to-business payment initiation to be a deployable product rather than an experiment. Consumer and small business comfort with app-native financial management — accelerated dramatically by the neobank experience of the late 2010s — means that receiving a financial product from a software context rather than a bank branch is no longer surprising. The question is no longer whether the infrastructure exists; it is which use cases have the distribution depth to make embedded financial products the default.
The use cases that are proving out first share a common characteristic: the software platform has superior information about its customers' financial behaviour than any bank or standalone financial product could acquire through standard underwriting channels. A B2B marketplace that processes transactions between its network members can see the full payment history, dispute rate, and seasonal cash flow patterns of every participant. An accounting platform that manages a small business's invoicing knows its outstanding receivables in real time. A property management platform knows its landlords' rental income schedules and maintenance cost patterns. In each case, the embedded financial product — a working capital facility, an invoice financing line, a payment collection tool — is more accurately priced and more relevant to the customer precisely because the platform context provides information that a bank application form cannot.
The infrastructural challenge this creates is one of orchestration. A software platform offering embedded financial products is not running a single financial product — it is running a portfolio of them, each with its own regulatory treatment, its own funding structure, and its own risk exposure. The plumbing that sits between the platform and its banking partners, scheme memberships, and credit facilities needs to handle reconciliation across multiple product types simultaneously, manage float across currencies if the platform operates internationally, and produce the audit trail that FCA regulations require. This orchestration layer — which Weavr, another of our portfolio companies, is building at the API level — is the least glamorous and most essential part of the embedded finance stack. It is where we expect continued investment to concentrate.