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How will BaaS adoption among fintechs, embedded finance/digital brands, and gig economy impact Bond's product roadmap?

Roy Ng

Co-founder & CEO at Bond

Roy: What we've seen inbound, coming to us, is there's quite a lot of both -- about 50/50 -- in terms of fintechs versus what I call "vertical software." They all embed finance, because most fintechs -- unless you're a Square or LendingClub where you get your own banking charter -- are leveraging a bank partner because they don't want to get a bank charter and they don't want to be regulated like a bank. They want to be a tech company.

Squire is a really good example of vertical software. Squire is an application that enables barbershops to manage their business better, from managing their bookings to the finances -- it's an all-in-one platform. When Squire came to us, they saw that a lot of barbers in their customers' barbershops had an issue around cash flow. A lot of these barbers get paid every two weeks via ACH and a payroll system, and some of them need to take out payday loans to make ends meet in between these pay periods.

The challenge was to build something that enables them to have instant access to their pay. So we developed with Squire what we call Squire Card: the moment you check out of your haircut, the net pay plus the tip goes directly on the Squire Card, and the barber can literally walk out of the barbershop and start spending it, buying groceries for their families or whatever it is. That's a paradigm change for that particular community because you're now able to address them in a very specific way. I believe vertical software like Squire has a huge opportunity and a huge role to play in delivering financial services products, partially because they're already working with these users in a different capacity, like booking their appointments and things like that.

So there's that connectivity already in terms of what they do, versus fintechs, which is digital banking. There are huge opportunities in digital banking, with the likes of Chime and a number of others, in terms of giving a much more user-friendly experience and capabilities and features that traditional brick-and-mortar banks do not offer today. I do think there's a lot of interesting angles that still have not been come up with, be it digital banking for a particular ethnic population or for new types of activities. Like the creator economy: these are folks that are making a lot of their day-to-day revenue from YouTube, Instagram, and they may have specific banking needs.

I think there's opportunity in both, but I do see that the larger opportunity is really in vertical software. I've been a student of software for a very long time. We went from on-prem software to cloud software, then over the past five to seven years, it was taking that cloud software and dividing it up by verticals. You can have software for healthcare industries, software for restaurants -- basically end-to-end software that's now addressing more and more of these specific verticals. The deeper the vertical software goes, the more relevant they are in providing that financial services product to the end-users. There are many more touchpoints to go into the various populations that they serve, to generate both revenue and data and drive loyalty with their core business.

That said, our customer base today is about 50/50 between pure fintech versus vertical software. We're bullish on both, but I do see, over the long term, the vertical software folks really having an advantage because they're adding another layer to the product that they're already offering users.

Find this answer in Roy Ng, co-founder and CEO of Bond, on BaaS's business model
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