<a style="color: #4bbb87;" href="https://rise.barclays/">Rise, created by Barclays</a>

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In this article from Rise, created by Barclays, we explore the growth of Embedded Finance, an area that’s gaining a lot of traction in both B2C and B2C markets and may well have a part to play in <a style="color: #4bbb87;" href="https://www.innovatefinance.com/uk-fintech-shines-brightly-amid-the-covid-gloom/">the future of UK FinTech</a>. The latest edition of Rise FinTech Insights, our flagship thought leadership publication, explores this subject and the opportunities for FinTechs in more depth. <a style="color: #4bbb87;" href="https://rise.barclays/news/reports/">Download the</a> report.

Non-financial companies are turning to Embedded Finance to enhance, or even transform, their value propositions significantly by associating these with financial products. By embedding financial services (from payments and lending to savings and insurance), new customer journeys emerge that solve real-world problems for consumers in many sectors, including retail, health, education, transportation, agriculture and music. Improved experiences for customers allow companies to strengthen brand loyalty and grow sales. Forbes estimate that the opportunity for Embedded Finance in the US alone will be worth $3.6 trillion in ten years’ time.

FinTechs play an important role not only by applying new technology to create better experiences, but also, in some cases, by providing infrastructure to do so more effectively and efficiently. These FinTechs, known as Banking as a Service (BaaS) providers, allow brands to distribute a bank’s financial products and take on the additional compliance burden normally carried by the bank. This creates a ‘win-win-win’ for BaaS providers, incumbent banks and consumers: providers get to reimagine aspects of core financial services, banks can more effectively integrate their products into new value propositions from brands, and consumers can experience those brands in newer and simpler ways.

Embedded Finance has wide-ranging potential and creates opportunities in many sectors. For example, ‘embedded investments’ enable non-financial institutions and consumers by simplifying the investment process and broadening the distribution of the investment product. In this space, Spark Change (a graduate of the 2019 London Barclays Accelerator programme) provide a technology platform and financial product ecosystem for institutional and individual investors who are seeking exposure to physical carbon allowances but who are unable to directly access existing markets. As carbon price exposure plays an increasingly important role in investors’ portfolios, the company is creating a new generation of financial instruments that allow that price to be fundamentally embedded into equity and fixed-income portfolios. In this way, it’s accelerating the rate at which society can achieve its climate goals.

The music industry is not something you’d naturally link to financial services, but here too, user experiences can be improved. In this sector, concert ticket sales alone represent over $30 billion a year of revenue and for a typical artist they represent more than 80% of their income, so the opportunities are significant. DICE, a platform that lets fans discover the gigs taking place in their city and evokes personalised experiences for them, has helped thousands of artists become profitable by supporting smarter decision-making about touring. Key to these capabilities are DICE’s huge data sets and innovative technology that assist with pricing, timing and avoiding conflicts with similar artists.

Music fans don’t care what time zone a gig is in. They just pay and attend whichever location has the most convenient livestreamed gig. As a result, currencies are less important to them (just like gamers) than the gig (or game). It makes you wonder what ‘currency’ will actually mean in, say, five or 10 years’ time.

<img class="wp-image-369142 aligncenter" src="https://www.innovatefinance.com/wp-content/uploads/2021/02/screenshot-2021-02-17-at-15.05.06-300x223.png" alt="" width="488" height="363" />

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In addition, London-based Kobalt has created a centralised platform that allows artists and creators to access their payments, royalties and data through APIs linking directly into global music hubs such as Spotify, Apple and YouTube. Algorithms acting on new types of music usage data let artists forecast future earnings, which lets them better understand their cash flow and take more informed financial and life decisions. This increased velocity of cash flow especially matters for up-and-coming content creators and young artists who need to maintain a critical income threshold to survive, often through financial products like revolving credit or SME loans.

Another sector that demonstrates the power of Embedded Finance is healthcare. 2016 London Barclays Accelerator graduate Seldon’s ‘model-as-a-service’ (MaaS) paradigm uses ML-based decisioning to automate the packaging and containerisation of ML models. In HealthTech, this has proven beneficial in drug discovery for major pharmaceutical organisations, speeding up the time it takes to deploy models key to making breakthroughs in the research process. Seldon enables users to screen massive numbers of new chemicals to predict their properties, like permeability, solubility or toxicity without having to physically perform the tests in the wet lab.

With the possibilities so varied, Embedded Finance holds opportunities for FinTechs to innovate at pace, for banks to tap new relationships with brands and, most importantly, for consumers in many sectors to have simpler and better experiences.

Read more about Embedded Finance in the latest edition of <a style="color: #4bbb87;" href="https://rise.barclays/news/reports/">Rise FinTech Insights</a>.

The impact of Embedded Finance in non-financial sectors

By Barclays

Alexandra Gheorghe, FinTech Platform Manager at Barclays and Editor in Chief of the Rise FinTech Insights report

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Venture Capital is funding the future, from the founders and startups that it funds to the customers and communities that are using their innovative new products. The latest Rise FinTech Insights report considers the subject of diversity in FinTech, and features an interview with SoftBank Investment Advisors, about giving diverse founders a “seat at the table” as well as insights from Anthemis VC, FinTech startups and industry partners.
<h3>Diversity of thought</h3>
Diversity of thought is the idea that “companies that bring together people who think differently from one another can create conversations that stimulate new ideas and drive efficiency.” In the investment world, investment decisions arise from differentiated perspective around market dynamics or a particular company. And the results are quantifiable. By giving diverse founders a seat at the table, companies enjoy better overall financial performance. HBR reported that EBIT margins for companies with diverse management teams were nearly 10% higher than for companies with below-average management diversity. So how do investors, corporates and individuals support diverse founders? 
<h3>Promoting diversity across investment teams</h3>
Supporting diverse founders begins within, by promoting diversity across investment teams and creating a corporate culture that enables all employees to grow. Even before an employee is onboarded, diverse recruiting practices and interview panels enable a pipeline of individuals from a range of cultural, ethnic, and socio-economic backgrounds. Equally, applicants at those interviews want to see interviewers and future colleagues that they can relate to. That’s true for any hiring team, including investment teams.

In my interview with her, Hayley Chan, Director at SoftBank Investment Advisors, highlighted that “SoftBank has established a Diversity &amp; Inclusion Committee with senior leaders that regular basis to discuss topics such as our work environment, flexible work arrangements and benefits to support our employees such as maternity and paternity leave, as well as elder care. We also started several affinity network groups that bring together groups of employees to celebrate and embrace our differences, leading to a more inclusive workplace.”

The need for employee benefits and community groups has been amplified over the past year. In the report, Elizabeth Davis, Investment Associate at Anthemis noted that “one of the areas in which women have been disproportionately impacted during this pandemic has been child care and mothers were 47% more likely than fathers to have either lost their job permanently or quit, and 14% more likely to have been furloughed.” This discrepancy can be addressed by creating equitable benefits packages for employees and enabling affinity groups to address community challenges through actionable corporate policy changes. 

Investors should not only ask for these support systems to exist in their own firms, but also in the companies in which they invest. Diversity VC, a non-profit partnership promoting diversity in Venture Capital, has put together a list of questions for venture funds during the due diligence process so startups can better understand their approach to diversity and inclusion. The list includes questions around diversity and inclusion policies and unconscious bias training that seeks to create a standard for tracking diversity metrics across the investment space. 
<h3>Inclusive founder networks</h3>
Hiring diverse teams will take time. In the meantime, all investors need to begin diversifying their founder networks and serving as better allies. One way to enable this is by focusing on creating communities where diverse founders can have access to resources, capital and networking opportunities.

SoftBank has brought together women leaders from their portfolio companies through Connect and Lead, providing an opportunity for them to network and explore business collaborations. Additionally, SoftBank Group recently announced the Opportunity Fund, a new $100 million venture fund for outstanding Black, Latinx and Native American founders. 
<h3>Programmes leading the way</h3>
Rise, created by Barclays, is deeply committed to empowering the next generation of FinTech leaders has a proud history of supporting diversity through our programmes. We have a strong support network for female founders, through our <a style="color: #4bbb87;" href="https://rise.barclays/female-founders/helping-female-founders/">Female Tech Collective</a>, a founder-to-founder network led by females to support females, and featuring mentoring and dedicated programmes and events.

Our Female Innovators Lab, from Barclays and Anthemis, is a New York City-based studio dedicated to cultivating entrepreneurial talent in women from all sides of the financial services ecosystem. The Lab’s mission is to identify female founders at the idea stage of their journey and match them with the resources and mentorship required to develop a company and bring it to its first round of fundraising. 

Barclays and Techstars have recently launched Female Founders First, a one-off programme for 30 high-growth female founders from around the globe. The selected participants will receive mentorship and a curriculum of workshops and roundtables as well as perks, access to a great network and brand strengthening initiatives.

Another new diversity initiative is the Barclays Black Founder Accelerator, specifically designed to champion diversity in innovation and entrepreneurship. In partnership with Foundervine, the programme offers up to 25 Black-founder led pre-seed businesses the opportunity to participate in a 12-week immersive accelerator programme and help them to grow and scale.

Funding a diverse future

Rise, created by Barclays is a global community of FinTech innovators working with disruptive technology to create products and services to serve current and future financial needs.  We support FinTechs of all stages to scale through mentoring, events and programmes alongside access to the Barclays network. Rise is the front door to Barclays Innovation team.

Rise, created by Barclays

Rise, created by Barclays is a global community of FinTech innovators working with disruptive technology to create products and services to serve current and future financial needs.  We support FinTechs of all stages to scale through mentoring, events and programmes alongside access to the Barclays network. Rise is the front door to Barclays Innovation team.

Head of FinTech Strategy and Open Innovation, Rise, Created by Barclays

Andy currently leads Fintech Strategy and Open Innovation for Barclays globally, with teams in India, New York and the UK, and has extensive experience of mentoring start-ups, supporting value proposition design and validation. He has 16 years of experience in financial services, working across innovation, strategy, HR and business management. Andy is responsible for the Rise Fintech Platform and Rise Academies, which enables him to work with fintech’s leading founders, helping their businesses to scale at pace. Andy is passionate about using experimentation to drive data driven open innovation and leads Barclays' external sandbox capability, with a focus on identifying enterprise-ready solutions that can add value to the bank. Andy is an Industry Fellow for the Centre of Fintech at University of East London, sitting on the advisory board for FinTech and Business. He is also on the Business Advisory Board for Anglia Ruskin University as a mentor on the Oxford CDL Fintech stream. Andy also leads on Barclays global IP strategy, incorporating portfolio development, licensing and enforcement of all patents across the bank.
Previous to this role, Andy held several senior roles in business management, providing a strong understanding of people, risk, finance and performance. He has founded his own business, which allows him to understand the fintechs with which he collaborates.

Andy Elphick  

Director - Head of FinTech Scouting 

Charlotte is Head of FinTech Scouting at Barclays. She identifies and evaluates emerging fintech start-ups and scale-ups, working with stakeholders across Barclays to map and explore strategic opportunities for open innovation.  Since 2017, Charlotte has been responsible for introducing new value opportunities and supporting Barclays teams to leverage innovative FinTech capabilities for customers and colleagues. Her previous roles include leading Rise, created by Barclays, the Barclays Accelerator powered by Techstars and Proposition Design &amp; Delivery. Charlotte is passionate about supporting diverse FinTech founders to succeed and the potential for FinTech to be a force for good. Charlotte is a Durham University alum and more recently studied sustainable finance at University of Cambridge Institute of Sustainability Leadership.

Charlotte Kanagasabapathy 

Head of Digital Policy 

Nicole is the Head of Digital Policy at Barclays. She drives the policy engagement on digital regulation and initiatives including AI and DLT cases, and regularly engages with policymakers globally. Nicole represents Barclays in various regulatory and policy forums and industry groups. She is on the European Commission’s Expert Group on Regulatory Obstacles to Financial Innovation; co-chairs the UK Finance AI Policy Committee; chairs the UK Finance New Forms of Digital Money SteerCo; sits on the GFMA Digital Asset Steerco, and she is on the UK Finance Digital, Technology and Cyber Product and Services Board. Nicole regularly speaks on panels, conferences and at universities. She has presented on AI at the EC FinTech Lab and represented Barclays at both the Crypto-Asset and Blockchain roundtable and Digital Identity roundtable at the EU Parliament.
She has received the following accolades: Top 20 Most Influential Women in Digital Assets 2023 (Financial News), Top 100 Women in FinTech 2022 (FinTech Magazine), Industry Personality of the Year 2022 (the City AM, Crypto A.M), Top 30 Women in Fintech 2021 (Re.Work), Influencer of the Year (NY Finovate Awards 2019) and Most Influential Women in FinTech Regulation – UK (Wealth and Finance Awards 2019).

Nicole Sandler 

Head of Strategic Investments for Europe and Asia 

Ryan leads in Strategic Investments across Europe and Asia for Barclays UK, overseeing the origination, execution and portfolio management of principal equity investments made by Barclays in external companies across these regions. He joined Barclays in 2011 as an M&amp;A advisor in the investment bank, later moving to the strategy and corporate development team in 2013, where he acted as a principal in originating and executing M&amp;A transactions on behalf of the Barclays Group. Before Barclays, Ryan worked as an investment analyst at Nevsky Capital, a $7bn long/short equity asset manager, where he analysed various sectors, such as oil, gas, chemicals and agriculture. Previously, he also worked at Deutsche Bank as a corporate finance advisor in the Industrials practice across Europe and based in London. Ryan read Politics, Philosophy and Economics at the University of Oxford.