Where the Customers Are

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The challenges of our time are well known and much talked about: 

Climate change in all its forms and impacts; sharing and caring for the earth’s bounty - food, water, health and wealth; winning the battle for equality and increasing inclusion on every level and in every part of the globe; a need for greater understanding, non-violent communication and compassion.

To be an explorer has always meant to look at new frontiers and believe that the path to discovery ultimately takes the world to a better place. To those on this planet who have had the good fortune to be in some position of privilege, this means dedicating your daily doings to one of these global challenges in a way that goes beyond charity. This, to me, has always meant doing business: profitable, sustainable, inclusive business with a long arc of impact. 

For all of us at Alviere, including myself and my co-founder Pedro Silva, executing on the challenge of financial inclusion, and building a global framework where more people can share in the wealth and opportunities created by the financial services industry is what Alviere is all about. And it’s called Embedded Finance, which may seem an anodyne term, but actually it belies a revolution. 

The Financial Crisis of 2008-10 laid bare the weaknesses of the current system. The near collapse of the global financial system – which was the result of an effective monopoly held by the incumbents – led to a complete desertion of trust and credibility with the public. 'Too Big to Fail’ for many has become just a code word for “Too Big”. And for many entrepreneurs, it’s become a serious call to action. 

And indeed, the last decade has seen a tidal wave of new financial technology startups pushing against the established players in every area of financial services. They have attracted historic levels of investment, shattering records and successfully breaking the established notions of what it means to be a Financial Institution. In fact, 1 in every 5 dollars of venture invested in Q2 of 2021 went into fintech, according to CB Insights.

These new financial technology companies have brought many new customers/users onto their platforms, customers that would have otherwise gone to the incumbents, and this has shifted the balance of power away from the traditional centers. It has also opened up financial services for regular consumers that were only accessible to very few. This was a more understandable expansion of the crypto/blockchain definition of the word decentralization.

Embedded Finance is a form of decentralization.

In essence, Embedded Finance is an aggregation of all the financial services that were deconstructed in the first wave of Fintech, creating a new form of fully integrated technology for all web-based financial services.

And it presents an evolved paradigm that addresses what my partner, and board member Omry Ben-David, wrote in his blog entry reflecting on Viola Ventures’ investment in Alviere: 

“While neo-banks present a shining, “fintech for all” mantra, their biggest challenge remains the most important component – winning the consumers” and I would add - winning and KEEPING the consumers.  

It’s the Customers, Stupid.

That’s Alviere’s simple thesis: Go where the customers already are.

Consider this: with all the hype and enormous valuation of fintechs, the total combined market valuation of all of the unicorns remains just slightly above that of ONE JP Morgan Chase (~$520B to ~ $500B).

Why is that? Simply put: Customers!

The sheer number of global customers, deposits and the volume of transactions that one Chase has, dwarfs every other fintech business. 

So the big “elephant in the room” question for the future of fintech is: when will ONE fintech be worth more than ONE JP Morgan Chase… and who will it be, what will they be doing? 

There are clues in simple everyday common sense.

Disruption is always chaotic and fragmented. 

Look at the early days of the automobile industry, the internet, the deregulation of communications, and of the banking industry itself. The beginnings were always about some mass movement, where many individuals and businesses chased a goldrush-like opportunity in a fragmented and uncoordinated way. 

However, things ultimately came together - because the forces of life tend towards two things: aggregation and convenience. And aggregation and convenience means ease and simplicity. Bank centrality was easy. Dangerous, but easy for the everyday consumer to understand. Which means, by nature, the sheer number of fintech startups and their specific solutions are ultimately not easy, and hard to digest by the overwhelming number of consumers who still want things to be simple.

And the Fintech Revolution - where to? 
To Embedded Finance and Alviere. 

Because our money, mind and time are all focused on bringing a best-in-class set of financial web services (which we call the HIVE) to mainstream global brands, our goal is to help those brands empower their already existing customer base with a new generation of financial opportunities. 

And in that way, we want to expand access everywhere. Not through actual fintechs - but through the brands we already patronize. You name a brand, and they can now be your neo-bank - using the financial web services provided by Alviere. Think Delta Airlines, Honda, Target, Nike, Peloton, Tesla and many more.  

By quickly and easily embedding financial services with Alviere’s HIVE, brands can now add these features to their already existing sites and apps – because that’s where the customers are. With Alviere, brands can remove the biggest barrier to success from the first generation of fintechs; getting to (and keeping) customers at every level, everywhere. 

So when it comes right down to it – the fintech revolution (like every revolution) is exciting at the start. But those starts are usually transitional - and the endgame is revealed over time. 

We believe that by partnering with globally recognized companies to provide financial services to their customers  – we can help these brands evolve by making the financial system more inclusive, and ultimately, impact more lives for the better on a massive scale.