This provocative headline leads a post in Tearsheet about the new API-based service called Stripe Treasury, about which we commented a few days back. The author goes on to discuss the implications for the embedded finance and BaaS space, which is gaining usage as the open banking era unfolds.
Indeed versus regulated mandates in Europe and other selected global markets, in the U.S., open banking is a growing market reality. This is due to the increasing recognition by company resources that their work experiences can and should be closer in nature to other things available to them on a smartphone.
‘ “Everything about running an online business has been transformed by technology, but business banking has largely been left behind,” said Karim Temsamani, head of banking and financial products at Stripe. “But we’re changing this, just like we set out to change payments a decade ago. Offering a user-centric banking experience should be as easy as spinning up a virtual server — that’s what we’re starting to accomplish at Stripe with our bank partner network”…..The move is emblematic of a larger trend of embedded finance that is layering in banking capabilities within companies in any industry and integrating financial services within platforms already used by customers. Goldman Sachs, one of Stripe’s banking partners, recently launched its own banking as a service offering for transaction banking, TxB.’
Of course the answer to the headline question is no, which the author goes on to explore through a few quotes from industry participants. We also covered these dynamics in our CEP Outlook for 2021, under the theme of collaboration.
This service is a nice functional improvement on the payments experiences for e-commerce merchants and vendors, and we would expect continued advancement of convergent services across the cash cycle process landscape. Working into financial operations and full treasury requirements is yet another thing, but one would expect continuing demand for easier platform integrations during the next 5-10 years.
‘“Overall, if you look under the hood, Stripe Treasury lacks features that are really needed to build powerful financial products for companies outside the retail space, such as neobanks or fintechs,” said Sankaet Pathak, CEO of Synapse Financial Technologies, a banking as a service platform….Stripe Treasury, disruptive as it appears, may be limited in its applicability to real life use cases. “It doesn’t make it any easier to develop products for lending or credit, the KYC framework shows room for improvement, and there’s no real bill-pay product – just ACH transfer. There’s also some questions about ATM ubiquity. While most competitors allow more customization, Stripe seems to be going after a very specific use-case of embedding deposit accounts in a modular way,” said Pathak.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group