Finovate. This brings together an established fintech with a growing presence in financial data sharing, and a startup that aims to make it easier for developers to create embedded finance apps.In the MX-Hydrogen partnership, two major trends in financial services converge: the development of API ecosystems for securely sharing financial data between networks of financial institutions and fintechs, and the rapidly evolving embedded finance landscape.
Data-sharing platform services are key to embedded finance, for both large companies and small ones, like Hydrogen.that it would partner with Goldman Sachs and Citi to offer bank accounts, cards, and cash management services. Stripe's BaaS API will let its US clients offer services to customers, such as ecommerce companies like Shopify seeking to provide banking services to merchants on their platforms.
Even with MX's partnership, Hydrogen will struggle to gain a foothold in the embedded finance landscape. It's not clear that there's a meaningful addressable market for no-code, "drag-and-drop" embedded finance platforms: The most likely customer for them would be a company without the scale to have significant development resources, but that would also want to offer financial services directly to customers.
It's a narrow niche—and embedded finance without a higher level of customization will quickly become a commodity in the face of products from companies with the engineering resources to implement a broad array of APIs and customize the user experience. Hydrogen should thus switch gears to emphasize its developer toolkit, a layer on top of a data-sharing network, which gives customers mix-and-match code for both access to third-party integrations and the ability to interact with them.
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