In brief: Itai Damti on embedded finance facilitator Unit
Q. Please introduce yourself and describe your role.
I co-founded Unit with Doron Somech, our CTO, to make it easy for companies to build financial features into their products. Our underlying mission is to improve access to the financial system, and as CEO that’s the goal to which I answer. Making (and keeping) embedded financial services simple requires skills that go beyond engineering and product and into compliance.
Pictured: Itai Damti, CEO and Co-Founder, Unit
Q. Many are touting embedded finance as the future of the industry. Is this an opinion you share?
Absolutely. Over the past few decades we’ve seen an evolution take root where now every company is a tech company - and, increasingly, every company is a fintech company.
The reality is that that simply wasn’t feasible before; a number of trends and key enabling technologies have converged to make it possible for a broader array of businesses to embed financial features into their offerings.
This is largely driven by consumer expectations for an integrated digital experience, as well as a ‘rebundling’ phenomenon, wherein businesses and people increasingly turn to favorite products and services as their trusted home base. Subsequently, this makes it natural for those operating systems to extend their platforms by embedding financial features.
Q. The opportunity to bridge the customer-FSI relationship is appealing. What challenges currently exist in achieving this?
We see a couple of primary challenges and lingering barriers in the space that Unit really exists to address.
One is related to compliance: when you embed financial features, the bar for compliance is raised significantly, and that burden can be difficult for any individual client to shoulder on its own. There’s a significant onus on infrastructure platforms like Unit to abstract away the complexity, not only of the technical requirements to issue cards and move money but also to simplify the operational and compliance burden. That’s why our Chief Compliance Officer was one of our first hires.
Q. Are there any embedded finance-related use cases that Unit can provide?
There are plenty, from lending to cards to payments. We prioritise efficiency and ease-of-integration in our solutions - helping companies launch financial features with 90% less time and effort - so Unit can act as a springboard for the use cases and functionality our clients can dream up.
One recent case that exemplifies our ‘plug-and-play’ approach is Unit’s partnership with Abound, a benefits API platform. We came together to build an integration that makes it easier to help independent workers automate their taxes. The integration leverages Unit’s openness and programmatic extensibility points, making for quick and easy implementation.
Q. Do you believe finance is becoming a 'tech first, finance second' industry? If so, does the sector's future belong to technology companies?
What an interesting question. What I think is really happening is that consumers (and, by extension, businesses) entrust their financial futures to the businesses that understand them and that have earned their loyalty.
Increasingly, this has been tech companies, with their easy-to-use experiences, personalisation, and laser focus on audiences. I expect we will continue to see this competition lead to innovation, as well as partnership. The sector’s future is a shared one.
Q. Is there anything on this topic that isn't receiving much attention that you'd like to highlight?
I’ve touched on it already, but I think the topic of compliance bears repeating. Over the last decade, we’ve seen legislation slowly start to catch up to the completely new experiences and products being created, and as a result compliance is an increasingly critical and clear investment.
That’s why this is an area where embedded fintech can really shine, even if it seems counterintuitive. Unit’s platform, for example, is specifically designed to do the heavy lifting of compliance, absorbing the complexity and day-to-day work associated with it.
Cover image source: Unit
State Street launch crypto service for private funds clients
State Street Corporation is now expanding its push into the cryptocurrency industry by launching new digital asset services. It will provide digital and cryptocurrency asset fund administration capabilities for the firm’s private funds clients.
In partnership with Lukka, a leading enterprise crypto asset data, and software provider, State Street will support its private fund clients with collection, standardisation, enrichment, reconciliation, processing, and reporting related to crypto and other digital assets.
The partnership is State Street’s latest effort in the digital and crypto-asset space following the launch of State Street Digital, a division focused on addressing the industry’s evolving shift to digital finance, and comes after Lukka’s Series C funding round in December of 2020, which was led by State Street.
A rise in digital assets
“The growth in popularity of digital assets is showing no signs of a slowdown and State Street Digital is committed to continuing to build out the necessary infrastructure to further develop our digital assets servicing models to help meet our clients’ growing demands,” said Nadine Chakar, head of State Street Digital. “Our work with Lukka will leverage their software and data in order to help expand our digital and crypto asset fund administration capabilities to alternative managers is just another advancement in our digital solution set and marks a very exciting development.”
State Street will leverage Lukka’s product suite, which includes a proprietary middle and back-office data management solution, purpose-built for blockchain and crypto-asset data, as well as Lukka Reference Data, and Lukka Prime Pricing Data. This will enable State Street to consume crypto assets that are comingled within a private client’s traditional alternative investments portfolios.
“As our clients continue to adopt digital assets, such as crypto, we’ve seen increasing interest among investors for institutional quality middle and back-office offerings that support diversified portfolios,” said Jen Tribush, alternatives lead for State Street Digital.“ Lukka was the ideal partner to help provide these services given their leading position in crypto asset data as State Street continues to add to our growing offering in the digital asset space.”