Financial Infrastructure: 10X Your B2B2X

While direct-to-customer payments led the last era of FinTech growth, B2B2X (e.g. banking-as-a-service, financial infrastructure) will lead the next.

B2B2X comprises of B2B2C (enabling other players to better serve consumers), B2B2B (enabling other players to better serve businesses), and financial infrastructure players. The latter provide customer-segment-agnostic technology solutions that support the operations of financial Institutions (FIs) or enable the delivery of financial services. B2B2X is expected to grow at a 25% CAGR to reach $440 billion in annual revenues by 2030, outpacing the overall growth of the fintech market (BCG, 2023).

As businesses across industries at large offer more financial services and incumbents struggle to keep up with the pace of innovation, B2B2X – which already constitutes 25% of all fintech revenues (BCG, 2023) – is expected to become increasingly relevant in meeting the growing demand for fintech solutions.

Led by the United States, North America currently has the world’s largest financial services industry, with an annual revenue pool of nearly $5 trillion. The US will account for a projected 32% of global fintech revenue growth (a CAGR of 17%) through 2030, largely due to the proliferation of B2B2X supporting the expansion of monoline fintechs into additional products and services, and the country’s interchange pool (BCG, 2023).

Yet, this gold rush is driving cutthroat localized competition. B2B2X fintechs that are looking to build a strong competitive moat should be prioritizing:

• Expand products and capabilities

  Focus on rapidly developing and offering a diverse range of high-demand payment products to clients. The top four products expected to see the highest demand are:
  • Cards / virtual cards (70-80% required by end-clients)
  • Wallets / virtual accounts (60-70%)
  • BNPL (20-30%)
  • Lending (40-50%)
    
    

• Target global brands

  Look beyond the local brawl and catering to global brands, large or small, with large multinational footprints – unlocking exponential growth. 

For most B2B2X players, expanding products and capabilities is already seen as essential to win the US. However, any provider wanting to 10X their growth in the next 12-18 months needs to also start thinking global.

Asia-Pacific should be in the sights for ambitious B2B2X players. With a 27% CAGR, the region is poised to become the world’s top fintech market by 2030. There is also massive potential in Africa and the Middle East, where only 17% use digital banking services (BCG, 2023). For B2B2X providers wanting to 10X growth, now is the time seize the moment and play offense.

The uncomfortable truth

Here's what B2B2X leaders won't admit:

• The U.S. could become oversaturated

  In the U.S., there are over 136 banking-as-a-service (BaaS) providers, making differentiation a challenge (The Financial Brand, 2024). Traditional banks are playing catch-up: Over 300 banks in the U.S. will be providing BaaS services by the end of 2026 (Cornerstone, 2023).
  
  

• Customer acquisition costs are soaring

  Acquisition is the top challenge (59%) and priority (30%) for FinTech CEOs. For B2B2X players this will be costly. We estimate that the cost of acquiring small to medium size clients is between $10,000 per client. For large enterprises and financial institutions, these costs can be $100,000+
  
  

For B2B2X players, it should not be about growth at any cost, and unit economics matter. B2B2X players need to strengthen their competitive moats and widen the gap between themselves and the rest. Pursuing smart but aggressive strategies to gain market share and price for value ensures that clients are willing to pay for the quality they receive.

Go big or go home

We think that targeting global brands, large and small, with presence across multiple markets, is the breakout opportunity for B2B2X players. Here’s what these brands are increasingly seeking:

• Embedded finance

  27% of global brands in high-opportunity industries (e.g. travel, gaming, eCommerce & digital goods, creators, etc.) express interest in embedding financial services like virtual cards (27%), BNPL (28%), and multi-currency accounts (29%) in the next 12-18 months (Rapyd, 2024).
  
  

• Branded cards & loyalty

  There are over 10,000 co-branded card opportunities globally (MasterCard, Visa, 2024). With an average annual revenue uplift of 42% for customers adopting co-branded cards (SSRN, 2024), the demand by global brands to take these programs global is set to grow.
  
  

• Agility & flexibility

  Global brands want solutions that meet the needs of their customers across each market. This requires multiple products, fast deployment, rapid iteration, and highly configurable services through a single global platform. According to 35% of BaaS adopters, rapid implementation was a top priority, ensuring that they stayed ahead of the competition to see their investment pay off early (EU Start-ups, 2023).
  
  

B2B2X providers who embrace this strategy can build a competitive moat and stand to gain:

• Higher contract values

  Providers are uniquely positioned to serve global brands across all markets and across a wide product offering.
  
  

• Pricing power

  Offering a differentiated global service that other regional players will struggle to replicate empowers B2B2X providers with leverage in the market.
  
  

• Reduced churn

  The average customer lifespan for a global brand is much longer, with lengthier contracts and a lower likelihood of going bust.
  
  

• Market leadership

  B2B2X providers who excel in this space can establish themselves as pioneers, attracting high-profile clients and partners, alongside shaping industry trends and proactively working with regulators to help shape regulations.
  
  

Episode Six: Empowering B2B2X to take the global stage

To win the B2B2X market, providers need to expand their product suite alongside building multi-market capabilities.

Episode Six is not just a payments technology platform: we're your strategic partner in capturing the lucrative global B2B2X market. With our solution, you can offer cards, virtual accounts, and BNPL as-a-service to your clients in the US and worldwide. Here's how we empower you to win:

• Unmatched flexibility and scalability

  Our modular platform is designed to adapt to your unique business model and the evolving needs of global brands. Launch new products, expand into new markets, and scale your operations effortlessly.
  
  

• Complete virtual account and card solution

  We offer a comprehensive suite of virtual account and instant card issuance capabilities, including customizable features like dynamic spend controls that can be offered as a service to your clients.
  
  

• Seamless integration

  Our open APIs allow for easy integration with your existing systems and third-party applications, ensuring a seamless customer experience.
  
  

• Proven track record

  We've partnered with leading B2B2X providers and global brands to launch innovative payment solutions that drive tangible results.
  
  

With Episode Six, B2B2X players can rapidly launch and scale innovative payment solutions for global brands, driving growth and establishing market leadership.

A bold but necessary move

This strategy isn't without risks, but for B2B2X providers willing to take the leap, the rewards stand to be transformative.

The future of B2B2X is not in local markets, but in conquering the world.