Once you’re clear on business model, the next step to building profitable embedded finance is product design. Forget anything you’ve heard about standalone savings accounts or debit cards as magical revenue and profitability accelerants. The real power of embedded finance comes when a banking product fully integrates into your ecosystem, solves a problem no one else can, and catalyzes your core offering.
MetaLab’s Head of Design Strategy & Craft Michael Wandelmaier understands the magic behind designing products people can’t live without. In fact, it’s actually less magic and more proven framework.
Michael has worked with brand powerhouses—Lululemon, Four Seasons, TD Bank, UBS, NBC Universal, and more—as well as rising fintech startups. In this episode, he'll share that proven framework, plus practical examples to optimize your design process.
Hey there, welcome to the Embedded Finance Blueprint, where we get past the noise to help you navigate the landscape, unravel the hype, and actually build a sustainable embedded finance business.
Today, there's no debate anybody can build these products, but who should? And if you should, how do you do it correctly? That's what this series is about.
I'm Ahon Sarkar, general manager of Helix by Q2, and I'll introduce you to a few friends, who will share their real-world lessons for success and help you avoid the potholes along the way. In just six expert conversations, you'll learn everything you need to get past getting to market, and get to growing your business.
So, let's dive in.
Welcome back for Episode 2 of The Embedded Finance Blueprint.
Today, we're going to focus on product design: How you build products that people just can't live without because they do a job so well that it becomes ingrained in your day-to-day life.
I'm super, super excited to be joined by today's guest, Michael Wandelmaier, who is, by all counts, an expert in this space. Mike is the head of design strategy and craft for MetaLab. And for the last 20 years, Mike has worked with teams to really think about human-centric design in just about every vertical you can think of—from health to education to finance to the environment to work and play. And core to Mike's being is this idea that design should enrich our day-to-day life through culture, through co-creation, and through community.
Over the last couple of decades, he's done just that in industries like fashion, with Lululemon, all the way over into industries like finance, with TD Bank, Goldman Sachs, and even fintechs like Upstox.
He's helped companies understand what's important and how to help really understand their consumer to build something that deeply resonates.
Mike's part of MetaLab, which, for over a decade, has helped companies from tiny early-stage startups to some of the biggest companies you've ever heard of—Apple, Google, Uber, YouTube, and more—build products that change the face of our daily lives. And so, I'm thrilled to have him on the podcast today.
Mike, thanks so much for taking the time.
No, thank you. So excited to join you on the show.
I don't think over this podcast today we're going to get to dive into all of the different experiences you've had because you've seen such a breadth and diversity of products. But I think you— better than most—probably understand what looking at different problems in different contexts means, and how to build something that's really delightful.
It's strange, you start to see patterns emerge from product to product, even though on the surface they might look really different.
Yeah, I'm really interested to hear the patterns that you see in healthcare versus finance and how you end up solving different problems in the same way. But let's not jump ahead. Let's start with the first question that we ask every guest.
In today's world, there's a lot of noise in Banking-as-a-Service and embedded finance, and it can sometimes be hard to figure out what's true and what's maybe a little bit of marketing BS.
So, the first question for you, Mike, is: What’s the biggest embedded finance myth you'd like to debunk immediately?
I don't know about myth, but I definitely had a really narrow understanding or conception of what embedded finance was. When I first started understanding this and hearing about it, I think the image in my mind was when a retailer or a department store offered a private label credit card with rewards points—that prototypical version of it was the sum total that I understood it to be.
And it took a lot of time to think of it a lot more broadly, in terms of any product or service that has a financial component to it that can help that core product or service move along. Well, that's like the bigger version of embedded finance, and there's so much there. So, I think that while most people carry around that one definition of it in their heads, it's not untrue, but it's super limited and narrow.
I think part of that is that the technology has changed so much in the last decade—two decades. I mean, 20 years ago you'd kind of be right, that was embedded finance. It basically was prepaid cards and white-label credit cards.
And now, yes, you have embedded banking, you have embedded credit, all that kind of stuff. But you're also starting to see embedded health insurance. You're starting to see embedded financial advice. You're starting to see embedded charitable giving.
I think you're seeing this at a time when different kinds of companies are figuring out this embedded finance business model, this idea of distributing through other products and services. And they’re creating that technology layer that I think is widening that definition you call out.
And I think the reason people don't really connect with it is because we try to design products that are really seamless and take away friction and bumps, and that makes them almost invisible. You're not even aware that you've been offered a financial service in many cases, it's just such a natural part of the product experience, which is good.
That's how it's supposed to be. But I think it makes your job a little harder to help people understand what it is that's actually available.
For sure. I was talking to an embedded insurance provider the other day, and it occurred to me that I had been interacting with them over and over again, and I just had no idea.
My wife and I recently came back from Taiwan, and when we bought those tickets, they asked that little question, “Would you like to insure your trip?” Thousands of people have done this. And every time, I hit “no.” Every time, I'm like, no, it's fine. Except for that one time when my flight got canceled thanks to COVID, and then I was like, "Oh, I see what the point of this was.”
But I realized that is an embedded insurance product. That is a company that is doing this embedded functionality in such—to your point—an invisible way that I didn't even notice it was there until I was looking for it.
Is that a phenomenon that you find often in some of the best products that you build, that they do their job so well that they tend to be invisible? Or do you think that it’s more a product of this kind of embedded finance world?
No, I think that's generally the aim. I think any product really wants people's time and attention. And the perception of the value is on the thing that they came to the product for—and what the product really presents itself to offer people. Everything else is a way of either getting out of the way or facilitating that.
So, I think that's deeply intentional. It would be really confusing and create a lot of anxiety for people if those aspects of a product were really strongly signaled or took a lot of your effort or time. I think that's a natural tendency, and I think it's on people who create products and design products to understand what happens behind the scenes to be able to do that responsibly and effectively.
For the consumer—the end user—only in cases where transparency matters, or they really need a deep understanding of what's going on, should that be more overt. If it doesn't need to be that, then why would you?
That's a good point. I kind of want to pull on one of the threads in what you just said there. You were talking about having to understand what they came to the product for.
One of the things that we'll be talking about on this podcast is that jobs to be done framework, right? Products exist to do a job for you. And oftentimes, when it comes to product design— the theme of today's episode—people try to solve a million problems all at once. And in so doing, don't solve any of them, confuse the customer, and probably spend way too much money getting to something that doesn't actually scale.
When I look at the work that you've done across all those different clients we mentioned, it seems to take the opposite approach. It seems to start with what is the one real thing that I'm going to solve for this person? Why are they coming to me, and how do I go from there?
So, I guess my question to you is, when you start with any of those clients, or if you're talking to someone who's getting into this fintech space, how do you figure out what that one problem should be in the first place?
Oh, that's such a good question. I mean, it's the principal preoccupation for anyone who is essentially starting a new product or creating a new product from scratch—but even for established companies that are continually trying to refine and reposition in a really competitive space and be successful. That's the most important part of the approach.
So, I think there are a few lenses by which you can do it. The biggest one is, for sure, just understanding your customer. What do they need, what do they need from you, and what can they get from you that they can't get anywhere else? And then, if you're going to deliver that amazing thing that they need, what's critical to them having a great experience, enjoying that product or that service? And that can really be about just understanding their day-to-day.
At MetaLab, we have a huge UXR, user research department, and they spend a lot of time talking to people—walking in their footsteps—not just understanding how they get their hands on and use a product, but just what happens in their day-to-day lives in and around, before and after, using the product. All of those messy little things really help you understand what is necessary and valuable, and what is superfluous and not necessarily a good part of your product—just adding to the noise.
So, I think prioritizing what offers the greatest value to your customers from what is anecdotal, or maybe duplicates things they get from other places—things they might already get from their bank or the existing other products they use. That's a great one.
I think the other one is just recognizing that no product exists on its own. It's a competitive marketplace. All day long, things are vying for your attention, for your money, and for your time and effort. And no product is doing something that's so completely unique that nobody else is offering it in some way, shape, or form. So, having a really sharp understanding of what you offer that's differentiated helps you stand out more clearly to people, and then they can orient and understand why your product or service is truly the best.
And the more you dilute that by having a collection of services and features that don't necessarily add up to something clear, the more it gets confusing for people. And they say, okay, there's a lot there, but is that really what I need? You can do yourself a huge disservice by just trying to pack on more and more and more.
For sure. And I love what you're saying there around understanding that your competition isn't just something doing exactly the same thing. It can be something that is competing for the same time. I think the CEO of Netflix talks about how one of its competitors is video games.
When you think about Netflix, you think, okay, yeah, they compete against HBO Max, but, really, they're just competing for your time—your leisure time. And so how they think about solving for winning your leisure time is in relation to all the other things that you could be doing with your time.
I think one of the challenges that we've seen people go through is in following the track that you went through, which is, first, figure out what's out there—figure out what that white space is. Understand what your customers actually need, and then, what they want. Then, prioritize those things to figure out what's the one thing you're going to focus on. I think, in general, that's a great framework to follow.
I think the place where I've seen people get stuck in this specific space—where, in some cases, you're creating something that maybe hasn't existed before—is customers don't necessarily know what they want, right? It’s like the old Ford saying, “If I had asked my customers what they wanted, they would have told me a faster horse.”
How do you navigate that as a product designer? People know what they want and what they know they don't want, but they don't know what they don't know they want, right? Until they see it.
So, how do you tease that out of someone when you're interviewing them to understand the thing you could build that's new that maybe they haven't seen before? Does that make sense?
It makes total sense because I think very few products or services or businesses start out just with, “Hey, I have no idea what I'm going to do, and let me go find out where there's white space, and then operate there.” Typically, there's an instinct, a hypothesis, or a vision for something that can be done better than it was before—or offering something that wasn't offered before.
And usually, you want to prove that out by prototyping it, articulating a vision, getting a proof of concept down. Then, often, experiencing is believing. So, doing user testing is a great way to get some validation. If people experience it, do they respond positively to it? Does it suddenly find a way to fit into their needs or into their life?
So, that's a good one. But beyond that, I think you really need to understand well the wide range of people who might be your customers—like who's your first customer. And I think a lot of people who work in product design have seen the bell curve, which is the curve of adoption, and those very first people at the front of it are the early adopters—the people who are out there actively looking for something new to solve a problem.
They're the people who buy a lot on video game marketplaces and are looking for the best, cheapest way to pay for items in those marketplaces. What's the best product or service out there? And the second someone launches something that's really good for it, they're looking for it. They hear about it, they're eager to try it, and if you do a good job, then they're like, “Great, I really enjoyed that.”
So, there’s that first early adopter, and then there’s the next set of people who will follow them. Understanding who those people are, who needs it most, is a great way to make sure you're doing something really new. You're not trying to displace people who are lukewarm or casually or mildly interested.
You mentioned people's biggest competition is other products for their time. Well, often it's what they're already doing. If you put a great new productivity tool in front of me for my day-to-day work, well, I'm still going to use email, and I'm still going to use Slack, and I'm still going to use the design tools I use. You have to displace what people already do.
So, trying to find who it's for in those first audiences is so essential. And then, if that catches on, gradually more and more people become aware of it, try it out, slowly adopt it. And that's a great way to build a customer base.
I think that's fantastic advice. So, let's go through that process.
Let's say that—I'll use your video game example, because I'm a nerd, and I love video games—video game people who really play games are fanatics about playing games.
You mentioned that it starts with a hypothesis or an instinct. Let's say in this case, the hypothesis is, people want other ways to earn this in-game currency, aside from buying the literal currency. And they would be willing to get a rewards card, let's just call it for a second, right? The concept is we're going to have a simple rewards card, and it's going to earn you currency in the game, at a high level. We go and ask some of these initial adopters, "Hey, would you be interested in this kind of thing for your favorite game?”
They're interested, great. We figured out who that initial person is, we figured out what the high-level product is. We're not going to go tack on health insurance for gamers, because they probably don't care about it, right? We're just going to focus on this one rewards card.
One of the things that you said is, I'm going to have to displace what you're doing today, right? So, today you're using your bank card or you're using your credit card, probably one of those two. And then presumably, if I can learn this from looking at the rest of your work, it has to delight me in some way. I need to be excited about it, to want to promote it organically to my own friends who play games.
So, how do you think about that? And you don't have to answer it specifically in this example, you can answer it generically or in the context of the example. But, once you know what you're trying to build, and you know who you're trying to build it for, how do you make it delightful?
And even further, how do you displace the thing they're already doing?
Yeah, there’s this one basic tool or concept that gets used so much in user experience and product design, especially in digital stuff, and it's the concept of a customer journey, and user journey. So, this is not 100 percent reality because every person goes through a different experience of using, of playing video games, of joining a platform, of making friends there, or buying things.
But you can reduce it more or less by talking to a lot of them and mapping that out, to an overall approximation of that journey. A user journey can be used to understand the major pain points, the things that are really terrible about that experience.
What are the great moments where they have a really big emotional high or a big sense of, “I got reward or value from this platform,” and what is their context? What are the things that matter to them? Why are they mostly there?
If they were only there to make money, it'd be very different than if they're there to make friends and sometimes make money. Or is it the value from the enjoyment of playing the games? Or do I really love the reward of accumulating things and having a better, I don't know, armor to wear around in Fortnite? Who knows? But it's understanding that user journey—and the aspects of it that motivate and move people along—that helps you see moments where there are opportunities.
Sometimes there are big pain points, and you can pick those away, and that already makes people feel so good. There’s an opportunity every time a service exists that is not bad in a way that you're used to it being bad. I don't know, waiting in line to check into a flight, for example. If you could remove that, and just skip that waiting in line, that's a great service. People would pay for that.
So, going through the footsteps of what someone experiences is a great way to see where all these moments are, and then finding ways to tie that back to the overall thing they're trying to do.
You said jobs to be done. Well, yeah, at the end of the day, they do have one or two things that they truly came for and other things matter less. So, making it a cumulative experience, something that feels really rewarding over time, is a great way to make features build on each other.
Yeah, the thing I love about that answer is how rooted it is in empathy, right?—understanding people first.
I think where we've seen folks fail is in designing the solution and then finding the problem, right? Or, building something for everybody, and in turn, not really understanding who they were building something for in the first place.
For the people who are newer to this, and trying to figure out how to take that framework that you just shared and apply it practically in their own business or their own day-to-day lives, can you share an example from the past of any of the things that you've worked on—financial services or otherwise—that reflect you doing that process, and results in the product that you brought to market?
I think a really good one is, Upwork, a marketplace for talent online. It's like a work marketplace where freelancers who provide things like design services or technology services can connect with employers—people who need to find someone to do a job and to help them out.
A tremendous number of people find ways to work together. But you have to articulate, “Hey, I need someone to help me with, maybe editing a video, and then I need to find the right person.” But at some point, they're going to start working together, and there will be an exchange of money at some point. The job will have been completed, and I’m satisfied with the work, so great, I'll pay you. Send me an invoice.
But more often than not, there's quite a few moments where it's uncertain, it's unclear. Like, "Hey, did this job get completed to satisfaction, or is something missing? Should I pay you all of it now?"
Escrow services is something that Upwork put into its product as a result of the design process because it helps create trust on both sides. It's like, okay, we've agreed to this job being $1,000, and we're going to hold those funds, which means that the person providing the service knows that the money is there as long as they do a good job, and the person who's paying for it gets a reasonable assurance that they have some fail-safe, in case the job was not provided in a satisfactory or timely way. There is someone to safely hold those funds, which is not like an arbitrary third party. It's the platform that you already trust to find that freelancer. And that's a form of embedded finance.
And it didn't arise because some people were scratching their heads saying, "Hey, how could we sell escrow services?” They were like, “What is a need that these two parties have in this exchange, and how do we make that happen?”
So, they worked really hard to be able to provide that service behind the scenes. There's a lot involved from a technology and regulatory and banking point of view, and all of that is great. But from the user perspective, it's one more reason why they would use Upwork as a platform, instead of maybe something else, which is simply a job board, or a matchmaking service—that kind of thing.
For sure. It starts with the experience, and you work your way back into how that's going to be possible, right? I love that.
Before we get to our final question, I want to ask one more, squeeze it in there. I love that example because in that example, the goal of the escrow product is not to be some standalone, super profitable product, right? The goal of the escrow product is to make it easier to work with other people in a more trusted way, and eliminate one point of pain that exists in the alternative that you're effectively displacing.
In doing so, I have to imagine that introducing that kind of feature actually helped increase usage of Upwork holistically, right? People were like, “Wow, what a great experience. I would love to use this broadly for all of my freelance work" or for all the hiring work I'm doing.
And I think that's really emblematic of the beauty of embedded finance—that it's not so much about, I'm going to launch this one standalone feature that's going to make me a bajillion dollars. It's more about, I'm going to solve a core problem and grow my whole business in adding this one component that was otherwise lacking or missing.
And so, my question for you is: When you think about embedded finance, or Banking-as-a-Service, and integrating a new product into the core offering to catalyze overall usage—as opposed to inline usage or inline profitability—how do you think through that?
In the Upwork example, it's not even just usage that grows. The direct revenue model in many forms of exchanges they have is related to the size or the amount of dollars of a job. There's a fraction of it that goes to Upwork as a facilitating platform.
And if you know that there is a safe and controlled way to make the exchange of funds, and to hold them in escrow, your likelihood to take on larger and larger jobs to earn more and more money is greater. So, it's not only $100 jobs that I would do and pay for on Upwork, I would be willing to put myself up to do a $1,000 job, or even a $10,000 job.
Well, that directly changes the amount of revenue that Upwork has without even growing the number of users or the number of jobs they take on. It just qualitatively grows the dollar amount. So in almost all cases, you can map it directly back to business growth. It doesn't have to be a standalone offering that’s got its own P&L or anything like that.
But how do you choose, I think your question was. How do you decide what to offer, what the feature should be?
I think we go back to our conversation about understanding what you're really trying to facilitate for your users at the end of the day. Say you're an investing platform, or let's say you're an e-commerce platform that has merchants on it, you really want to help them do the thing that they came to do, and then you have to understand them as users, especially the subset that is your most important or first users. You have to truly understand their experiences and their journeys. And along those moments, suddenly those features and ideas almost jump out at you.
When we do workshops at MetaLab, when we do ideation exercises, we'll look at a user journey, and we'll be identifying opportunity areas. We say, "Oh, a great feature here would be if we could do this." We haven't figured out yet how we're going to do it or anything.
At some point, it would be great if we get to a point and say, "Well, look, I only get paid on Fridays, but I'm going to need money in my bank account on Thursday, and maybe we should offer the financial service to bridge some of that transactional gap." Cash flow might matter for e-commerce merchants.
So, if you understand what you're doing to serve your customers, these features almost jump to mind in a session like that. And it's a great part of the design process that it doesn't have to involve a visual or UX designer. It can be anyone who's a business stakeholder that's in those conversations and comes up with ideas for features.
And then, if you look at the feature, you may say, "You know what? That is a finance feature." And then I can determine how I get this done. Who is my partner in getting it done? What does it look like in the product experience?
I love that.
I think it's a beautiful explanation, and I really appreciate you helping our listeners not just understand the framework, but also really distill that down into what does it look like in real life, and how to get to it.
That’s what we do in the next episode, talk about how to pick partners. How do I set up that foundation?
But we're not going to skip ahead. We're going to let Melissa and Nag talk to us about that. Instead, we're going to close on our closing question, which I'm sure you have many responses to, but I'm curious as to which one you'll pick.
What is the one piece of advice that you would give someone who's trying to figure out how to build a good embedded finance product?
I think it echoes what we were saying before, that it really has to be in service of the essential value that you're trying to drive with your product and the user experience. I think if you always hang to that point of view as the reason for why you do anything in your product, then that will always drive you to something that will have a true purpose and will resonate with customers. It will deliver the business outcomes that you want.
But if you start from a business driver and don't ask yourself how this connects to people, then it's kind of like bolting a digital clock onto a toaster just because you have one. With that form of cobbling together products and services—we've all experienced it and seen it—you know when you're just being sold something for the sake of the business, not in service of what it's trying to do for you.
And I think if you hold to that point of view, it'll always get you to a much more successful place, which is what everybody wants. It's great for the business, it's great for your customer, it's great for people. It reduces the amount of bad things in our world, in our day- to-day.
I could not agree more. I think we've seen a lot of timers strapped to toasters—companies that decide to add a bank account and a debit card because it's in vogue. I think a lot of those companies are figuring out it was a waste of time and resources, and it actually just made it harder for us to do the thing that we wanted to do, made our customers more pissed off because they didn't really want it, and it didn't really add any new value.
And I think every single company that has succeeded in this space has gone about it in the way that you described.
Square built Square Cash to help supercharge its merchant business and make payments easier. Acorns built its checking product to allow you to see all your wealth in this kind of simplified roundups world. Gusto built a bank account to help folks—to your point—get paid when they need it, as opposed to on the scheduled Fridays that the money comes in.
Everyone started with, "What is my business about? What is the job that I do for somebody? Where are those moments inside of that journey that I wish were a little different—that I wish were a little better? And how do I get there?" I think that is the best framework that you could give anyone, and I really appreciate you taking the time to share that with us.
Yeah, happy to. I feel like we could talk about this for days and days, so if you ever want to do a Part Two, always there for it.
Oh, we are going to do a Part Two.
But for those of you guys listening in, this was our second episode—on product design. I hope you, like me, learned a lot about really where to focus your efforts and how to build a product that's useful, delightful, and a core part of your business.
If you're now wondering how to get to the next step that Mike was talking about, picking your partners, don't stress. That's exactly what the next episode is about. We'll be joined by our friends over at Visa and at NBKC, one of our banks of record, to talk about the realities of getting married to a brand new partner and what that means for you, for your business, and for future implications.
Until then, we'll talk soon.