How Synthetic Accounts Combine Financial Services into One Platform

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Filip Sobiecki

Dec 2, 2021 • 10 min read
Making Fintech Simpler with a Single API

Nowadays, the world of fintech is much larger and more complex than ever before. It’s not just about banking anymore. It’s evolved into something much bigger.

You can now throw brokerage, insurance, payments, lending, investments, and even crypto into the mix. All of these different financial verticals have different uses regulations, tools, and accounts to manage them — making financial services fragmented by nature.

The problem with this fragmentation is that it forces consumers to manage their money through a range of various tools from different providers. As none of these tools are really designed to integrate with each other, it’s up to the customer to manage it all individually.

In other words, it can be a great hassle, time-consuming, and makes for an overall poor user experience.

Aiming to solve the problem is Rize, a fintech-as-a-service provider designed to pull these different verticals together under one roof. Rize does this by using Synthetic Accounts technology, which seamlessly integrates checking, saving, and individual brokerage into one API fintech builders can use.

In this episode of Disruption Talks, CEO and Co-Founder of Rize, Justin Howell, explains how its embedded fintech service works.

What is an embedded fintech service?

Embedded fintech services fall under the umbrella of banking-as-a-service (BaaS). As a growing market, it's estimated to reach a value of over $138 billion by 2026.

Embedded fintech services involve using APIs to integrate financial services into other ecosystems. This means that a fintech company essentially 'leases' tools to other companies so they can offer financial services to their own customers. For example, if a food delivery app needs to include the ability to take payments, embedded fintech is a simple solution.

Rize takes embedded fintech one step further. The platform enables businesses to embed a range of different financial services under one API. With its Synthetic Accounts technology, Rize helps businesses build simpler user experiences for their customers.

Filip Sobiecki: Could you give us a little backstory? How did you come to be the CEO of Rize?

Justin Howell: I’ve spent half my career in private equity and hedge funds, and the other half has been building companies. Rize is the third company I’ve been a part of building. I had absolutely no intention of ending up in this space at all. I even said I would never do anything in financial services, which clearly backfired!

What brought me back into this world was that my parents, like many others, got absolutely crushed in the 2008-09 financial crisis. I ended up spending about five years working with them to help them get back to stability.

Could you tell us about the founding story of Rize?

It started with the experience of helping my parents out. My co-founder and I got together because we shared a vision for a more customer-centric and intuitive approach to financial services.

The problem we wanted to solve was bridging the gap between different areas of the industry that had been regulated into different silos.

Things like banking, brokerage, lending, insurance, and now crypto don’t map very well with how people use money in the real world. That mismatch is really the source of all the complexity and confusion in financial services.

Rize is an infrastructure platform serving other fintech builders, but we originally started as a consumer fintech.

What we had originally thought was a UX problem was actually an infrastructure problem. To build the intuitive user experiences that customers wanted meant we had to build an immense amount of that missing horizontal connective tissue.

As we talked to a lot of other fintech builders, we discovered that pretty much everybody was running into the same infrastructure problems. They had to recreate the wheel and were doing it badly.

It turned out that what we’d built for ourselves to solve that problem of how we operate across multiple verticals was a much more flexible and elegant solution. We ended up pivoting the business starting in late 2019, from being a B2C fintech builder to becoming a platform that supports other fintech builders around these core infrastructure elements.

What’s next for Rize in 2022 and beyond?

2021 was a crucial year for us because it’s when we fully made the pivot, and the platform went live. We signed first customers and raised our Series A funding round.

The theme of next year is all about growth, particularly on the back of the Series A funding. The team is developing quickly and the demand is increasing, so we’re growing the size of the business. We have to contend with all the challenges of scaling a business, especially because we have a relatively complex onboarding process.

We're already starting to move outside of our first vertical, which has been banking, and now we're starting to cover brokerage as well. Our vision is to start operating across a variety of additional financial verticals.

Can you explain Rize’s Synthetic Accounts technology?

The traditional, incumbent way of managing finances is very limited in what it can do. There are all the rules that make it difficult to map an intuitive user experience. Even companies with 15 million-plus accounts struggle to move horizontally and add new financial verticals because of how rigid the infrastructure is.

What we realized with Rize was we wanted to just focus on building the right user experience for our customers. We started with the customer’s needs and worked backwards rather than starting with the same old infrastructure.

Synthetic Accounts technology is a set of master ledgers designed to simultaneously operate across multiple verticals with the ability to add any new capabilities.

This allows fintech builders to focus on building a good UX rather than worrying about how to integrate everything.

I’d say this concept of embedded finance, which is taking financial capabilities and embedding them in what’s traditionally a non-finance user experience. Take the classic example, Uber. Part of the innovation around Uber was that you could call a taxi from your phone, but payments were also embedded in the app. You never even had to pull your wallet out.

The other trend I’d say is multi-product fintech, fintech companies that started with one particular vertical moving over into another. This gives customers a wide range of products and services in one place.

With so many neo banks popping up, do you think we’ll see more mergers in the future?

I don’t think we’ll see what I would call any more new generalist neobanks, those that address a broad customer base.

We’ll see neobanks that offer experiences for more niche audiences where they do a much better job of meeting specific needs.

I think there will be some consolidation around that space.

What does your decision-making framework look like?

In 2021, we were really pushing ourselves to just go and make a decision quickly. What we forgot was to take a step back and communicate why we were making these decisions with the rest of the team. Communicating even when you’re moving fast is essential.

If you had a magic wand and could give every 12-year-old in the world a new skill, what would it be?

I’d say empathy. We’re such a polarized and divided world, so we need to learn to take a step back and think about someone else’s worldview for a second.

The second thing I’d say is to teach people that it’s okay, and even a good thing, to change your mind about something when presented with new information. As you learn new stuff, you need to adapt and be willing and confident enough to say, “maybe I was wrong about that.”

This discussion is part of our Disruption Talks recordings, where we invite experts to share their insights on winning innovation strategies, the next generation of disruptors, and scaling digital products.To get unlimited access to this interview and many more insights from industry experts, sign up here.

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Filip Sobiecki

Senior Executive at Netguru and host of Disruption Talks
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