By Nermeen Nabil 
Jifiti is quietly shaping the future of embedded finance by working strategically with banks to deliver personalized solutions. This will help them get their share of a pie expected to grow by 148% by 2028.
Co-founder and CEO Yaacov Martin said Jifiti was founded more than a decade ago, initially to provide technology for retailers. Back then, clients paused when integration was discussed. That drove Martin and the team to provide the same functionality with minimal integration. They achieved it by building solutions on top of existing guardrails.
The company saw success by working with large companies and building trust over time. Soon, clients looked to Jifiti to help deliver quality where consumers, finance and retail meet – embedded finance.
“Creating a real-time connection between three different parties proved very challenging for all three players, and our infrastructure was able to tackle much of that,” Martin said.
Jifiti works behind the scenes to build the pipes that allow retailers, institutions and other service providers to offer financing to their customers. That lets everyone concentrate on their specialty: retailers sell, fiservs finance, and Jifiti connects the system.
Factors shaping the growth of embedded finance
Martin said a few key factors have changed the complexion of embedded finance over the past three years. Between 2017 and 2021, several companies flourished by touting the lack of need for banks. They brought better, more accessible technology, and by focusing online, they made their mark.
That made sense when interest rates were near zero and raising capital was relatively easy. As that changed and interest rates rose, investors looked harder at companies that needed to raise for both operations and to fund balance sheets.
“When you are operating in an environment where interest rates are zero, and you’re only measured on growth and profitability, great,” Martin said. “They grew to these (extreme) valuations.
“If they couldn’t show profitability when their cost of capital was close to zero, how would they overnight show profitability when they’re paying 6x for the same for the same dollar? That perfect storm of the regulator coming in, the markets completely changing, and the economy shifting created a situation where there was huge demand, but suddenly, the supply shrunk overnight. And that was our opportunity to shine.”
It’s better to work with banks than against them
Many a company back then promised to get rid of the banks. Jifiti did the opposite. They worked with them, as they were stable, regulated and experienced. Contrast that with some newcomers deploying questionable practices like encouraging overspending and nurturing defaults.
Banks were competitive, more efficient, and had a low cost of capital. They needed the technology to make their loans more accessible, and Jifiti could make it happen.
Martin cautioned that patience is required when working with Tier One banks. Trust develops slowly. Each client has unique strengths that must be accounted for in the design.
Along the way, Martin saw an opportunity in B2B. They would also benefit from embedded finance opportunities but needed a system designed for their unique needs.
Be careful which embedded finance partnerships you pursue
Banks and institutions must also be mindful of what they surrender when they let fintechs into their system, Martin advised. Early on, many thought by partnering with the name providers that they were simply offering convenience to their customers, not realizing that link allowed outside companies to market directly to their customers.
“I take my hat off to them,” Martin said. “They did an incredible job and if you think about it strategically, it’s absolutely genius. It’s a fairly simple, straightforward product: pay in three and four. And in return, what they get is not only access to the customers, but they also onboard the brand’s customers, whom the brand may have been cultivating for the last 100 years.”
Jifiti landed its first large bank client by cold calling them. Martin said they could help them reduce the implementation without hurting their scalability. Then, Jifiti focused on offering infrastructure outside of the United States. It took work to accommodate the different environments, but it’s paying off. Jifiti has a presence in 12 countries with plans to expand.
Growing through the right partnerships
Growth also comes through partnerships. Over the past year, Jifiti announced unions with Ingenico, FIS and Finastra. By integrating with Ingenico’s PPaaS service, Jifiti allows merchants to offer bank financing at any point of sale easily. Working with FIS delivers an end-to-end embedded solution for banks and financial institutions to deliver merchant services like B2B BNPL. The Finastra deal enables participants in Finastra’s BaaS ecosystem to embed finance offerings at any merchant POS via a single platform.
“They also realized that our platform gave validity to their components,” Martin explained. “You can’t operate with an underwriting component if you don’t have the rest of the origination or if you don’t have the rest of the disbursement. Those are two primary areas that we provide technology for and a whole other layer of orchestration.”
The challenges of integration
Back-end partner integration is a complex process involving many pieces. Martin said that must be balanced with simplifying the process as much as possible within highly regulated environments. Ideally, Jifiti is included early in the process as the partner responds to an RFP. It’s a lengthy process involving patience, a patient board with an eye to the long term.
Martin said financial institutions must match transactions with the right financial products. Each product has underwriting requirements, and each lender looks at distinct credit bands. Do it wrong, and you risk being irrelevant to the customer or giving them the wrong financing.
Looking ahead, Martin sees many Tier One banks getting ready to offer POS solutions. When they do, Jifiti will be there.
“We’ve gotten broader and gone deeper,” he concluded. “We’ll have a few new markets as well, but what we’re really doing is doubling down. We’re in 12 markets and doubling down on many of those.”
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