In this episode of Commerce Conversations, Ysbrant Marcellus, partner at Commerce Ventures, interviews Tom Bianco, who leads Newline at Fifth Third Bank. The two discuss the evolution of embedded payments, the organizational challenges of building fintech infrastructure within traditional banks, and where the industry is heading next. Here are the key takeaways: Defining Embedded Payments: Tom clarifies the often-confusing terminology around "banking as a service," "embedded payments," and "embedded finance." He breaks it down into three segments: embedded payments (core payment capabilities placed at the point of need), embedded banking (adding deposits and fund storage), and embedded finance (adding credit or working capital). The industry's lack of consistent definitions has made it difficult for banks, fintechs, and regulators to have productive conversations about these different business models. The Embedded Banking Evolution: The embedded space has evolved significantly from simply providing access to card schemes like Visa and MasterCard to file-based software integrations to today's API-driven platforms. What makes this moment particularly interesting is the convergence of stablecoins, new legislation like the GENIUS Act, and the emergence of new payment corridors. Tom emphasizes that it's not just about technology—institutions also need to bring risk management and regulatory oversight capabilities that come from decades of experience. Building Different Culture Within Traditional Banks: One of Tom's key insights is around organizational design. Banks entering the embedded payments space face a branding paradox: how do you signal that you operate differently from traditional banking while maintaining institutional credibility? Tom describes building a team with a deliberately different culture—casual dress, different interaction styles—to show fintech clients this isn't a conventional banking relationship. The challenge is being different enough to win fintech clients without losing the trust signal that comes from being part of an established institution. The Technology Stack and M&A Strategy: Tom discusses the advantage of owning a proprietary core banking platform rather than licensing one—it creates optionality to modify and extend capabilities in ways other banks cannot. He also explains how Fifth Third's acquisition of Rise Money allowed them to repurpose a consumer banking-as-a-service platform for commercial payment use cases, creating a "one plus one equals three" effect by combining legacy infrastructure with modern technology. Organizational Design Choices: Tom reveals that about 95% of the Newline team is ring-fenced and dedicated exclusively to fintech clients, with cross-functional capabilities spanning go-to-market, engineering, product, and client success. However, he notes that some functions—like legal—don't make sense to fully separate because it limits career progression. Instead, they secure dedicated capacity within enterprise functions. He also describes a dual-track engineering model where dedicated engineers work alongside enterprise peers who help navigate internal governance and infrastructure. Prerequisites for Success: Two critical factors enabled Newline's success: executive conviction from the CEO level that embedded banking is where the market is heading, and strategic investment that extends beyond just the embedded unit itself to supporting functions like legal, compliance, and risk. Tom emphasizes that execution discipline—hitting committed dates and milestones consistently—gives the market confidence, which matters when fintech clients are presenting sponsor bank choices to their boards and investors. The Regulatory Clarity Paradox: Tom articulates a tension that many in the industry feel: while the U.S. financial services market is "dynamic by design, which is wonderful," institutions would benefit from short-term clarity (6-9 months out) on where regulations around stablecoins, industrial loan charters, and skinny payment accounts are heading. Without clarity, institutions must hedge across multiple scenarios rather than making focused bets. Stablecoins as Potential Disruptor: Tom is "optimistically bullish" on stablecoins as potential "leapfrog technology" that could challenge the handful of mega-banks that currently control global payments infrastructure through correspondent banking networks. He sees stablecoins as a way to level the playing field for multi-regional banks, allowing them to serve clients internationally without navigating the traditional oligopoly. The open question is whether the right regulatory, risk, and oversight infrastructure will evolve quickly enough to let stablecoin growth scale safely. The B2B AI Opportunity: While consumer agentic commerce (AI shopping agents) gets most of the headlines, Tom argues the real near-term opportunity is in B2B back-office automation. Fortune 500 companies employ thousands of people in accounts payable and receivable departments where AI could automate manual processes like invoice matching, payment approvals, and reconciliations. This represents "the shortest path to revenue" for AI-driven payment solutions, and institutions need to build the infrastructure that allows AI agents programmatic access to payment rails. The Future is Agentic, Real-Time, and Global: Tom anchors his product strategy on three beliefs about where the industry is heading: more agentic than not, more real-time than not, and more global than not. He argues that the next generation of high-growth fintechs will ask, "Can you help me operate globally in real time?" Rather than incrementally improving legacy infrastructure, institutions need to build toolkits that are truly "borderless, real-time, and frictionless." The Enterprise Payments Shift: Tom observes a fundamental shift in how banks approach enterprise payments. Historically, banks led with commercial lending and payments were a nice-to-have to capture full share of wallet. Now, payments technology is becoming the primary hook because companies are making bank decisions based on "what technology can you offer to automate my payment operations?" rather than lending capacity alone. The buyer of a payment solution is different from the buyer of a working capital solution, and banks are reorganizing around this reality. The North Star Metric: When asked what single metric matters most over a five-year horizon, Tom's answer is monthly processing volume in the trillions. This metric reflects scale, client trust, execution consistency, and whether the platform is becoming essential infrastructure. For a multi-regional bank to target trillion-dollar monthly processing volumes represents a fundamental shift from traditional regional banking scale to competing with global payment infrastructure providers. The conversation highlights both the immense opportunity and significant organizational challenges in building embedded banking infrastructure within traditional financial institutions, and offers a roadmap for how legacy players can compete in an increasingly fintech-driven world.
