Why capital is the new platform moat

SaaS has been a cash cow for platforms for more than a decade, but it was only ever meant to be a means to scaling growth – never a destination in itself. Yet the model’s recurring revenues and predictability have led many platforms into a SaaS trap. Even though long-term SaaS revenue growth is slowing, they stick to the same formula.

But AI raises another threat. A beautiful UI, clever onboarding flows, a “holistic dashboard” can be copied and created in a weekend with AI tools like GPT-5 and Lovable. When everything can be built and replicated in just a few clicks, the only thing left to make you stand out is a fintech moat. And the strongest –and most obvious – moat is capital.

Embedded finance gives platforms more than a feature; it’s a system of distribution, data, and trust. AI may be able to copy your features, but it can’t copy your lending relationships. It can’t help a family business cover cash flow gaps, help an ambitious founder invest in new stock, or enable a restaurant to replace a broken fridge overnight. Embedded lending creates a stickiness that investors love to see and a revenue stream that doesn’t rely on constant upselling.

You only need to look at the companies pulling ahead to see this impact in action. For instance, Shopify Capital has issued over $2 billion in funding to its merchants since 2016. Merchants that take this funding grow 36% more than their peers, 76% come back for more, and Shopify has seen its revenue soar from $389 million to $8.88 billion since Capital’s launch.

At Toast, financial services, not software, are now its biggest revenue driver. Uber’s embedded payments didn’t just boost revenue by 10% in a year, they made the entire product better: 15% higher retention, 25% lower admin costs and 20% better ad conversions.

These platforms didn’t get lucky. They stopped thinking like feature factories and started giving real and considered thought to what their customers actually need. And all SMEs, no matter their size, sector, or region, need the same thing – money.

Of course, this has been true since the early days of the industry, but it’s been thrown into stark view in recent years due to the continued decimation of high street banks. The death of local relationships with lenders who truly “get” your business has left SMEs with few – and dwindling – options. Outdated credit models and one-size-fits-all financing have created a staggering €400bn gap in SME funding in Europe alone. This isn’t just bad for those businesses, it’s bad for the economy. Small and medium-sized businesses make up the majority of the companies across the continent and beyond, and if they fail or stall, we all do.

So if the benefits are so clear and repeatable, why aren’t platforms rushing to jump in and provide the new forms of lending these businesses so desperately deserve? In the early days, embedded finance was clunky, expensive, and risky. It made sense for platforms to hold off to see how the market played out, protected by the SaaS frameworks they’d built around them. That excuse is gone.

Today, infrastructure providers can handle the heavy lifting, managing everything from compliance to underwriting. Today, all platforms – from e-commerce tools to B2B marketplaces, vertical SaaS, and more – can embed lending, payments, and more without becoming a “bank”: all of the benefits without the risk.

The real risk now is doing nothing. The platforms that win in the next decade won’t just build features, they’ll power businesses. That means offering capital, on your terms, inside your ecosystem, and ahead of the competition. Because if you’re not getting your head out of the sand and embedding finance, someone else will – and when they do, SaaS won’t save you. It will become the trap that eventually renders your platform irrelevant.

Max Schertel, co-founder and CEO of finmid, highlights the importance of capital as the new platform moat. The article “Beyond SaaS: Why capital is the new platform moat” originally published by Retail Banker International, a GlobalData owned brand.

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