Fintech and payments expert Sophie Njagi discusses why higher interest rates are exposing the difference between lending businesses built for growth and those built for long-term sustainability
Q: Higher interest rates have changed the lending landscape significantly. How do you think they’ve reshaped the market?
I think higher interest rates have acted as a reality check for the industry. They’ve exposed the difference between businesses that were built for sustainable lending and those that were built for cheap capital.
For a number of years the conversation across fintech was centred on growth, how quickly you could acquire customers, launch new products and scale. When funding was readily available there was naturally more appetite for growth over profitability. But today’s market is asking very different questions.
From what I’ve seen working in payments and regulated financial services, businesses are now having to prove that their lending models can stand on their own commercially. It’s not enough to have a great customer journey or a clever piece of technology, you need disciplined underwriting, resilient operations and a clear understanding of where risk sits across the business.
I actually think that’s a positive shift because it highlights those businesses who have built strong operational foundations, took risk management seriously and always kept customer outcomes at the centre of their decision making.
Q: Where do you see the biggest opportunities in embedded finance?
I’m still incredibly optimistic about embedded lending because it allows businesses to offer financial products exactly where customers need them.
Whether it’s helping a small business access working capital, enabling merchants to finance inventory or giving consumers more flexibility at the point of purchase, embedded lending removes unnecessary friction from the customer journey.
But the opportunity is about embedding finance responsibly rather than embedding credit into more platforms. Businesses need to be combining convenience with strong governance, clear accountability and robust risk management.
Q: Why is accountability so important with embedded finance?
Many lending models in the current environment have several organisations involved before money reaches the customer. You might have the consumer facing brand, a technology platform, a Banking-as-a-Service provider and a regulated lender all working together.
What I’ve seen throughout my career is that every organisation tends to be very clear about its own responsibilities, but not always about ownership of the overall customer outcome. That becomes much more visible when economic conditions tighten. If complaints increase, affordability becomes an issue or customers experience poor outcomes, responsibility can’t disappear somewhere between multiple providers.
I think the industry is gradually recognising that customer outcomes have to be a shared responsibility and that partnerships are a crucial role here which is a much more mature way of approaching embedded finance.
Q: From your experience, what separates successful lending businesses from those that struggle?
One thing I’ve learned working in payments and regulated financial services is that operational excellence rarely gets the attention it deserves because customers don’t see it. Customers only notice when something goes wrong. The businesses that do well tend to treat compliance, risk and operations as part of the product rather than something that happens afterwards.
In my opinion businesses that involve compliance teams when products are being designed, not once they’re ready to launch and they build governance into their decision making from day one and they’re honest about what their infrastructure can realistically deliver. Whilst that may not always be the fastest route to market, it’s almost always the more sustainable one.
Q: What practical mistakes do you still see businesses making?
One of the biggest mistakes is confusing a seamless customer experience with a simple operating model. Customers should absolutely experience a frictionless journey, but behind the scenes lending is becoming more complex. Firms are operating across multiple jurisdictions, working with different banking partners and relying on increasingly sophisticated technology stacks.
I’ve seen businesses underestimate that operational complexity because they’re focused on launching quickly. The challenge is that operational weaknesses often don’t appear during testing, they appear at scale. That’s why I always encourage businesses to invest in governance, infrastructure and operational readiness just as much as they invest in customer acquisition.
Q: Looking ahead, what does the future of embedded lending look like?
I think we’re moving into a much more disciplined phase of growth. Embedded lending will continue to expand because customers increasingly expect financial services to be integrated into the platforms they already use. That demand isn’t going away.
Success in the past has often been defined by customer growth and transaction volumes. Increasingly, I think we’ll judge businesses by different metrics: sustainable profitability, strong customer outcomes, operational resilience and responsible lending practices.
Ultimately, I don’t think the next generation of successful lending businesses will be defined by how seamlessly they embed credit into a customer journey, but how effectively they manage risk, maintain accountability and continue delivering positive outcomes when market conditions become more challenging.
For me, that’s an exciting direction for the industry as it signals that fintech is maturing. Whilst innovation will always matter, I think the real opportunity lies in combining that innovation with operational discipline and a genuine commitment to building trust with customers.
