The financial services industry is getting better at selling to itself. Its customers still have problems, though.

The “Letter from the Editor” is a biweekly series of exclusive insight and opinion-driven analysis from Tearsheet’s Managing Editor Sara Khairi, connecting ideas, questioning assumptions, and tracking shifts across both mature and emerging trends in financial services.

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Issue # 18

The financial services industry has built an entire business around helping itself build more financial services. Banks buy technology from fintechs. Fintechs sell infrastructure to other fintechs. And payment providers offer banks new ways to move money, while banks open their systems to software companies looking to embed financial products. Now AI is giving everyone another set of tools to sell to one another.

Some of this work makes a real difference. Somewhere along the way, the industry has become so focused on what it can build together that it risks losing sight of the customer it is supposed to serve.

Every new glossy launch adds to the industry’s innovation story, but in a lot of cases, what does any of it actually change for the person or business using those financial services? The argument here is that the industry can keep building increasingly sophisticated systems without making a customer’s financial life any easier.

Infrastructure is only the starting point

In September, FIS announced an embedded banking platform that lets banks bring accounts, card issuing, payments, and expense management directly into the software businesses already use. M&T Bank, Cogent Bank, and Commercial Bank of California are among the pilot banks.

The idea makes sense. Business owners shouldn’t have to jump between accounting software and a separate banking portal just to pay bills or check their cash flow. But getting the pieces together is only half the job. The bank needs the right products and controls, the technology also has to work reliably, and the software needs to make the experience genuinely better. On top of it, customers must find enough value to change their behavior.

The same principle applies to APIs, Banking-as-a-Service, and AI tools built for financial institutions. Each can expand what a bank is capable of doing, but the real value has to come from what customers can do better as a result.

Two approaches can help narrow the gap between what financial products offer and what customers need.

i) Sometimes, distribution does the heavy lifting

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