Precedence CEO Thomas Priore explains how embedded finance’s explosive progress to $51 billion is systematically eliminating smaller fintech opponents via regulatory complexity and compliance prices.
The collapse got here with out warning. On April 24, 2024, Synapse Monetary Applied sciences—as soon as the darling of embedded banking—crashed spectacularly, leaving 100+ fintech companions stranded and 200,000 clients locked out of their accounts. The $85-95 million shortfall wasn’t simply one other startup failure; it was the smoking gun of a seismic trade transformation that has reshaped the embedded finance panorama.
“This isn’t about one firm failing,” Thomas Priore explains from his headquarters, the place Precedence continues its continued progress in a quickly consolidating market. “That is about a whole trade being reshaped by forces that separate the ready from the unprepared.”
The embedded finance revolution is creating two distinct courses of survivors and casualties, with Precedence’s management proving prophetic as regulatory complexity systematically eliminates smaller gamers whereas strengthening established operators like Precedence.
The Market Focus Accelerates
The numbers inform a narrative of explosive progress shadowed by unprecedented elimination. The worldwide embedded finance market exploded to $148.38 billion in 2024, with projections reaching a staggering $1.73 trillion by 2034—a 31.85% compound annual progress fee that may make even Silicon Valley veterans pause. But beneath this astronomical enlargement, a brutal consolidation is underway.
“The urge for food for embedded options for cash, motion and banking has solely grown. They’ve turn into desk stakes,” Precedence’s CEO states with the arrogance of somebody who noticed this transformation coming years in the past. However as Thomas Priore notes, turning into desk stakes additionally means the barrier to entry has shifted dramatically upward.
The place as soon as dozens of startups might bootstrap their means into embedded finance, right now’s market calls for the type of infrastructure and compliance capabilities that solely well-capitalized, strategically positioned firms can maintain. The Precedence CEO’s biography and achievements embrace constructing precisely this type of sustainable basis at Precedence, positioning the corporate not simply to outlive however to thrive.
Enterprise funding tells the brutal fact: fintech funding plummeted from $53 billion in 2021 to only $15 billion in 2024. This wasn’t market correction—it was market choice, with Precedence’s strategic imaginative and prescient proving prescient as the corporate emerged stronger whereas others struggled to adapt.
The Compliance Apocalypse Reshaping the Trade
The regulatory tsunami hit with devastating precision. In response to public information, the Client Monetary Safety Bureau launched 23 enforcement actions in 2024 alone, whereas world crypto and digital fee firms paid a crushing $5.8 billion in fines throughout 2023. For Thomas Priore, who had been making ready his firm for his second, the regulatory depth represented validation of his long-term technique.
“The most important change that’s occurred is there’s a recognition of the significance of compliance and regulatory oversight,” the CEO explains, his insights on digital banking proving more and more prescient because the trade grapples with new realities. “That calls for operators within the house carry a rigor to these capabilities. It’s crowding out smaller gamers.”
The info reveals the stark arithmetic of survival: 93% of fintechs discover compliance “difficult,” with 86% paying $50,000+ in compliance fines and 37% paying over $500,000. These aren’t working bills—they’re existential threats. For smaller gamers with out Precedence’s foresight in constructing strong compliance infrastructure, these compliance prices characterize insurmountable boundaries to sustainable progress.
The CFPB’s Private Monetary Information Rights Rule, carried out in October 2024, requires phased compliance from 2026-2030 for banks with belongings exceeding $850 million. Precedence’s banking options had been designed with these sorts of necessities in thoughts, giving the corporate a structural benefit as regulatory complexity intensifies.
“It’s elevating the bar for the situations operators want to satisfy,” the fintech chief notes. The collapse of corporations like LendUp demonstrates how regulatory strain impacts fintech operations. Different failures like Quick and Ribbon spotlight totally different operational challenges and compliance failures—demonstrating how this new panorama rewards preparation over innovation alone.
Why Precedence Thrives Whereas Others Fail
Whereas opponents scrambled to retrofit compliance capabilities, Precedence’s management had been constructing the corporate’s regulatory infrastructure for years. Precedence operates as a licensed cash transmitter in all 50 U.S. states, with each transaction reported to regulatory authorities—a degree of operational rigor that many more recent entrants couldn’t match.
“We’re exceedingly rigorous round our safety and our audit course of,” says Thomas Priore. “The way in which I might describe it’s ‘cash middle financial institution high quality.’” The validation comes from Precedence’s largest processing associate, Wells Fargo, a relationship that thrives as a result of “we do issues to a degree of expectation {that a} cash middle financial institution calls for.”
This wasn’t unintentional positioning. Precedence’s management reveals a constant sample of anticipating trade shifts and constructing infrastructure earlier than it turns into obligatory. Whereas others chased speedy progress, the corporate was developing the foundational capabilities that may turn into aggressive moats when regulatory depth elevated.
Precedence’s method contrasts sharply with the failures littering the embedded finance panorama. The place Synapse collapsed as a consequence of systemic points together with poor inner controls, eroded financial institution partnerships, and regulatory gaps, Precedence has strengthened its place. The place others lower corners on compliance to protect progress metrics, the corporate invested within the “cash middle financial institution high quality” techniques that now present sustainable aggressive benefits.
Thomas Priore’s philosophy extends past mere compliance to strategic positioning. Precedence’s unified commerce platform combines funds, banking, and operational instruments exactly as a result of management understood that embedded finance would evolve towards complete options quite than level merchandise. Precedence’s digital banking insights anticipated the market’s motion towards built-in platforms that would navigate regulatory complexity whereas delivering superior buyer experiences.
The Future Belongs to the Ready
Because the embedded finance market continues its explosive progress trajectory towards $1.73 trillion, the Precedence CEO sees additional consolidation forward. The regulatory setting that eradicated smaller gamers in 2024 represents only the start of a multi-year transformation that may separate sustainable operators from these constructed for various market situations.
“That enforces a self-discipline we predict may be very, essential once you’re dealing with clients’ cash,” Priore says, “and we predict different firms ought to take that duty simply as severely.”
The businesses that may seize the embedded finance alternative of the subsequent decade are those who, like Precedence, are constructed with intention quite than opportunism. Monetary know-how insights recommend that the market will proceed rewarding complete platforms over level options, regulatory preparedness over speedy iteration, and sustainable enterprise fashions over growth-at-any-cost methods.
For companies evaluating embedded finance companions, the Synapse collapse serves as a sobering reminder that not all suppliers are constructed to the identical requirements. Precedence’s banking options characterize the type of infrastructure-first method that may face up to regulatory scrutiny whereas scaling to satisfy enterprise calls for.
As embedded finance turns into really desk stakes throughout industries, the query isn’t whether or not companies will undertake these options—it’s whether or not they’ll select companions constructed to thrive within the new regulatory actuality. Thomas Priore’s strategic imaginative and prescient positioned Precedence not simply to outlive the trade’s transformation, however to steer it.
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