Building in layers: Scaling vertical SaaS and embedded finance

Modern SaaS and fintech ecosystems are defined by layers. Companies no longer need to do everything themselves; instead, success comes from identifying core strengths, building deep expertise in specific areas, and relying on partners to fill in the rest. This layered approach underpins vertical SaaS and embedded finance, where specialization, regulation, and technology converge.

This post continues our blog series based on conversations from a Fintech Takes podcast series, hosted by Alex Johnson and Pipe CEO Luke Voiles, this time joined by Increase founder and CEO Darragh Buckley.

The case for specialization

In today’s crowded market, vertical SaaS companies win by going deep rather than wide. They focus on solving the day-to-day pain points of highly specific industries—lawyers, orthodontists, salons—and perfect the workflows that matter most. As Luke explained:

“There's no way that we can go think about 25 or 50 different industries and ever have a chance from a product perspective of serving them very well. And so the SaaS verticals can focus and nail every single individual pain point.”

Specialization also creates defensibility. Niche knowledge, like handling fiduciary controls for attorneys, is difficult to replicate and allows both SaaS and fintech players to thrive in their respective layers. With that deep understanding in place, SaaS companies can begin to layer in products and partners to deepen their offerings without distracting from their core market and competencies.

Reimagining the stack

The modern SaaS-fintech stack is a layered ecosystem: regulated infrastructure lies at the bottom, specialized vertical SaaS sits on top, and embedded financial products integrate seamlessly in between. Luke described how this layered approach allows teams to innovate without getting bogged down by complexity:

“Sometimes taking a technologist approach can help… you need folks from both sides dipping their toes in the other direction… it’s useful that someone feels kind of end-to-end ownership of making sure that the end platform, the end vertical, a software company… doesn’t need to think as deeply about the things that might peer through some of those product layers.” 

Often, this means embedding specialized partners like Pipe to handle the complexity of financing, like risk, KYC, and compliance tasks, allowing SaaS teams to focus on their overall platform experience.

The AI connection layer

AI is changing the connective tissue of these layers. Instead of manually building API integrations across multiple systems, intelligent agents can gather and synthesize data, presenting actionable insights directly to users. Luke explained:

“Instead of actually building a dashboard now, we're using AI to just go collect the data, pop it into the same dashboard screen… So yes, they're talking to each other ultimately… but it’s happening through AI connections instead of API connections.” 

As Darragh noted, these shifts also change where value accrues in the stack:

“As these different areas shift… value accrues in different places… when the rules change, the value accrues to different spots in the stack.”

The combination of layered infrastructure and AI-enabled orchestration reduces friction, accelerates decision-making, and allows companies to scale without losing control.

Staying agile at scale

Even mature vertical SaaS companies face the threat of stagnation. Luke shared how legacy systems can slow innovation, emphasizing the importance of protected teams focused on new products:

“You have to allow a reset moment. You have to get a new team, protect that team to go innovate within a bigger business… each of these teams shouldn't be hamstrung by the platform or stack.” 

Darragh drew parallels to the innovator’s dilemma: companies must continuously watch for emerging competitors and evolving customer needs, balancing growth with the need to protect core user experiences.

Where founders begin

For early-stage vertical SaaS companies entering embedded finance, the advice is clear: start with the customer’s primary pain point, add financial capabilities incrementally, and partner for complexity. Darragh explained:

“Money movement typically ends up being a required first step… money storage can be a natural extension… money lending is where I'd be like, you should talk to Pipe.” 

Luke added a practical operator perspective:

“Focus on the underlying customer pain points… build a wedge and build a loyal customer base. Then when you need to add payments, do the thing that's the fastest and the easiest… absolutely don't try to do lending yourself. You can partner with somebody to make it happen.” 

This incremental, user-focused approach allows companies to scale their offerings without overextending or taking on unnecessary risk.

Closing: The stack keeps shifting

The embedded finance ecosystem will continue evolving. Every layer—from data collection to compliance to lending—will see technological and regulatory changes. Success lies not in mastering every component, but in understanding the stack, choosing the right partners, and focusing on areas where your company can deliver outsized value.

As Luke and Darragh’s insights demonstrate, the future of vertical SaaS and embedded finance is not about building everything in-house. It’s about mastering your layer, leveraging specialization, and embracing AI and partnerships to move faster, serve customers better, and innovate relentlessly.

You can view the full conversation between Darragh, Alex, and Luke, along with the rest of the series, at pipe.com/fintechtakes