We had a really interesting talk with Ran Makavy last week (EVP Strategic Initiatives at Lyft), on embedded fintech. Lyft processes over $20B annually on its platform, which makes it an ideal platform to build financial services into.

If you’re looking to pitch to them – here are some of our key takeaways:

Lyft’s goals are about improved and simplified service to its riders, higher driver retention, and cost-cutting. How do they justify building a financial service? An equation where the broader benefit of the quality of service and retention surpass the investment. The unit economics of the financial transaction alone is not make or break.

Build vs. Buy –
Lyft tends to build in-house (as opposed to Uber, for example). Almost all of their tech stack runs on internal platforms that were custom built over the years – from fraud to LTV predictions.

This does not mean that they do not outsource, but that they have a high threshold for doing so:

• Customization of products is very important to them – the solution needs to not only be user friendly but also developer friendly, which is why they prefer to develop their own tech stacks.

• If it involves regulatory aspects – they will be more willing to rely on companies that have deep knowledge/expertise in that space.

• Another consideration is the maturity of the product offered to them. They need to be confident it’s a perfect fit for their 600M annual rides (and not a startup that might be in over its head).

What are the main criteria for launching a financial solution?

• On the driver side – answering the needs of the drivers. For example, offering a debit card to enable drivers to get paid immediately instead of through weekly payments.

• On the rider side – it’s mainly about reducing friction and enabling more features for increased loyalty and reduced churn. For example, developing the split pay option or offering credit cards with multiple credit points on the same transaction.

Are they concerned about “credit card fatigue,” i.e. 10 cards per individual? Makavy anticipates there is a good chance for consolidation, but it will take 5-10 years to get there. There could be an opportunity for a startup to solve this issue.

Does he expect to earn money from Lyft’s financial activities (PNL-wise) or is this only for branding and loyalty? Makavy said: “We don’t want to lose money on it. The cost should be zero. We need to make sure that the ROI on the engineering efforts is covered by the increase in retention. For example, if we make a product really useful not only for the driver but for his family to use.”

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