Digitization is shrinking profit pools — and exposing a fundamental business model flaw in financial services. That’s the uncomfortable starting point of this conversation with Simon Torrance, widely known as Mr. Embedded Finance. In this episode of Scouting for Growth, Sabine VanderLinden explores why more than half of large publicly traded financial institutions generate zero or negative economic profit — and why optimizing legacy models is no longer enough. Simon argues that digitization, while necessary, introduces new competitors, regulatory pressures, and shifting customer expectations. Companies must spend more just to stand still. Meanwhile, digital-native platforms expand, capturing value in ways traditional players struggle to replicate. The real issue? Business model innovation. Simon’s early work in telecommunications revealed a pattern: the companies that win in digital markets are not necessarily those building end products, but those orchestrating platforms — intermediaries connecting customers with third-party solutions. Apple’s App Store is the classic example: co-opting developers to create value that drives demand for its core business. That same logic now applies to financial services and insurance. Embedded finance and embedded insurance represent a structural shift. Instead of selling products directly to customers, financial institutions can modularize capabilities — underwriting, risk assessment, payments, lending — and enable other organizations, often closer to customers, to integrate them seamlessly into their own experiences. Why? Because those platforms often interact more frequently with end users and hold contextual trust. The opportunity is immense — Simon once estimated embedded insurance alone could represent a $3 trillion market. But beyond growth, it addresses something deeper: the protection gap. Millions remain underserved or excluded, while incumbents struggle with declining returns. Technology now allows financial capabilities to be extracted from legacy systems, transformed into configurable software components, and embedded across digital ecosystems. The challenge is not technical — it is strategic. 99% of institutional resources still go toward digitizing and optimizing the existing business model. Necessary, yes. But insufficient if the core model itself cannot deliver sustainable economic returns. This episode is essential listening for: Board members questioning future profitability Strategy leaders exploring platform and ecosystem plays Insurers embedding protection into non-traditional channels Executives navigating AI risk and digital transformation Because the real question is no longer whether digitization will disrupt finance. It’s whether institutions are brave enough to redesign the way they create, capture, and share value.