This article is an attempt at my own answer to that question. There may not be a single clean definition, but the goal is to put some structure on the new shape of financial services that many people have begun to sense without quite being able to name it.
To get there I looked at as broad a set of companies as time allowed. The list includes Lightspark, Erebor, Catena, Coinbase, Meow, and others. There are many more I didn't get to, which is a real limitation.
The outline of this piece:
The new wave of finance can be called 'Composable Finance': an architecture where (Substrate, Regulatory Wrapper, User Surface) are independently selected and recombined into financial products that don't reduce back to legacy infrastructure.
The industry has moved through Fintech 1.0 (digital distribution) → 2.0 (neobanks) → 3.0 (embedded finance / BaaS) and arrived at Composable Finance, which is 4.0. 1.0 through 3.0 each unbundled one layer of the stack, but the rails always reduced back to legacy. 4.0 is the first era where the rails themselves became composable.
Within that frame, companies cluster into three groups: Pick & Shovel, which builds infrastructure that other companies embed into their own products; Bank Builder, which holds customer money directly under its own charter; and Vertical Brand, which competes on brand and workflow specialization on top of someone else's infrastructure.
The reason I needed a new category is that the companies I studied don't fit existing ones cleanly. Some look like banks but aren't, some look like fintechs but aren't, and some get called neobanks but are really just banks. So I'm using a new term: Composable Finance.
Composable Finance is an architecture in which Substrate, Regulatory Wrapper, and User Surface are independently selected and recombined into financial products that work without reducing back to legacy infrastructure.
Three terms do the work in that definition:
Substrate: where money actually rests and settles. Traditional rails (ACH, Fedwire, SEPA), card networks (Visa, Mastercard), stablecoin rails (USDC on Base, USDT on Solana), and DeFi protocols (Aave, Morpho) all qualify.
Regulatory Wrapper: what legally lets a company handle customer money. Bank charters, MSB registrations, RIA registrations, sponsor-bank contracts.
User Surface: how the customer interacts with the product. A mobile app, a developer API, an MCP server, or UI embedded inside another company's product.
(Substrate is often just called the 'rail'. I use both terms interchangeably here.)
The phrase that does the real work in the definition is "doesn't reduce back to legacy infrastructure." Composable architectures have existed in theory since the BaaS era. But every prior combination eventually reduced back to a single legacy rail (Visa, ACH) at some stage, usually settlement. A permutation with the same result isn't really a combination. It's just a relabeling within a closed set.
When I say "the era of Composable Finance has arrived," I don't mean simply that composition has become possible. I mean that composition has started to actually matter. Permutations across the layers are no longer variations of the same legacy stack. They're starting to produce structurally different products.
To see how composition actually works, separate the unit of analysis first. The unit is the function: custody, payment, yield, credit, FX, treasury, advisory, and so on. Each company picks one or more of these and offers them to customers. Each function is delivered through some combination of the three axes defined above (Substrate, Regulatory Wrapper, User Surface), and which functions get delivered through which combination is what defines the company.
Function = Regulatory Wrapper × Substrate × Surface
A few examples:
Mercury: {custody, payments, yield, credit} = {OCC full charter} × {Fedwire + ACH + Mastercard} × {mobile app + read-only MCP + banking CLI}
Augustus: {custody, clearing, FX, stablecoin settlement} = {OCC full charter} × {Fedwire + SEPA + stablecoin rails} × {developer API + machine-native primitives}
Catena Labs: {custody, payments (for agents)} = {OCC trust charter (applied)} × {stablecoin rails + correspondent banks} × {agent-native API + MCP server}
Rise: {payments, yield, FX} = {FinCEN MSB} × {Base + Aave + partner-bank off-ramps} × {web dashboard}
This three-axis framework has always existed in principle.
What changed in the Composable Finance era is that permutations across the axes are no longer variations of the same legacy stack. They now produce structurally different products. To see why, walk through the historical flow where each era unbundled one layer of the stack while leaving the rails underneath alone. I'm borrowing this framing (yet again) from Multicoin Capital's Specialized Stablecoin Fintechs.
Pre-Fintech
Until around 2000 the only model was the vertical bank that owned Substrate, Regulatory Wrapper, and surface all at once. The bank had its own substrate (its own ledger, its own Visa relationship, its own ATM network), its own wrapper (its own charter), and its own surface (its own branches and apps). The three layers were welded together. You couldn't have a JPMorgan checking account without going through JPMorgan's rails, JPMorgan's charter, and JPMorgan's app.
Fintech 1.0 (2000-2010)
Fintech 1.0, represented by PayPal, was the era of digital distribution. PayPal made payments clickable on a webpage in 2002, but every click still settled through ACH and card networks built decades earlier. PayPal unbundled distribution (the surface). The rails stayed the same.
Fintech 2.0 (2010-2020)
Fintech 2.0, represented by Chime, was the era of neobanks. Chime offered a free banking app and unbundled the customer relationship, but the deposits still sat at Bancorp Bank, the cards were still issued by Stride Bank, and the rails underneath were the same Visa and ACH that Chase used. Chime unbundled the customer relationship. The rails stayed the same.
Fintech 3.0 (2020-2024)
Fintech 3.0, represented by Marqeta, was the era of embedded finance and BaaS. Marqeta sold card issuance as an API and powered dozens of branded cards including DoorDash, Cash App, and Klarna. If the 2.0 players became one brand on top of legacy rails, the 3.0 players became an API between the legacy rails and many brands. But every card still ran on Visa or Mastercard, still got issued by Sutton Bank or Pathward. Marqeta unbundled the bank-integration contract, but the rails stayed the same.
Each era unbundled one layer of the stack. PayPal unbundled distribution, Chime unbundled the customer relationship, Marqeta unbundled the bank-integration contract. None of them unbundled the rail. Every fintech from 1.0 through 3.0 ultimately reduced back to "still running on top of Chase or Wells or SWIFT."
Composable Finance is the first era in which the rail itself became composable.
The core change is that new Substrates have become sufficient. Stablecoins (USDC on Base, USDT on Solana, DKUSD on the Dakota platform) are dollar substitutes that don't reduce back to sponsor-bank deposits, and DeFi protocols like Aave and Morpho deliver bank-level yields without a bank. For the first time, the Substrate axis has real choices that don't reduce back to legacy.
The test that separates "3.0 with stablecoins bolted on" from 4.0 is one question:
Does the money flow the user sees ultimately reduce to "still running on top of Chase or Wells or SWIFT"? If yes, it's 3.0 with optionality added. If not, it's 4.0.
This Substrate change means any company can now pick a new combination, and that choice changes what the product can do:
Tuyo runs a consumer surface on a Regulatory Wrapper borrowed from Bridge and Rain, settling on Base. The combination produces a consumer USDC card that pays DeFi yield.
Rise runs a payroll surface on its own MSB Regulatory Wrapper, settling on Aave and USDC. The combination produces international payroll that earns on-chain yield while the balance is held.
Of course, to legally handle a new Substrate you need a matching Regulatory Wrapper. The emergence of categories like OCC trust charters and the PACE Act is part of the same flow. Which Regulatory Wrappers exist today, and which a builder should pick, is the topic of the next section.
Of the three axes, Regulatory Wrapper might be the most consequential. The companies I studied for this piece fall into roughly six Regulatory Wrappers:
For reference, the OCC national charter status as of May 2026:
There is endless detail under each wrapper, but here is a quick comparison on the dimensions builders actually have to choose between:
One thing worth calling out is the PACE Act, proposed in April 2026. What makes the PACE Act (Payments Access and Consumer Efficiency Act) distinctive is that it would guarantee direct access to Fed payment systems (Fedwire / FedNow / ACH) by law. Under every other Regulatory Wrapper, Fed access is gated by the Fed's activity-profile review regardless of charter type, and new activities like stablecoin settlement or agent banking tend to land in Tier 3 and get effectively declined. The PACE Act is the only Regulatory Wrapper that bypasses the activity gate. The catch is that to qualify as a Registered Eligible Provider you have to already hold 40+ MTLs plus a state depository or credit-union charter as prerequisites.
Looking at the companies covered here, they end up clustering into three groups. Two questions are enough to decide where any given company belongs.
The first and biggest split:
Does your customer embed your product into their own product, or do they use your product as the final thing? If the former, you're in the Pick & Shovel cluster.
If the latter, the second question:
Do you hold customer money directly through your own Regulatory Wrapper? If yes, you're a Bank Builder. If no, you're a Vertical Brand: a company that competes on brand and workflow on top of someone else's infrastructure, going after a specific customer segment.
By the car analogy, Pick & Shovel is the engine maker and the other two are the finished-car makers. Inside that, Bank Builder is the carmaker that builds and installs its own engine, and Vertical Brand is the carmaker that borrows the engine and brings only the body and the brand.
These companies build infrastructure that other fintechs, platforms, and enterprises use to launch financial products. A large share of them are orchestrators that bundle rails owned by other companies into a single API + ledger + compliance program. In a sense, BaaS 2.0.
A few representative orchestrator examples:
Originally a software layer on top of corporate bank accounts that exposed ACH/wire/RTP as an API. After acquiring Beam (a stablecoin solutions company) in October 2025 it pivoted to an integrated PSP that absorbs the bank relationships themselves. Now companies like Robinhood, Gusto, Procore, and Navan can handle everything from ACH through stablecoins through a single API. It has its own ledger, which makes sub-accounts and real-time balance aggregation possible.
A global banking service that other companies can embed inside their own products. A single API covers user onboarding, multi-currency accounts, sub-client structures, and multi-rail payouts. The recently launched pay-as-you-go model is particularly interesting. This kind of infrastructure is usually enterprise-sales territory, but Dakota made it possible to open a sandbox immediately, sign up in five minutes, and start using it without contracts or sales calls. Pricing is a simple usage-based 25bps + $0.50 ACH + $1 KYC + $5 KYB with no minimum commitment. A five-person team can actually stand up its own fintech in a few days.
Payments infrastructure that ecommerce sites, gig networks, and creator platforms embed into their own platforms. A single API handles KYC/KYB, multi-currency accounts, cross-border transfers, embedded wallets, and AI-agent delegation workflows. The point is to let those platforms directly capture the yield, interchange, and FX margin that used to flow to Stripe, Cross River, and FX desks.
Some companies go beyond orchestration and create Substrate themselves. Stripe, through Bridge, enables other fintechs to issue their own stablecoins and run on/off ramps without their own Regulatory Wrapper, and through Tempo built a settlement rail of its own. Coinbase similarly supports other services' settlement through Base.
Banks like Cross River, Lead Bank, and Column also belong in this category. On the surface they look like Bank Builders because they hold charters and take deposits directly. The defining fact is that their dominant customers aren't ordinary users or businesses but other fintechs building financial services on top. Mercury borrowed Cross River before getting its own charter, Flex borrows Lead, and Slash borrows Column. Two companies can hold the same kind of charter, and the cluster split comes from whether they sell to end users directly or as Substrate that other companies embed into their products.
This cluster holds customer money directly under its own charter, and the Regulatory Wrapper is the biggest differentiator. Representative companies:
A business banking app used by 300K+ startups and small businesses. Mercury started on Choice/Column BaaS in 2017, applied for an OCC charter in December 2025, and received conditional approval on April 27, 2026. With its own charter it captures the full NIM on $20B+ in deposits that it used to share with sponsor banks. It recently shipped a read-only MCP server (burn analysis, board reporting) and a banking CLI.
Augustus is the rebrand of Ivy, a European open-banking API company founded in Berlin in 2021. Ivy is already integrated with 5,000+ banks across EMEA, SEA, US, and LatAm, processes billions of euros annually, and counts Kraken as a flagship customer. After filing for an OCC charter in December 2025 and receiving conditional approval on May 11, 2026, it rebranded to Augustus Bank, N.A. (Dallas). The positioning is "a clearing bank for the AI era": a bet on reinventing legacy clearing banks like BNY Mellon and State Street as 24/7, multi-currency, stablecoin-native, and API-first.
The technically interesting part is that fiat balances and stablecoin balances live as peer primitives on the same ledger. A customer can receive EUR via SEPA Instant, send USDC on-chain, and flip between the two balances via internal ledger entries, all from one API call. The target customers aren't retail but crypto exchanges, stablecoin issuers, global payroll companies, and payment processors: businesses that are structurally 24/7 and multi-currency.
The only bank in the 2026 charter wave that has received a full charter and is operating. The targets are segments that no existing bank handles well: AI infrastructure / hardware companies, defense-tech startups, robotics, crypto-native companies, and UHNW individuals.
One stated differentiator is the intent to underwrite new kinds of collateral. Erebor wants to extend loans against assets like GPU clusters, precision manufacturing equipment, crypto (BTC/ETH), and the private equity of VC-backed startups, an area traditional banks can't price. But as of now, loans are at zero, and the business model itself stays unproven until the lending engine turns on.
Catena Labs, which recently raised a Series A, is an interesting company that filed for an OCC trust charter explicitly to serve AI agents as its primary customers. Founded by Circle co-founder and USDC creator Sean Neville, it is the first chartered-bank application in US history whose customers are software rather than humans or businesses.
The product is agent accounts + payments (ACH, wire, card, stablecoin) + guardrail infrastructure, with specific features like agent identity, counterparty whitelists, transaction limits, and transaction signing. The open-source Agent Commerce Kit is also being distributed as a standard. Strictly speaking Catena Labs isn't a bank because it only does custody, but it's worth paying attention to because it is the only chartered entity among financial-agent solutions.
This cluster has no charter of its own and competes on its own brand and workflow specialization on top of someone else's infrastructure. Customer money sits at sponsor banks, in DeFi protocols, or in accounts the user already holds elsewhere. The moat is deep understanding of a specific user segment, and that understanding lets the company package borrowed rails into products that chartered banks can't or won't build.
Business banking aimed primarily at tech startups, espousing a 'Costco model' where "the depositor gets most of the yield, not the bank." Its 'Maximum Checking' product spreads funds across three sponsor banks (Grasshopper, Third Coast, FirstBank) to create $125M of FDIC-sweep coverage, then passes through 3.5-4.8% APY on top.
In April 2026 it shipped an MCP server with write authority before any chartered US bank had done so. External LLMs like Claude, ChatGPT, and Cursor can open Meow accounts, issue cards, send payments, and handle invoicing (with limits, 2FA, approval workflows, and role-based permissions as guardrails).
Flex is an "AI-native private bank" for owner-operator businesses (truckers, contractors, solopreneurs, ecommerce operators, and so on). Where Ramp / Brex / Mercury target digital, VC-backed, finance-team-staffed companies, Flex targets $3M-$100M-revenue, non-digital companies (construction, logistics, real estate, agriculture, professional services). It bundles a 60-day interest-free credit card, a Visa Infinite Business card, working-capital lines, and AP/AR automation into a single surface.
The real moat is the five AI agents embedded inside that surface. AP agent automatically parses invoices that arrive by email, matches vendors, and schedules payments (an AI Inbox pattern). Expense agent captures receipts, matches them to transactions, and applies policy rules. Cash Management agent handles cross-account fund movement and treasury optimization, and Underwriting agent automates working-capital and Net-60 credit decisions. Finally, Owner Insights is the 'AI CFO' interface that gives consolidated answers to owner questions like "How is the business doing this month?" or "Can we afford this expense?". Together these five create the CFO seat owner-operators never had before. That's Flex's pitch.
A consumer USDC card. To the user it just looks like a Visa debit card, but the balance lives in their own non-custodial wallet as USDC on Base, and at the moment of a Visa swipe Tuyo pulls from that wallet. While the balance is held, USDC is automatically deployed into a DeFi vault, yielding up to 11% APY (Tuyo keeps 10% of the yield).
The signature feature is "Buy Now, Pay Maybe." Tuyo arbitrarily absorbs some transactions into its own balance (the merchant gets paid normally, the user pays nothing), creating slot-machine-like variable-reward CAC. Rain handles card issuance and Bridge handles virtual bank accounts plus ACH/SEPA/SPEI conversion. Available in the US, EU, and Mexico.
An international stablecoin payroll service. A company funds Rise in USD, and Rise pays out employees in 190 countries in crypto. The newer feature is Rise Earn. From the company's side, idle USDC balances between payroll cycles are automatically deployed on Aave on Arbitrum to generate 3-5% yield, and employees can optionally do the same with their received USDC. Rise takes 1% of the yield generated and the rest goes to the user, redistributing the NIM that traditional banks used to capture.
The slogan is "Make Claude manage your money." Once the user connects their existing accounts (Schwab, Mercury, Chase, and so on) to Era, Era's MCP server (context.era.app) exposes 33 tools to external LLMs. Claude, ChatGPT, or Cursor can answer "How are my finances?", "Cancel my Netflix subscription," or "How much did I spend on food this month?", and paid tiers can even automate ACH transfers between the user's own accounts. Era itself holds no money (it's only SEC RIA registered) and acts purely as an orchestration layer on top of the user's existing accounts.
On May 6, 2026, Era became the first personal-finance connector in Claude Directory. Nine days later OpenAI launched ChatGPT Personal Finance with Plaid and Intuit, which gave Era an instant competing-product problem.
This article started as my own attempt to answer the question, "What does next-generation finance look like?" The answer came out not as the shape of a single company but as the shape of an architecture. Composable Finance, where Substrate, Regulatory Wrapper, and User Surface are independently selected and assembled into financial products that don't reduce back to legacy infrastructure.
Three simple conclusions follow from that architecture:
Architecture choice is now strategic rather than given. Builders pick a cluster the way software founders pick a deployment model. Bank Builder, Vertical Brand, and Pick & Shovel are all bets, and all of them carry risk. None is universally right. The question every founder now has to answer is: which layer do you want to own?
Regulatory Wrapper is the single most consequential choice. The same Substrate and the same surface can produce completely different things depending on the Regulatory Wrapper. Builders should pick the wrapper that fits their activity, not the most prestigious one.
Finance is no longer a single product category to predict. It's a stack to assemble. The winning companies will be the ones that picked and owned the right layers at the right times.