Embedded Finance: Creating Seamless Financial Experiences for Businesses and Customers

embedded financeImagine a world where payments are as effortless as a single click, seamlessly integrated into your website or app. That is the power of embedded finance,- a force that extends beyond mere payments, offering a wide range of benefits for both businesses and customers alike.

Embedded finance is all about making financial services seamlessly accessible into the fabric of non-banking businesses. It creates a comprehensive, one-stop shop where customers can manage their finances, make payments, and explore tailored financial solutions without ever leaving the platform they’re on. It has convenience, innovation and an elevated customer experience rolled into one.

But embedded finance is more than just about payments. It opens a new world of possibilities, empowering businesses to offer personalized financial services, hassle-free transactions, optimized cash flow management and more. It’s about bridging the gap between traditional banking and non-banking sectors, creating outstanding customer experience.

In this blog, we will explore the concept of embedded finance, discovering its transformative impact and the exciting possibilities it offers. We’ll discuss how it’s reshaping the way we interact with financial services, benefiting businesses and customers in ways we never thought possible. Let’s dive in and unlock the full potential of embedded finance.

What is embedded finance?

Embedded finance is a game-changer for non-banking business, allowing the integration of financial services into their existing infrastructures. This integration allows non-banking businesses to combine their operational management and financial services into one smooth solution.

It bridges the gap between traditional banking and non-banking sectors, allowing businesses to offer convenience, innovation and a customer experience that is a cut above the rest. With embedded finance, non-banking businesses can shine with convenience, innovation and an elevated customer experience that makes them stand out.

Where does banking as a service fit in?

It’s hard to discuss embedded finance without mentioning one of the core tenants: banking as a service (BaaS).

Banking as a service is the foundation that enables businesses to leverage the infrastructure and capabilities of established banking and financial institutions. It empowers non-banking businesses to tap into core banking frameworks and access the necessary tools and resources to deliver financial services.

The benefits of embedded finance

Embedded finance is changing how businesses operate and how consumers access financial services. It brings a world of benefits for both businesses and consumers. Just imagine the possibilities! Here are some of the key advantages that embedded finance offer:

It opens new and diversified sources of revenue for FinTech. Embedded finance also empowers businesses to explore innovative product offerings and deliver a modern, seamless customer experience. By integrating and digitizing various financial services into your customer journey, you can capture valuable transaction data to enhance your services and design new, customer-centric products.

It also gives businesses a competitive edge by making their product more attractive. Think about it – when a business offers enticing financial products such as insurance, financing options or flexible payment methods, it becomes far more valuable and appealing to customers.

It is not just about adding new products though. The integration between business operations and customer transaction data allows you to sell the right product to the right customer at the right moment. This not only boosts customer loyalty and repeat business, but also attracts new customers. In fact, according to Cornerstone Advisors, “85% of non-financial companies using embedded finance are considered very successful or successful at acquiring new customers”.

And let’s not overlook the significant boost in revenue that embedded finance brings to a business. Customers are more inclined to make larger purchases thanks to convenient financing options and attractive Buy Now, Pay Later (BNPL) plans. This creates a win-win situation for businesses, driving increased sales and contributing to their overall success.

Customers benefit from embedded finance too. Embedded finance enhances the customer experience by offering easy access to various financial services within websites and apps. Beyond retail transactions, customers can open accounts, receive cards, and enjoy banking services directly from the businesses they interact with the most. This convenient integration saves time and effort, leading to increased sales. Embedded finance goes beyond purchases, empowering customers with a comprehensive suite of financial services, resulting in an improved overall experience.

Furthermore, embedded finance empowers customers with personalized and customized financial solutions. Instead of a one-size-fits-all approach, customers can choose from a wide range of tailored payment and financing options that suit their specific needs. Whether they prefer to pay in full, use installment plans, access cash-back rewards or explore loyalty programs, embedded finance provides the flexibility they desire. This individualized approach enhances their overall satisfaction and fosters long-term loyalty to your brand.

One of the remarkable aspects of embedded finance is how it bridges the gap between underserved communities and traditional financial institutions. It makes accessing banking services more attainable and brings financial solutions within reach. In the past, many underserved customers faced challenges in accessing financial services due to complicated processes or strict approval criteria imposed by traditional institutions. However, with embedded finance, these barriers are being overcome.

By distributing banking services and offering tailored financial solutions, embedded finance empowers underserved communities and provides them with opportunities for financial inclusion. This inclusive approach benefits everyone involved, fostering greater access to financial resources, and contributing to underserved individuals’ overall well-being and empowerment.

Embedded finance truly has the power to transform businesses, enhance customer experiences and promote financial well-being for all.

Building and maintaining customer relationships with embedded finance

Embedded finance has become valuable in building and maintaining strong customer relationships. Any friction in the buying process can lead to a bad customer experience and the loss of a sale. They might not return if you make them leave your website or app. By offering easy payments and various financial services like financing and BNPL through one platform, customers can complete their purchases quickly and easily. If you can sell customers financial services or offer competitive financing, they will likely buy from you again.

Embedded finance is changing the game for businesses and consumers alike. You get to offer financial services right to your customers and open new sources of revenue while your customers get a smooth, personalized payment experience. It creates a strong relationship between businesses and consumers, with both benefiting from new ways to approach finance. Embedded finance stands as the future of financial landscapes and is here to stay.


Author: Carissa Fisher, Head of Embedded Finance Strategic Planning & Market Development, Worldpay from FIS

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Published On: 14 September 2023Categories: Payment Systems, Fintech, BlogTags: , , , , ,