Embedded finance might sound like it belongs in the world of fintech but, in the digital economy, it’s becoming an ever more essential tool for any business.
We recently spoke to digital businesses across a number of service industries and our study revealed a remarkable trend: More than 65% of non-fintech businesses now rank embedded finance as one of their top-three priorities. Needless to say, this has serious implications.
This is where all markets are going
Users have come to expect services that mirror their experiences with tech giants such as Amazon and Netflix, and are increasingly gravitating towards frictionless experiences that are brand-driven – and financial capabilities are a critical part of that package. When end-users barely notice the financial plumbing their attention can stay focused on the great product.
It’s not a fintech issue anymore, it’s any sector. Whether it’s e-commerce, real estate or the gig economy, the innovators who create the best experiences will win. And the integration of digital wallets, point of sale financing, and Buy Now Pay Later options will all play a part.
The more walls you can tear down between the end user and what they’re actually interested in – training, health provision, easy expenses, a house with a mortgage, or finance for an idea, education or a new laptop – the slicker, stickier and more disruptive your product becomes.
The transactional capabilities of embedded finance are too significant to ignore, and any business that isn’t putting them in place risks losing their competitive edge.
The capability to seize the market
While the awareness of embedded finance is escalating, most platforms still lack a mechanism for ensuring a seamless UX. Of the two-thirds of businesses who told us embedded finance was a top priority, only 13% of those already had a solution in place. The rest were only dipping their toes into the water – relying on clunky, expensive and even potentially insecure payment capabilities.
The goal is currently wide open for any business that can harness the power of embedded finance within their tech stack. Getting in there fast will be crucial, particularly for early stage companies. Just look at how giants like Uber and AirBnB were able to out-manoeuvre their competition and dominate their respective markets by integrating a complex financial solution into their core product before anyone else. But they had to build the financial infrastructure from the ground up, which was doubtless a complex, expensive and lengthy exercise. It should, and can, be much easier.
Embedded finance isn’t just about moving money from A to B. It’s also about removing friction from the user experience, enabling them to complete purchases, split charges and manage transactions without being redirected away from your platform.
The smoother the process, the higher the customer retention. In turn you’ll be able to generate incremental revenue through additional streams, and keep control of your users’ data since they aren’t being shuttled around between services. All because of embedded finance.
Embedded finance should be as simple as plug and play
We know the reason for the gap between importance and uptake isn’t because of a lack of awareness. For the businesses we spoke to in our study, speed and ensuring fully-compliant solutions were crucial concerns. But at the same time, integrating financial capabilities was difficult, time-consuming and expensive. Such barriers could keep embedded finance out of the mainstream.
Compliance rules and what impact they might have on your product are immensely complicated to wrap your head around. That’s true for anyone, but especially founders who aren’t already immersed in that financial world. What’s more, they aren’t really designed with innovation in mind.
You need to be fast to get in ahead of the competition. But building complex financial capabilities from scratch and ensuring it’s all up to code is anything but quick – and the penalties for getting something wrong in haste are severe. For many companies that’s reason enough to leave thinking about embedded finance until later down the road.
But you don’t have to do it all yourself. Allow us to raise our hand here. Weavr’s low-code, Plug-and-Play Finance solution is robust and road-tested, and provides all the integrated functionality you need from day one. We also take care of all the compliance so it doesn’t have to be a burden for you. It’s a clean, simple financial toolkit that gets innovators off the ground fast, and it helped clients like Thanks Ben and Finway go live in record time – with onboarding taking less than five weeks. For them, really was a case of plug and play.
Embracing embedded finance is something that just can’t wait. There is a huge opportunity now to catch your competitors napping, but that won’t last forever. And if someone else gets in there first, your priorities may change from stealing a march to staying afloat.
If you’re looking to get ahead of the game and discover what embedded finance is and how it can help your business, get in touch to see how simple Weavr can help.
