We know that embedded finance can feel like a dark art at times. From finding the right vendors to fit your business model, to writing transaction processing code and navigating compliance, it can seem like there’s no end of things to consider – especially for Innovators who are just trying to get their product to the market.
After speaking with digital businesses about their embedded finance plans, we learned that one of their top three priorities is simplicity. Innovators need to be able to move fast without being bogged down, and an intuitive platform with everything at their fingertips whenever they need it is the answer.
Embedded banking vs Banking-as-a-Service
For many, embedded finance has become inextricably linked to Banking as a Service. In other words, a collection of APIs backed by a financial license that enables innovators to issue payment accounts and cards to their customers, and also to initiate or process transactions on these accounts.
The difficulty with traditional Banking-as-a-Service providers is that they’re often limited to a financial licence with a useful but rather too thin layer of technology on top, normally limited to enabling account creation and transaction processing. This approach leaves a large gap in terms of how financial systems are now expected to be managed by both regulators and the card schemes like Visa and Mastercard.
That gap can be labelled “Risk & Compliance” and is one that is ever increasing in scope and complexity. It includes the means to verify the identity of customers (knowing your customer, or KYC) and doing a risk-based assessment when issuing a payment account to anyone, business or consumer. This includes ensuring that they are not on lists of sanctioned individuals or businesses, or if they happen to be ‘politically exposed persons’ then extra scrutiny is applied.
Once an account is issued, its activities have to be monitored in line with the expected use of the account. And of course, what would pass as ‘normal use’ will be different for every innovator and every application. Accessing the accounts and initiating transactions, at least in the UK and Europe, now requires strong customer authentication, which involves complex trade-offs between security and user experience.
Finally, there are several data security and data management standards – such as PCI DSS – that have to be adhered to, in some cases requiring external audit and certification. In other words, the Risk & Compliance Gap (yes, capital “G”) can be monumental.
The Weavr approach to embedded banking
In practice, therefore, BaaS offerings tend to be limited, meaning innovators have to contract and integrate with multiple providers to get the complete financial solution for their application. Not only does this take an age, it racks up huge costs too, far more than the average startup or scaleup can afford.
With Weavr, we’ve taken the opposite approach. We set out to deliver a complete solution by defining the full suite of technologies needed to create a comprehensive foundation for embedded finance. One that banking partners and financial services providers can plug into to simply provide the basic licenced activities such as account creation. And, more importantly, one that offers innovators truly embeddable finance solutions that come with the Risk and Compliance Gap fully filled in.
By taking this approach, Weavr is an open, extensible platform that connects innovators with the range of financial services as well as all the extra Risk and Compliance stuff they need via a single interface.
Innovators only need to plug into Weavr’s API and our backend will connect them with the financial institutions and risk and compliance technology vendors they need. Everything from Visa and MasterCard rails to embedded KYC and anti-money laundering services is there to create a complete ready-to-run embedded finance solution.
A marketplace that grows with you
Because Weavr isn’t locked into providing a single kind of banking capability, the platform is able to continually grow and build in ever more functionality. With a marketplace of providers at your disposal you’re able to pick and choose which services you need, adding them in with a few clicks without needing to integrate a new platform each time.
With a more rigid Banking-as-a-Service provider, that’s just not an option. Each time you want to expand your capabilities you’d have to find another vendor, work out a new contract and integrate multiple APIs into your product.
In a sense Weavr takes care of that for you, before you even need it. We’ve already found the vendors and contracted with them, and everything’s integrated onto the platform so you can tap into new services as your business grows without needing to change anything on your end.
It’s quicker and there’s less risk – if you want to test a new currency or add physical cards as well as virtual, you can do it without committing to a new contract first. Likewise, if you want to begin with the UK and then expand into the European market at a later date, you don’t need to worry about making a huge financial pivot, you can simply click a button on your dashboard.
The businesses we spoke to in our study told us that time to market is a crucial consideration for embedded finance. Implementation is essential to moving fast as a digital business, and the simpler the platform the quicker it can be set up and ready to roll.
That’s the philosophy we put behind Weavr. With a single API, innovators can set up embedded finance on their platform fast, without wasting time building complex financial infrastructure. And because we take care of the compliance on our end, that’s one less thing for you to worry about.
Embedding financial capabilities into your product doesn’t have to be laborious. With a solution that provides fast, trouble-free integration and a comprehensive range of services at your fingertips, you can give your product the banking power it needs to leap ahead of the market.
Get in touch to learn how Weavr can help power up your product.