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05 Apr 2022

How Plug-and-Play Finance helps you scale faster than BaaS / banking-as-a-service

For digital innovators, standing still isn’t an option. Once you’ve found your product/market fit there’s no time to rest on your laurels – the next goal is scaling that product, rolling out new services and broadening your distribution to a wider market.

We know that all too well because we’re scaling ourselves. We’ve just announced a Series A funding round, and we’re expanding our offering from the European market into the US. We also know that companies scaling into new territories or services need a financial solution that supports, not stifles, that growth – and until now, the pickings have been pretty slim.

Embedded finance and fast scaling haven’t always been friends

For digital innovators, scaling depends on two things – being able to offer a range of services to a wide enough customer base, and being able to implement those services fast. But when it comes to integrated finance, the options out there rarely fit the bill.

There are Banking as a Service (BaaS) providers who offer pre-built solutions. They offer their specialist service and do it very well, but a lot of the heavy lifting is still on your shoulders.

It’s like starting your home build project yourself – without a project manager. You’re trying to pull disparate trades together into a single system, and you’re the one responsible if it goes wrong. And it’s fair to say that the risks associated with BaaS are higher than a home build.

BaaS providers will keep their eyes on the backend here, but there are still compliance issues you need to navigate. You also need to build controls around the data the BaaS APIs bring to you. So these pre-built BaaS solutions still end up being complex, expensive and too much of a burden to maintain for any SME to seriously consider – particularly one that’s looking to scale fast.

The margin for error is tiny

With any kind of payment service or banking facility, robust security is non-negotiable. Any system that isn’t diligent with its controls is essentially leaving an open door for money laundering, fraud, scams and financial abuse.

That’s the case with a platform of any size, but innovators scaling their platform have to be extra vigilant. As you offer new services, reach new markets and see more variety of use, the risk of financial criminals slipping through the cracks in a growing system goes up. And the cost of dropping the ball hardly bears thinking about – from massive regulatory fines to the loss of revenue and customer trust, the penalties can be devastating.

Building a financial services platform is exhausting enough, but it’s dealing with compliance and control that makes it so difficult – and is the reason why so many innovators give up. There’s an ocean of red tape to cross to be sure you’re protected, and the time it takes to understand and implement it all doesn’t fit with innovators who need to scale fast. You’d almost certainly need to hire a compliance team to take on that burden.

Not only does it take an age to wrap your head around all the regulations, you then need to figure out what controls to put in place to protect yourself and your customers. The more you scale and take on new users, the more flexible those controls have to be.

For example, you might implement a velocity rule that locks cards if too many transactions are made in a short timeframe. But while that should catch a large amount of fraud cases, it can also snag plenty of legitimate users who then feel let down by the service.

There’s a fine balance to be found between casting the net too wide and not being strict enough. Setting up those tailored checks yourself can be a minefield, and BaaS providers are almost always too rigid to offer the flexibility your growing customer base needs.

But there is another way forward, one that offers the flexibility, security and efficiency that scaling businesses need: Weavr.

A fast, flexible alternative that’s built for scaling

Embedded finance is a response to the difficulties companies of all sizes face in trying to implement BaaS. That said, it’s also not free of its own issues. 

Speed to market can be slow in the first instance. And then when you’re trying to offer new services or expand into new territories and currencies, you’re inevitably going to have to opt for a lower gear. You might even need to stop so you can read the manual and familiarise yourself with a whole new set of instructions and compliance issues. In a time-critical market, this can be the difference between success and failure.

The test for whether an embedded finance offering is applicable to the mainstream is if you need to know how it works – the tech, the processes, etc. If you do, it’s not ready. 

That’s why we’re offering Weavr build Plug-and-Play Finance. We want the mainstream to just plug in the financial services they need – and go. No need to understand how it works – we worry about that so you can focus on growing your platform.

Weavr’s warehouse of services is what powers 11Onze’s banking super app, El Canut. As a digital platform that combines social networking with e-commerce and financial accounts, the ability to quickly plug in functionality to support innovative new features has been key to the app’s successful scaling.

Ultimately, embedded finance exists to create a seamless customer experience that directly enhances your offering. But for most businesses it’s either too complex, too expensive or too cumbersome to scale. We want to level the playing field. 

In today’s fast-paced market, you should be able to easily, quickly and safely integrate financial features such as cards, accounts and IBAN’s into your UX and workflows. And with Weavr’s Plug and Play Finance, this has never been simpler. 

Talk to us about embedding finance into your business.

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