Weavr will be launching in the US soon! Read more

22 Apr 2022

Who benefits from embedded finance?

How much hassle do you want? Most people would wish for little or none, yet businesses are inadvertently creating it all the time, whether for themselves or their customers. If you want to get ahead in the digital age, every system needs to be frictionless – at the point of sale, in the delivery of a service and behind the curtain of a product. 

To create efficient end-customer experiences, an organisation needs to be efficient itself. Embedded finance is the one stone for these two birds. And the streamlining it provides benefits three key players: end-customers, application providers and banking service providers.

Everyone benefits from automation

A lot of organisations that appear to be streamlined and automated are actually operating as a Mechanical Turk. That is, the automation is created behind the scenes by a team of people working overtime and eating up resources. It may look seamless, but at the end of the day it is just the illusion of automation.

Think of the classic swan metaphor – all we see above water is a graceful swan gliding elegantly downstream, but underneath the surface, its feet are paddling frantically to stay afloat. A back office operation that isn’t efficiently automated, is much like the thrashing legs. But there’s a way to offer your customers the graceful swan and do away with the leg work at the same time.

Let’s say an organisation is paying their couriers on a weekly basis by manual bank transfer. Each bank transfer is costing money, and is taking time and people power to complete. 

With embedded finance, though, the money can be moved programmatically, increasing efficiency and speed, while lowering costs spent on bank transfers.

This method of buyer automation, instead of unwieldy payment systems such as invoices and bank transfers, greatly reduces the margin for human error. It also benefits the couriers themselves who are now being paid swiftly and without hassle.

 If you’re a small business, using embedded finance means you can stop haemorrhaging costs on bank transfers, and quit getting stuck in the mud with inefficient systems – ultimately meaning you can scale quicker. If you’re already a big company, it means you can move money away from outdated payment methods and move it to where your company needs it most.

It’s about making your money work for you

Embedded finance can also trim the fat from many supply chain issues. A lot of supply chains are stacked with middlemen, each correlatively increasing the steps needed to reconcile and the potential for reconciliation related issues. If an invoice goes missing somewhere down the line in that supply chain, and you’re unable to settle a bill, everything grinds to a halt.

Think of the middlemen in a supply chain as hurdles in a running race, each one presenting a new opportunity to fall face flat. With embedded finance, the payment is a short sprint – direct and to the point.

Continuing this trend of money-saving savvy, embedded finance also ameliorates costs associated with international transactions. A lot of money is lost on foreign exchange fees when conducting overseas transactions. However, if you have an international card connected to an embedded finance system, the money is being paid in whatever currency is required, again saving you money.

In the world of international transactions, the quicker the payment, the lesser the cost. If payment is agreed at a certain price one day and paid thirty days later, the fluctuation of currency may mean you’re losing money on financial exchanges. Embedded finance does away with these uncertain FX costs, so you know what you’re paying, and what you’re getting.

When it comes to banking service providers, these incremental gains can provide the post-decimal point difference you need to lower your total cost of operations. Plus, the API-based integration of embedded finance means that banking service providers can shift their focus away from consumers and businesses alone. They can also market competitively to businesses who are putting their software inside a product, which is where banking becomes invisible.

Going the extra mile, without going the extra mile

We’ve all heard the statistic that if a customer has a good experience with a company, they will tell three people, whereas if they’ve had a bad experience, they will tell ten people. With embedded finance the idea is that they don’t even notice the experience in the first place. It is so seamless and invisible to the end-customer that it flies completely under the radar.

Provision of any good or service typically involves multiple providers, and in many industries, like healthcare and real estate, this creates extra administration, extra steps on the customer journey as multiple people/providers need to get paid. This administrative burden adds time and wastes money. If you were trying to define features of a good customer experience, it would be the opposite of this.

By integrating payment processes into your product, embedded finance takes away the need for these extra steps and makes the payment process exactly what it should be – simple. 

The bottom line is if the product or service works, you’re going to increase stickiness. And once the back office of your company is a well-oiled machine, you’ll save on costs and provide a better experience out front to your end-customers, securing repeat custom. Everything, in other words, will come back around to benefit your business.

In today’s fast-paced market, you should be able to easily, quickly and safely integrate banking 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.

Updates straight into your inbox