04 Aug 2021

Demystifying embedded banking

The world of banking is rapidly changing. Customers are now able to have a banking relationship with the company they’re getting goods or services from, instead of banks themselves.

Many non-financial services businesses have integrated financial services into their apps and software to enhance their offering. Money can now move around more quickly, cheaply and often without anyone noticing. As a result, businesses are able to offer new services and smoother user experiences. 

When Deliveroo couriers make their deliveries, payment is invisibly deducted from the customer’s card stored on the Deliveroo app, the restaurant is paid and the courier gets their fee, automatically.  This invisible and frictionless experience doesn’t happen by chance. This is what embedded banking does. It’s the integration of financial services into an app, software or business.

But we understand this can be a bit complex to get to grips with, so we’re going to demystify it for you here.

1.  It’s banking at the point of need

Although embedded banking is a new concept, an older form of it already exists in car dealerships. When you go to buy a car at a dealer, you can get financing there and then. It might take an hour, but you’re essentially getting banking services at the point of need – no waiting in line at your local bank branch, no applying for a loan in advance. 

But embedded banking transforms this kind of lending into something much faster and more intuitive. And it can be seamlessly integrated into any online marketplace. You can see this in the arrival of ‘Buy Now, Pay Later’ (BNPL), which gives customers finance at the point of need to enable immediate consumption. For customers, this means convenience, for businesses, it means higher conversion rates.

Amazon, for instance, have placed their Amazon Pay Monthly option on their checkout page. This reduces the bounce rate at this stage in the customer journey, enabling Amazon to convert more browsers into purchasers. It’s simply a recipe for more sales.

2. It’s account creation for a specific purpose

Embedded banking allows businesses to create accounts (quickly issuing IBANs) and use them immediately for a specific purpose.

So if a sofa dealer, say DFS, was to sell a sofa on finance, they wouldn’t need to faff around with standing orders and credit cards. Instead, in a few clicks, an account could be created, a third party lender could supply the credit, and DFS’s customer would be set up to pay the money back into an IBAN created just for them. This customer wouldn’t know the IBAN exists, but its instant creation would enable them to walk out DFS’s door in a matter of minutes – the ease of the experience encouraging them to make a return visit. 

This instant account creation can be rolled out in any industry, through any platform, app or website. Businesses can use it to simply enable customers to make seamless purchases on their online marketplace, or they can get inventive: creating accounts for employees to purchase employer-approved benefits or training, or for clients to spend on a range of on-demand services, such as leadership coaching or tech support. 

3. It’s invisible

You’ll have used embedded banking without realising it. That’s the magic. It’s woven seamlessly into the customer experience so the user experience (UX) is never disrupted. 

Your customers won’t be redirected to third party payment sites like PayPal, which break the flow of a customer’s interaction with your business. From a business perspective, this means you have complete control of your UX, enabling you to collect better data, increase customer retention and unlock extra revenue.

Embedding financial services into your product or service has never been simpler.
With Wearv’s revolutionary plug-and-play embedded finance solutions, you can easily, quickly and safely integrate banking features such as cards, accounts and IBANs into your UX and workflows, for a seamless customer experience that directly enhances your offering.

Sign up for a free sandbox account and get started today.

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