22 Jun 2021

Embedded banking and its relatives – what’s right for your business?

The future has arrived and it looks like banking. Except of course, that banking doesn’t look like banking anymore.

Instead it feels like booking a holiday without hassle, or like doing your weekly shop faster, or like getting customisable benefits from your employer. Embedded banking is invisible to a consumer because their focus is on the larger context, be it product or service. But it’s already here. And pretty soon it’ll be everywhere – because it is genuinely value-creating to everyone involved. 

We’re going to take you on a whistle-stop tour of three API-driven (Application Programming Interface) ways to integrate banking within your business –  and reap its lucrative benefits.

Embedded payments

First up, embedded payments, which are swiftly becoming the standard for digital commerce. The fewer clicks required and the fewer times you need to enter your details – especially card details – the better. Bouncing to an external site to verify a payment is problematic. Asking you to fill out a form is a no go.

Customers either want to be getting it now and getting it fast. Or they want to spend their cognitive energies on making other more cosmetic decisions – which personalises the transaction. The actual payment, except for transparency’s sake, should barely make a mark on your customer’s experience.

Embedded payments don’t involve opening accounts, they just make use of nifty APIs to interact with existing accounts. Once set up, you can collect or send money to the accounts linked to your software. And then that’s that.

It’s what enables you to hail an Uber with a single tap on a smartphone screen, or order Deliveroo without worrying about your billing address, or one-click on Amazon to instantly replace that broken kettle.

Whether your customers realise it or not, this is the experience that they will want from your company. Drop offs can so easily occur when transactions are redirected to third party sites.

Anything less than an embedded payment already feels clunky and may soon feel jarring. 

But when the payment is embedded, it gives you control over the whole end to end process. You get to define the customer experience. You get to decide how it feels. And as a result, your customers are more likely to go back and make another purchase. You’ll also have access to data you wouldn’t otherwise have access to.

Embedded Banking

Next on the list is embedded banking, which is your ticket to a more automated, optimised, algorithmic business model. 

This is all about efficiency on your end. Saving labour through automation and saving costs by picking the optimal way to deliver each payment avoiding unnecessary transaction charges. For ParkingPerx, it means they can reward consumer spending with free parking when payments are made in associated stores. And Weavr gives them the efficient system they need to deliver that payment just in time to parking operators. 

There’s also the matter of stickiness. In embedded banking, you are effectively opening accounts for your customers which – though invisible – make it easier for your customers to make future purchases from you. To your customer, this is user-friendly design. While to your business, it is increased customer lifetime value.

Embedded banking is also, crucially, about saving time. It doesn’t take a genius to figure out that automation will reduce costs, but the complexity, along with the effort and time it takes to automate banking and payments processes, makes it impractical with most legacy banking services.  

But once you find a provider who can hook you up to the right APIs (and Weavr is the only provider with an API-first bank) and connect you to the right third parties, everything – payments, purchases, conversion of currencies – becomes faster, easier and cheaper.

Banking-as-a-service

Next up is banking-as-a-service which gives you significantly more control over the movement of money associated with your business. 

For Uber, this means they can pay their drivers in real time to help cover fuel costs. For Wayflyer it means they can lend money to be used in ways they have defined. The crucial power you have with banking-as-a-service is that you can open accounts for other people – without holding the money yourself. So you get to offer the services of a bank without suddenly becoming responsible for guarding a high security vault.

Say you want to lend money to an e-commerce business for their marketing – and if the marketing performs well, you want to lend more. Banking-as-a-service gives you control over how the money you lent is spent and it can give you insights into how that money performs. Simply lending the money doesn’t position you any better than a high street bank. But banking-as-a-service can power the core of your business model. 

Traditionally this was the scope of retail titans like M&S, who issue you with a credit card. They get a lot of data about their customers, building a much more intimate bond with them. It tied together lending and purchasing and customer rewards. This dynamic creates a more lasting, profitable and meaningful relationship between business and their target clients. 

And now anyone can do it. Not just those who can put millions up front. So why isn’t everyone doing this yet? Well, banking-as-a-service used to cost an abysmally high amount. It was slow to set up and it was typically inflexible. And many businesses still don’t know where to look to find an alternative provider.

But Weavr’s unique (and we mean unique, this is not marketing speak) API-first system gives you banking-as-a-service to fit your business, rather than the other way around. It’s far faster and cheaper (by a margin that reaches six figures) and since all the compliance is already in place, you don’t even need a license. You can simply get started now. 

So what is it that you’re looking for?

The possibilities are open to you. Embed payments into your software, provide banking for your customers or automate banking within your own operations. Or you can pull an Uber and do all three.

This is the evolution that is taking place. First we had banks, then we had part-online/part-paperwork banks. After that people started working solely with bank online interfaces. And now we’re hardly going there at all. Consumers and businesses are going to the bank less and less. But you can bring your bank to your customers.

Now financial services aren’t so much about interest rates and a guise of security. In truth, we’ve never been excited to bank before. But now, you’re not presenting customers with rates and figures, you’re presenting them with what they actually desire – a holiday, a home, business funding, marketing, a new pair of shoes – it’s just that you used banking to make the whole experience better for them and more profitable for you.

Interested in becoming a financially integrated digital business? As the only company offering an API-first bank account for businesses, we make the process easier, more affordable and faster than any other embedded banking solution. Get in touch with us to discover just how quickly you could be generating revenue and going to market.

Updates straight into your inbox