The Embedded Finance Revolution

Published On : 08/06/2021

By Andries Smit, CEO and Founder of Upside Saving

The future of finance looks fast, convenient and increasingly personalised and the demand for more won’t stop there. Growing expectations from consumers and the market mean these innovations will be constantly challenged and pushed for improvement driving ever more rapid advances in the way our finances integrate with various aspects of our lives.

The good news is the finance sector, and in particular the banking industry,, is already in the midst of a huge digital transformation, a revolution of sorts, driven by the rapidly-progressing technology; embedded finance. From digital wallets and savings accounts, to frictionless payments and lending, an ever-increasing number of non-bank businesses are beginning to welcome embedded finance as part of their service.

Having already began its disruption of the banking industry, embedded finance is now bridging the gap between financial service providers and consumers; a valuable asset that non-finance sectors, such as retail, are only just beginning to realise. Embedded finance companies have enabled less friction for consumers during a transaction, whether that be shopping, transferring money to savings or even paying off a loan. This increasingly frictionless experience means more and more consumers are coming to expect this across the financial interactions, something we are already seeing begin to transform the retail sector.

Bank and NonBank Benefits
The benefits of embedded finance to banking are numerous. From tangible proof points such as faster transactions and therefore fast payments, to less quantifiable benefits like driving customer loyalty and trust in digital finance and banking, all through the provision of a seamless customer experience and an improved end-to-end journey for consumer financial transaction. Embedded finance has immense potential to unlock a lot of value here for both banks and nonbanks alike.

Perhaps the most tangible benefit for nonbanks implementing embedded finance services is the opportunity to collect highly detailed spend data insights. Granular level information like this is invaluable as it can be monetized for competitive advantage, shape decision making on business development and reduce marketing costs by allowing efficient and hyper-targeted digital strategies. As has become quite clear by now, data is king.

Of course, considering the wider picture, increased use of embedded finance services has the potential to provide vast opportunities across whole industries. Driving innovation forward even further and encouraging growth in digital banking and finance through the investment and adoption of modern technologies can benefit us all.

From the customers viewpoint it’s the straightforward, holistic, integrated, and personalised experiences that offer them real value and benefits. Digital consumers are now accustomed to instant gratification and having a wide variety of options at their fingertips. This means the slow and clunky models of old quickly become frustrating to use and do not work in a business’s favour, particularly when it comes to finances.

Any business, financial or nonbank, that struggles to quickly implement the latest that fintech has to offer may find themselves on the wrong side of this revolution. While implementation should be approached strategically, taking the leap to partner with a fintech company can help companies to keep their finger on the pulse. Fintech partners ensure nonbank businesses have access to the necessary technical skill, knowledge and innovation to keep up with technical advances as well as challenging consumer demand. And for banks, it allows them ever-greater and easier access to the consumer wherever they are spending their money.

The Future of Embedded Finance Outside Banking
Embedded finance is without a doubt the future of finance, but is also looking like to be key to future of other nonbanks industries, like retail, too. Developing integrated and safe ecommerce platforms will give many retail businesses a competitive edge in the race to fully digitise the sector. And other industries should soon follow suit. Hospitality, for example, is also just beginning to capitalise on the best that embedded finance has to offer.

By strategically adopting solutions to allow for streamlined customer experiences and the use of in-depth customer data analytics as part of a personalised marketing approach, nonbank businesses can embrace all the benefits of embedded finance revolution that the banking industry is already enjoying.

As the technology advances and is adopted more widely across nonfinance sectors, it will continue to change the face of fintech. However, it’s important to remember that the future of embedded finance relies heavily on the trust consumers place in it. At a time when data privacy and cybersecurity are among the biggest concerns for consumers the world over, confidence in fintech algorithms and data usage must be unshakeable.

AI Innovation in Embedded Finance
By providing frictionless, easy to use finance services that consumers can trust, embedded finance companies can continue to grow and develop fuelled by consumer confidence. Once confidence in this technology is well established, further technological advancements will emerge. One such advancement that is already emerging in embedded finance technology, and could have a significant role to play in its future growth, is machine learning and artificial intelligence (AI).

With the addition of AI in embedded finance technology, fintech could have the ability to learn a customer’s preferences, anticipate their needs and then act on this information to provide a better and more tailored experience in relation to their finances. It has the potential to revolutionise not just the financial sector, but every aspect of our lives where money is discussed or exchanged. An example of this in practice could be tailored student loans, based on current and projected income, that aim to minimise debt, or even disruption in the mortgage market with lending and home insurance embedded within the real estate journey.

The embedded finance revolution is already well underway, particularly within banking. Creating a truly seamless society where finance can go hand in hand with other  industries and encourage holistic accessibility of finance, is the important next phase of embedded finance. One day, perhaps quite soon, we can expect to see nonbank businesses able to offer a full range of financial services, from lending to wallets, crypto currencies, and branded currencies. And it will all be fuelled by Embedded Finance APIs and Open Data – now that will be revolutionary.

Andries Smit, CEO and Founder of Upside Saving

Jessica Weisman-Pitts

Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.