Embedded finance is a perfect winning strategy for both traditional banks as well as non-financial businesses. The banks get the feasibility of accessing the latest markets, whereas the non-financial firms will be able to provide a better payment experience to their customers.
In simple words, embedded finance is the concept where a financial product is put up for consumers to avail by a non-financial firm. Non-financial firms offering financial services to consumers might not be new, as retail stores have been doing it for a long time.
But, the difference is that embedded finance offers a digitally integrated experience for the consumers in availing those financial services from non-financial firms. Such collaboration between traditional banking institutions and non-financial businesses is executed upon BaaS (Banking as a Service) and CaaS (Card as a Service) models.
In this article, you will get an insight into the benefits of embedded finance for businesses and how it is going to change the payment ecosystem of India.
What are the Examples Associated with Embedded Finance?
There are various business individuals who intend to implement financial services into their business models but are unaware of the embedded finance concept. Therefore, to spread the word around the business world, here are some examples of embedded finance being used across various industries:
1. Cards
If there is a routine purchase between the seller and customer, the embedded cards can be used as an alternative to credit or debit cards. Thus, the users will get the liberty to transfer the money to cards electronically. Hence, the purchases can also be limited so that the expenditure is limited to the amount transferred.
Comparing the embedded cards with standard cards, the embedded version is cheaper and highly secured. Some examples include corporate cards, virtual cards, expenditure cards, and smart cards.
2. Payments
When businesses implement embedded payment features onto their business models, the customers get the feasibility of making payments by just pressing a button. They can make the payments without navigating between the applications, allowing faster payment settlement and checkout procedures. Thus, it will provide an enhanced user experience!
Embedded payments are a common feature in most or all payroll automation solutions and food delivery business applications.
3. Investments
Today, many investors aren’t yet aware of the risk-free platforms to make their financial investments. But, knowing all possibilities for determining efficient money management is important. With embedded or integrated investment capabilities, the entire process will become streamlined.
It is because you will be getting a single platform to do both investments and money management. Moreover, it implements a security feature that will allow the consumer to put money across various assets without the need to leave the platform.
4. Banking
The ideal process of integrating financial solutions with the company’s application or platform, with the use of APIs, is known as embedded banking. Thus, non-financial firms can provide their consumers with lending, contactless payments, bank transfers, card issuing, and other such services.
When your business integrates these financial solutions over its app or platform, they do not have to bring in a whole team to execute or manage them.
5. Lending
With embedded finance and the associated technologies, consumers don’t have to visit the banks physically to apply for a loan. It is because there are various non-financial firms out there that have adopted embedded finance to help their consumers get credit while they avail specific products or services.
Thus, the consumers will no longer need to go through lengthy procedures, submit many documents and get in touch with mediators. They can just log in to your business application, select the desired options, and fill out the asked details to get their credit sanctioned.
Benefits for Businesses Associated with Embedded Finance
At FidyPay, we believe the embedded finance industry will help Fintech businesses make their interfaces more accessible to end consumers. Thus, it is eventually helping financial institutions to attain better engagement rates with their consumers.
Apart from helping businesses provide a seamless payment system for consumers, embedded finance offers a lot of other benefits, which include:
1. Supports the Digital Platforms to Excel
Embedded finance helps digital platforms excel by increasing the AOV (Average Order Value), lifetime value of customers, and customer retention capability. Thus, it will eventually increase the overall revenue of the online business. Moreover, the businesses get the scope to add alternative income sources through revenue sharing without imposing any financial risks.
When you use your digital platform to deliver financial services, your business will gain a competitive advantage. Thus, it will enable your platform to collect the client data significantly, which can then be used for determining their purchase behavior.
2. Enhances the Proficiency of Financial Institutions
In the case of financial institutions, they have the liberty to use the distribution capabilities of digital platforms. They will have access to a large amount of borrower data, which can then be used to provide the borrowers with custom financial solutions.
Thus, it will improve the management of the credit lifecycle for the institution, along with other proficiencies, proficient enough to boost the profit margin.
3. Convenience for the End-Users
In the end, it is the consumers who leverage the maximum potential of embedded finance! They get the accessibility to affordable and flexible financial services. The non-financial businesses can offer dedicated financial solutions, which would have the capabilities to meet the individual needs of the consumers.
Thus, may it be borrowing credit for the purchase or making seamless payments, embedded finance has made things quite easy for them.
FidyPay is Destined to Scale Embedded Finance’s Impact on Business Growth
FidyPay is a third-party service provider that acts as the bridge between Fintech start-ups and the top banks or financial institutions. We offer you API Banking, BBPS, eNACH, prepaid card, and other embedded finance services that will help you scale your business to optimal heights.
When you can offer the convenience of payment to your consumers, they will gradually find your brand more reliable. We are using modern-day technologies with a dedicated API stack to help your business contribute immensely towards the digital payments landscape of India.
We intend to achieve ample milestones through our service offerings, some of which include the following:
1. Increase the collaboration among the banks and Fintech companies
2. Promote the development of data-driven financial instruments or products
3. Support the expansion of vertical Software-as-a-Service (SaaS) business models
4. Ensure a better experience for the end-consumers upon availing the financial services from you. Leverage the popularity of BNPL (Buy Now, Pay Later)
With this and more, we are now stepping into the ideology of using embedded finance to create new channels for businesses to earn revenue. Our team contributes immensely to restructuring the relationship between financial consumers and service providers. So, if you want to scale your business and make it more accessible for today’s customers, get in touch with FidyPay right away!
Conclusion
By now, you are already aware of how embedded finance has changed how people conduct businesses or accept consumer payments. It is a perfect digital technology revolution that is benefiting banks, Fintech start-ups, and consumers at the same time.
At FidyPay, we strive to make this collaboration successful, with your brand becoming the face while the banks get their expected engagement from customers. So, embrace the adoption of embedded finance, and take your business to the next level.
