Embedded Finance, integrates financial and banking services into apps and services outside finance. It is at the forefront of this change.
Embedded Finance is a term that might sound foreign to many people but every digitally connected consumer would have experienced some aspect of it. It is designed to be practical and accessible. You “embed finance” to take or experience some financial action somewhere you would actually want to. Paying for an item or service through the vendor’s app, is a classic example.
User experiences on apps and websites are crucial to business growth. Overcoming issues that interrupt, for instance, a buying experience, can have a direct and major effect on business growth. So can the insertion and creation of business opportunities for financial services.
Increased revenue streams
Bringing embedded banking or other embedded finance benefits into non-financial contexts reduces the points where a consumer might abandon a transaction. It also creates new opportunities for additional transactions and the use or purchase of additional (embedded) financial services.
If they don’t have to leave the app or website, they are more likely to make a purchase; and if you can offer and convert the sale of a financial service tied to a purchase that they made, at the point where they made it – you have both increased and added new revenue from embedded finance solutions.
This creates new opportunities and brings financial services to a wider audience that are not especially familiar with them or with banking technology as a whole.
The more customers can use a service by finding it conveniently embedded outside that finance app, the more touchpoints there are to build both revenue and that customer relationship.
Enhance customer loyalty
Bank or financial services can cultivate greater customer loyalty by embedding finance options in the non-financial contexts that they would most likely want them.
Customers positively associate that convenience with the financial or banking service provider, and with the non-financial context itself. It is easy to incentivise the use of embedded finance options and the purchase of embedded financial services with discounts that latch onto the customer journey the consumer is already on.
A classic example of this (and the above) is buying a plane ticket, and having the option to add insurance, a hotel, or car rental, at a discounted rate, while completing a single transaction in a single, non-financial setting.
Tying those purchases together into loyalty rewards programmes is a simple and effective way to grow customer loyalty. This is also well evidenced by airlines rewarding air miles for packaging flight purchases with hotel, rental, insurance, and other partners.
Improved Customer Experience
The positive associations that go towards growing customer loyalty start with their experience of the non-finance app or site. Customer experience (CX) cultivates those positive associations and emotional ties that will keep them customers for a long time.
Embedded financial services that solve problems for customers and make their lives easier will always improve their experience. Packaging that in an experience that is enjoyable, through design elements, haptic feedback, sounds, or just customisation is all part of it.
Most of all, you can improve CX by offering a wide variety of embedded finance options. If customers feel an app or platform can be used for every transaction, and they like it there and trust it – they will stay there when faced with the option to move elsewhere.
Personalised offerings, built-in protections to assure their security, and expanding their access to financial tools will all help.
Access to Valuable Data via Embedded Finance
Through analysis of financial data, businesses can monitor actual performance precisely and adapt how to handle different situations.
Successful embedded finance benefits help the bottom line, but they also always deliver valuable data on how to serve the customer better and what firms can do next to support business growth.
Embedded finance allows for the capture of valuable data on customer behaviour and on behaviour towards embedded financial services in the non-financial contexts they get embedded in. This data capture gives unprecedented insights that will in turn lead to improved financial services and new opportunities for revenue generation.
Competitive Advantage
Embedded Finance presents clear opportunities for businesses to find and establish competitive advantages. The nature of embedded financial services also means that they can find advantages through initial deployments and long into the future.
Embedded finance benefits are so significant for business growth that they will become part of cross-industry business strategy for years to come. It offers quick wins for early adopters, and those who just deploy the best tech. It also brings growth to firms deploying embedded banking for the first time, as their customer base reacts to the deployment.
From that point forward, businesses can press that advantage home. They can use that advantage in consumer preferences to find better ways of serving them with the embedded applications they deploy.
Agile businesses can maintain those competitive advantages over sustained periods of time because of the availability of data to interpret.
How embedded finance transforms business growth
Embedded finance enables businesses to innovate quickly, adapting to market trends and customer demands more effectively.
The sooner platforms with embedded finance options are deployed, the sooner businesses can refine them. Familiarising consumers with their brand’s growing forays into consumer convenience supports growth.
Embedded Finance is one of the most beneficial inventions in banking that combines technology and finance fields. As people rely more on technology, they need a more practical and efficient platform to help them. They are part of the fabric of the digital future.
- Embedded Finance
