Today, all businesses, across all industries understand the importance and potential of embedded finance, and they are increasingly embracing this technology in their process of delivering various products and services. This is because embedded finance is driving businesses to enjoy more revenues and increased customer loyalty. Customers, on the other hand, love to use brands with embedded fintech, as it makes their shopping experience quick, easy and effective.
Financial services like payment, lending, insurance and more are not just limited to banks and financial companies anymore. Thanks to embedded finance, even non-financial companies can integrate these financial features as part of their products and services. This way, they don’t have to go through the hassles of availing of the services of conventional financial institutions like banks. The popularity of embedded fintech is so high that the market capitalization of companies with embedded finance technology is expected to touch a whopping $ 7 trillion within the next 10 years.
So how exactly embedded finance helps businesses create and earn higher revenues? Keep reading to know the answers to this.
The integration of financial solutions like payments, insurance, investments, credit and lending in the operations of non-financial institutions is called embedded finance. This does away with the need for the customers to be redirected to a traditional financial institution’s payment interface. All big brands today like Amazon, Walmart, Uber and likewise use this technology. When customers shop from Amazon, they can make their payment in full or choose EMI options and complete their checkout formalities – all in one single app. That is embedded fintech explained in simple words!
With the embedded fintech market growing phenomenally, it is only natural for businesses to make the most of this technology to improve their revenues. Here are some ideas that businesses can implement using embedded finance to see a visible improvement in their revenues -
Most of the apps that people use daily (like Amazon, Zomato, Uber, Walmart and the like) have mastered the art of increasing their revenues through the embedded payment option. This is the most popular of all other embedded finance options that are explained in this list. Here, customers never go out of that particular website or app until they place an order and pay for it. The transaction time is very quick this way, which is why more and more customers use these types of apps for their everyday purposes. Through embedded payments, a business can not only increase its revenue but also improve its customer loyalty percentage significantly.
When businesses deal with high-value products like automobiles, flight tickets and more, they also offer embedded insurance plans. For example, when a customer books a ticket to Indonesia through a travel agency like MakeMyTrip or ClearTrip, he/she also gets the option to buy travel insurance from there. This way, the customer doesn’t have to leave the travel agency’s website at all for any of his/her travel-related requirements. While these insurance plans add to the revenues of that brand, they also motivate customers to choose the same brand again for further ticket bookings, as they can find all that they need in one platform.
Embedded lending is one of the most beneficial embedded finance schemes for customers. For example, if a customer does not have the entire money to buy the latest model of iPhone on Amazon, he/she can opt for the easy EMI options scheme provided on the site to complete the purchase. This way, Amazon earns revenues by charging a reasonable interest rate for these EMI schemes, and the customers are also happy that they got what they wanted without having to take a loan or swipe their credit card. Some other ways of increasing revenues through embedded lending services are the BNPL (Buy Now Pay Later) schemes, subscription fees, etc.
Big supermarkets like Walmart and Target often associate with banks to provide co-branded credit cards to customers. This way, every time a customer swipes the card, the brand earns a small percentage of swipe fees, also known as an interchange in the embedded finance market. Card swipes, usage of this card at ATMs, and any other fee associated with the issuance of these co-branded cards are good revenue channels for any business.
In a bid to earn extra money through embedded fintech, many brands have launched their own fintech services. Some of these services include offering financial solutions to customers like prepaid credit cards, digital wallets, bill payment features, money orders and more. Their customers are thrilled to find all of these benefits under one roof.
Banks and other financial institutions charge a certain percentage of fees for facilitating international payments and wire transfers. Businesses can make use of this excellent opportunity, and turn the tide in their favor by offering international payments as a part of their embedded finance services in their app or website. Many are already doing it, and customers are attracted to these brands because they charge far lower rates than banks for carrying out international payments. The charges can vary based on the amount that needs to be transferred and the destination it needs to be transferred to. Businesses can improve their revenues this way by leveraging on exchange rate fluctuations on these international transfers.
Offering investment and wealth management services is a sure-shot way of increasing revenues for businesses through embedded finance technology. Stock analysis features, trading, buying & selling options, and offering different investment options like equity, mutual funds and debt instruments are some good embedded investment ideas that businesses can consider to increase revenues. This way, their customers can get all their investment-related questions answered in the brand’s app or the website itself.
With more and more industries understanding the concept and monetization potential of embedded finance, the role of traditional banking services has taken a backseat. Many brands like Finverv have understood this fully well. They offer a series of embedded finance, especially in the B2B services. These services have definitely helped them increase their revenues significantly. However, the more important fact is that these services are the reason why companies like Finverv have built a loyal base of customers over the years.