Embedded Finance: insights from the Paypers’ latest report
The Paypers, a leading media focusing on financial innovation and trends, just released the 2024 edition of its “Embedded Finance and Banking-as-a-Service Report”. The document notably dives into business models, key players, and deciphers the latest trends that reshape the financial services industry.
As explained by Oana Ifrim, Lead Editor at The Paypers, “Embedded Finance creates significant value by solving problems across the value chain. Product providers, digital platforms, and consumers all benefit: providers gain access to new markets and data-driven profitability, platforms secure additional revenue and reduced churn, and consumers enjoy seamless access to better-priced, data-driven financial products within their existing digital ecosystems”.
Main trends & opportunities
In an interview, Jovi Overa (Managing Director, Unlimit’s Baas division) focused on different B2C applications of Embedded Finance solutions and highlighted the example of payment gateways solutions integrated within ecommerce platforms that can enable seamless transactions and simplify the checkout process for customers. He also added: “Looking at the insurance category, companies like Lemonade have revolutionized the landscape by embedding insurance services within other consumer platforms, offering on-the-spot coverage tailored to specific purchases, such as travel insurance offered during flight booking”.
The expert also underlined that he expects new regulations and several changes in the future: “regulators are likely to increase scrutiny on data privacy and security, especially concerning how financial data is shared and stored within embedded systems. Improved consumer protection laws may be introduced to ensure transparency and fairness in lending and insurance practices”.
Vinay Mendonca (Managing Director, Embedded Finance for HSBC Commercial Banking) agreed by stating that “Embedded Finance offers an important opportunity to embed financial services, such as payments and lending, into non-traditional financial platforms. This enables customers to access financing solutions with minimal friction at the point of need”.
He also explained that the transformative potential of Embedded Finance is most significant for SMEs and merchants engaged in online commerce. But it can also benefit larger firms: “Corporate treasurers stand to benefit significantly from the automation and real-time insights that Embedded Finance solutions provide. By reducing manual processes and improving visibility and control over financial transactions, these solutions empower treasurers to allocate resources strategically and respond promptly to evolving market dynamics”.
In her article, Oana Ifrim highlighted the fact that financial services are becoming increasingly available through digital platforms (where customers also spend their time), what she likes to call “financial services at one’s fingertips, anytime, anywhere”. Also, she shared several examples that showcase the growing trend of incorporating banking and financial services into everyday digital platforms.