The concept of embedded financial services has been rapidly expanding for quite a few years and now includes everything from payments and banking to compliance. While adding the word “embedded” in front of a growing number of discrete services may seem gimmicky, the underlying functionality of embedded finance is massively beneficial to the end user.
All you need under one roof
Perhaps the most obvious benefit of embedding is that it enables companies to offer a wide variety of financial services via their own proprietary system, be it a platform, marketplace, fintech or any other type of business interface. All that’s required is a quick and painless integration through an Application Programming Interface (API) suitable for the task at hand.
In many cases, this is far superior to both – in-house development of the desired functionality and using third-party services that redirect customers off-site to the provider’s website or platform. While building software from scratch is often a drain on time and resources alike, the use of third-party services typically forces users to continuously switch back and forth between several different systems and interfaces.
Given the degree to which people today are used to having everything they need right in front of them, offering services that bounce them around several different websites is not a viable long-term solution.
It should also be mentioned that embedded finance can essentially rid companies of the need to worry about compliance, as most providers of such services, being licensed financial institutions, take care of things like AML/KYC procedures and background checks on behalf of their customers.
Making your brand go further
Luckily, companies no longer have to choose either of the options outlined above. Embedding allows for the selection of high-quality services that seamlessly blend into the already existing user interface by way of a simple integration.
This means that businesses, whether financial or otherwise, can offer third-party services that have been customised to look and feel as their own. As a result, users become more comfortable in navigating the given platform or dashboard, and more likely to return, as everything they need is available from the same hub.
As you may imagine, the range of services that can be embedded is already quite large. For instance, an ecommerce platform may choose to offer its customer faster and cheaper transactions that come with a digital wallet. An alternative financing company may include a branded card option to increase brand loyalty and awareness. The possibilities here are virtually endless.
In short, white-label embedded services help companies make their brands more visible and easy to memorise, as well as promote customer habits that boost loyalty.
Frictionless customer experience
Embedded services, by definition, minimise redirections and require much fewer clicks from the user, since they’re all immediately accessible on the platform that provides them. Increased convenience for customers and greater efficiency while online – more actions performed within the same amount of time – brings several additional benefits.
These are – reduced bounce rate and higher conversion rate. As a general rule, each click away from the platform or website is a step closer to losing one’s prospective customers, who might not return, or even worse, stumble upon a competitor.
With embedded services, however, there simply is no jarring transition to a third-party site that features a different interface and set of procedures. Instead, customers remain on-site at all times, secure in the knowledge that whatever extra services the company is providing are in its own hands and, therefore, entirely trustworthy.
Additionally, offering embedded financial services is an indication that you understand and cater to your customers’ total journey. Whether it’s the ease of making a payment or the ability to quickly secure financing for a larger purchase, customers will appreciate the streamlined, hassle-free experience. And a satisfied customer is less likely to bounce, and more likely to return.
Unique insights – tailored products
Embedded financial services enable companies to easily follow how their customers are using the services, what they like or dislike, at which points of a transaction they’re most likely to abandon the process, and much more.
The insights gained through that can lay the foundation for highly informed decision-making, fine-tuning one’s existing products and services, adjusting marketing strategies in real time, and developing new offerings based on the patterns observable in the data.
For instance, if you find that many customers are pausing at the checkout, you might try a different layout to encourage them to complete the purchase. Or, if you observe that customers frequently interact with certain types of transactions, you might want to include them alongside the main product.
Targeted promotions offer another powerful tool. With the insights gained from embedded financial services, businesses can roll out special offers, discounts, or loyalty rewards targeted with great precision at individual customers or preference clusters. For instance, if you know a customer often uses the embedded payment feature, why not offer them a limited-time lower fee on transactions? It’s all about making your services as attractive as possible.
Snowball effect for maximum growth
Put together, all of these benefits can build towards a snowball effect, where the customers of a given business meet all, or most, of their shopping and financial needs through its own system. And the more services it provides, the more revenue streams become available.
Embedded finance really is the way of the future, and there is no doubt that we’ll be seeing even more novel applications for this technology in the years to come.