More and more non-financial companies are jumping on the ‘embedded financial services’ train — not just large, brand names but also mid-size firms in staffing, payroll, and education. At a high-level, adding this functionality can help firms deliver an improved user experience, higher customer retention, and a new channel for revenue.
Besides these general benefits, here are specific targets/needs to consider in adding embedded finance to your roadmap:
Addressing unmet customer needs: users may need immediate access to funds — this can be accomplished through instant payout options (via card processing, wire transfers) OR spend cards;
Exceeding customer expectations: companies must be able to stay ahead of user demands — as an example, offering cryptocurrency (for savings, transacting, rewards, payroll) is gaining tremendous demand;
Boosting user growth: more products & services drive new user traffic and catapult the deposit & spend activity of existing users;
In-demand, customized rewards: beyond cash back, customers seek bonuses in the form of stocks, crypto, higher yields (on deposits);
Minimizing interchange fees: wallets and the ability to hold deposits lower operational costs through a closed-loop ecosystem of bank transfers (internal or ACH) between users; this can lead to a savings over paying card network fees;
Driving customer loyalty: The sum of more services, rewards, and access for clients builds long-term loyalty; customers are interested in sticking around and seeing what comes next;
Validating more customer data and insights: platforms can generate better insights from the banking activity taking place in their app — incoming/outgoing payouts, card spend, and other transactions can provide recommendations on strategic initiatives (i.e. what to offer next, partnerships to build);
Going through the list, which ones directly connect with your company’s focus in the new year? Two themes stick out the most — customer drivers (loyalty, growth, targeted offers) and profit drivers (reducing transaction cost and increasing revenue).
What can embedded finance deliver?
Embedded banking provides wallets/accounts for users (either through individual deposit accounts or omnibus account structures) that hold deposit balances, payment rails (ACH, wire transfers, remote deposit of checks, card pull or push, bill pay, physical checks, ATM access), and spend cards (prepaid, debit).
What can embedded finance offer? Here’s a list of innovative products rolling out:
Go to Publisher: Articles – FinTechtris
Author: William Morales, Founder