Embedded Finance: Every detail you need to know

A significant amount of technology has advanced over the past decade, allowing people to pay for a ride before they arrive or pay their utility bills online without leaving their homes. The pandemic accelerated digitization even more, forcing companies to find novel ways to expedite execution, which seemed unimaginable a few years ago. Instant payment systems have become a part of our everyday lives since then.

 Financial services can be seamlessly integrated into non-financial services, known as embedded finance. With embedded finance, customers can simplify finance procedures and have a better user experience, enabling them to obtain what they need when they need it right away.

In contrast to traditional “checkouts” where a customer enters their card information into a website or app, swipes their card into a card reader, or visits an outside provider to get a loan or insurance they may need for a purchase, it allows payments, transactions, and loan processing to occur directly within the business's platform. Customers experience improved satisfaction with these solutions and get the loan or insurance they need.

This form of finance has gained popularity due to its flexibility and freedom, as well as the fact that it streamlines access to financial services, making access to finances easier, so they are available when the customer needs them. It includes Banking, Credit, Investment, Payment processing, Lending, and Insurance.

Embedded finance: what does it entail?

Additionally, embedded finance solutions provide businesses with flexibility. Using APIs, businesses can seamlessly integrate plug-and-play financial solutions into their business processes for the customer experience while complying with regulatory requirements in the region. This allows them to provide banking and payment services for the customer experience.

Customers need not worry about whether they will be able to pay off their credit, EMI, insurance, or anything else, since effective embedded solutions are available and they are as follows:

  • Banking is embedded in the Internet of Things

Embedded banking is a way of integrating financial solutions into a company's app or platform through APIs. It is a broad term used to cover a variety of money-related services, such as lending, wearables, contactless payments, card issuance, and bank transfers. By integrating financial solutions into a platform or app, businesses can reap the benefits of having them without having to hire full-time staff to implement them.

  • Investments embedded in the organization

Investing in safe financial investments is a crucial component of efficient money management; however, many investors do not know how to do it. As a security feature, integrated investments allow consumers to invest in a variety of financial assets without leaving the platform, simplifying the investment process by providing a single platform for investing and managing money.

  • Lending is embedded in the business environment

In today's world, people don't need to rush to banks to get loans because many non-financial companies have entered the financial industry so that they can get credit right away. This eliminates intermediaries, lengthy procedures, and a lot of paperwork.

By utilizing safe and secure APIs, instant settlements for marketplace sellers allow marketplace sellers to obtain loans based on their sales data fetched directly from the marketplace platform within seconds with embedded lending. A zero percent interest rate is usually applied to these loans, although longer-term loans may have a low interest rate.

  • An embedded insurance system

In today's tech-savvy world, it is imperative to integrate technology into selling insurance products. Embedded insurance is a much better choice than the tedious process of purchasing standard insurance. As a result, insurance providers can communicate with clients on a safe platform, which they are more likely to consider reliable. These embedded solutions have grown in popularity as they are fast, convenient, and flexible.  

  • Paying through embedded systems

In Embedded Payments, customers can make a payment by pressing a button without having to navigate between apps, so check out and payment settlement can happen faster apps like Google Pay, Phone Pay, and Paytm provide a convenient user experience. Furthermore, these applications allow users to take advantage of discounts and rewards not available with debit or credit cards when making purchases.

  • Cards that are embedded

It is possible to use embedded cards such as smart cards, virtual cards, etc as an alternative to credit cards or debit cards for routine purchases between a customer and their seller. By using this service, users can transfer money electronically and make purchases that can only be made up to the amount transferred. This amount can also be activated. These cards are cheaper, more convenient, and more secure than standard cards, which are less expensive, less efficient, and less secure.

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