Embedded finance is the integration of financial services within non-financial platforms. It enables businesses to offer customers seamless transactions right within their regular apps or platforms. Considering the recent revelation of embedded finance evolving into a $3.6 trillion market opportunity by 2030, this isn’t a wave Canadian businesses can afford to watch from the shore.
Improve User Experiences
In a world addicted to instant gratification, embedded finance is all about its simplicity and immediacy. It crosses traditional barriers, making every transaction feel as natural as taking a breath. Improving customer experience is a pivotal element in financial services. Embedded finance, with its user-centric design and real-time services, aligns perfectly with this narrative.
Diversify Revenue
The integration of financial services introduces businesses to unexplored revenue terrains. It’s a departure from conventional earning models and an entrance into a world where every interaction can be monetized. Cross-selling financial services is a significant opportunity for revenue diversification, and embedded finance is the catalyst.
Risk Mitigation
Every interaction or transaction made via embedded finance systems is like adding another piece to a complex puzzle. It allows businesses to gather insights, not just on the transaction itself but on the behavioural patterns, preferences, and tendencies of the customers. Big data and analytics play a pivotal role in enhancing decision-making processes, reducing risks and driving innovation.
With embedded finance, data is not a byproduct but a valuable asset. It provides real-time insights, leading to dynamic risk assessment models that evolve with every new piece of data. The ability to instantly analyze and assess data ensures that risk mitigation strategies are not static but are as dynamic and evolving as the financial ecosystem itself. It’s not just about knowing their financial standing at a given moment but understanding their historical patterns, predicting future behaviours, and identifying potential red flags.
Real-World Applications of Embedded Finance
The advent of embedded finance is akin to opening Pandora’s box of infinite possibilities in real-world applications. It’s an intricate blend of finance and technology woven seamlessly into the fabric of everyday business transactions.
Auto Financing
Visualize a prospect exploring their dream car on a dealer’s website. As they marvel at the features, an instant loan approval notification pops up, personalized to their financial standing. The cumbersome process of seeking auto financing is eradicated. Customer satisfaction skyrockets when financing solutions are immediate and tailored.
E-commerce and Retail
Imagine a scenario where a customer, immersed in the world of online shopping, reaches the checkout point and instantly receives a customized credit offering. There’s no need for the customer to abandon their cart to seek external financing. The offer is there, embedded within the interface, intuitive, timely, and tailored. Such seamless integration can significantly reduce cart abandonment rates and elevate the customer experience.
Every click, every selection, every preference recorded is data that can be leveraged. Embedded finance turns e-commerce platforms into personalized financial service providers. Service providers, whether in healthcare, education, or entertainment, can offer real-time customized financial solutions.
Closing Thoughts
As embedded finance propels the world, and Canada specifically, into a new fintech era, the query isn’t whether to adapt but how swiftly the adaptation can occur. Every business, especially in sectors like auto financing and payday lending, stands at the cusp of transformation.
At Inverite, we offer resources and knowledge to help you understand and adapt to the evolving landscape of embedded finance. We provide a platform where security, innovation, and customer experiences intersect, aiming to foster an environment of discovery and adaptability. Your entry into the embedded finance world doesn’t have to be a solo venture–we’re here to share insights and support your journey, book a demo with one of our specialists to learn more.