Over the past several years, embedded finance has completely transformed the financial services industry by fusing fintech services with non-financial businesses and altering the way people work, buy, and make payments.

Branded credit cards, one-click payments through coffee shop apps, and insurance products linked into e-commerce platforms are all revolutionizing how consumers and companies engage with financial services.

We discuss the revolutionary effects of embedded finance, how it can evolve even further, and how organizations may get beyond obstacles to its adoption with industry professionals during this discussion.

Introducing our speakers:

• Radha Suvarna is Finastra's Chief Growth Officer for Payments and BaaS.

• Peter O'Halloran is Fiserv's Vice President and Head of Enterprise and Digital Commerce for EMEA.

• Edenred Payment Solutions' Head of Sales, Karine Martinez

• Ryan O'Holleran is Airwallex's Head of Sales, Enterprise.

To what extent has embedded finance already revolutionized the financial services industry?

O'Halloran, Peter:

A revolutionary force that is changing the fundamentals of financial interaction is embedded finance. It opens up new income streams and allows non-financial firms to provide their clients with a range of financial goods and services.

Both businesses and their clients desire an integrated and smooth payment experience.

Instead of using a third-party app, which could impede the smoothness of the payment process, embedded solutions give users access to a range of payment options inside the framework of their regular transactions.

One way a business may enhance customer satisfaction and increase revenue is by integrating a buy-now-pay-later (BNPL) option into their checkout process.

Additionally, by gaining knowledge about client purchase patterns, merchants may better customize their offerings and foster closer bonds with their customers.

In the end, integrated financing has changed the game for retailers and their clients and will remain a very appealing option for companies.

Karine Martinez:

The manner that consumers engage with financial services has significantly altered as a result of embedded finance. When it comes to the Uber debut, users now anticipate being able to find, connect with, and pay for cabs using a single app. It was unimaginable about fifteen years ago.

It's also a widespread occurrence. Instagram purchasing has made it possible for us to easily book a last-minute vacation in one location and browse through pictures of friends' vacations. Online shopping on AliExpress has skyrocketed in China, whereas Booksy is the industry leader in online beauty services in the US.

The least fun but most important aspect of the customer experience is making payments for goods and services. Embedded finance has transformed this formerly tedious procedure into one that is far more convenient.

Offering these financial resources as a part of the whole package benefits the firm by boosting client loyalty and generating extra income.

Ryan O'Halleran:

Even though embedded finance is still a relatively new field, it has already shown that it may significantly alter the financial services industry.

It has altered the accessibility of financial goods and given firms the chance to strengthen client connections and create a variety of revenue streams.

A more smooth customer experience is made possible by integrating various financial services that are tailored to each individual's needs onto common platforms, which increases customer loyalty and retention.

Even yet, we can observe that a number of companies, including software platforms, are still unable to take use of embedded finance, despite its increasing popularity.

According to an Airwallex poll, just 9% of SMBs now have access to financial services through their Software as a Service (SaaS) platforms, despite 83% of them being interested in doing so.

SMBs are increasingly looking to their current software vendors for financial services, including payment processing, that traditional banks have overlooked.

Non-financial businesses are frequently in a good position to provide these services as they have stronger client relationships and more comprehensive consumer data.

They are therefore able to suggest to users the appropriate financial products at the appropriate moment. We will witness a true transformation of the market as we know it from embedded finance if software suppliers match this need.

How important do you think embedded finance can be for growth and innovation in the future?

Suvarna Radha:

Banks want to make investments to expand. They see room to expand and, via indirect means, reasonably reach new consumers in the fields of embedded finance and BaaS.

Banks that exercise caution and ensure that their customers are given priority will benefit the most. Waiters can very well find themselves on the outside looking in.

In my opinion, 2024 will be a pivotal year for the ongoing implementation of embedded finance and BaaS technologies. BaaS ranked highest, just surpassing AI, in Finastra's 2023 State of the Nation poll about the technologies that financial institutions want to give priority to in the upcoming year.

Our study makes it abundantly evident that respondents see 2023 as a year of action and that the sector is progressing beyond the stages of planning and observation.

With regard to embedded finance and BaaS, we observed a quickening of their deployment. Approximately 48% of financial institutions worldwide have added or integrated BaaS functionality into their products, up from 35% in 2022.

Ryan O'Halleran:

For companies everywhere, embedded finance has the potential to spur innovation and expansion in the future.

Financial services may be easily integrated into a wide range of digital platforms, creating a more efficient and linked market environment that can satisfy countless client demands.

It is probable that embedded finance will play a significant role in fostering rivalry among enterprises, as retailers utilize various financial tool stacks to improve the products and services they provide to clients.

Embedded finance offers businesses enormous development potential by opening up new income sources and fostering client loyalty.

In the past, companies have prioritized building their local market presence.

On the other hand, a multi-market strategy is becoming more and more apparent in embedded finance, driven by more effective money movement, alluring FX capabilities, and the creation of new income sources.

What obstacles stand in the way of embedded finance adoption?

Suvarna Radha:

Despite recent economic headwinds that have limited technology investment, financial institutions continue to prioritize the deployment of BaaS and embedded finance use cases, based on my observations.

BaaS and embedded finance are crucial facilitators when it comes to satisfying the higher client expectations for far more seamless experiences in financial services.

They provide financial institutions with the tools to incorporate their services into the websites, applications, and other platforms that their clientele already utilizes.

In this approach, companies may meet consumers where they are rather of trying to force them to become where they want them to be.

Of course, banks need to have cutting-edge, open platforms in place to facilitate open finance, work seamlessly with ecosystem partners, and handle issues like data security and regulatory compliance; however, the right alliances can help them get past roadblocks and expedite the process.

As BaaS and integrated finance models progress and the features they provide grow easier to include, companies are really able to create more comprehensive, customized offerings.

Most importantly, these models provide a quicker method of achieving this than previously. According to more than four out of five (81%) decision-makers in our 2023 study, time-to-market can be accelerated by using both embedded finance and BaaS, as doing so removes the need to create financial solutions from the ground up.

Karine Martinez:

This is difficult to develop internally, particularly in sectors lacking a firm financial foundation.

You may require local financial regulation, such as that from the FCA or NBB, depending on where you're situated and where your activities take place. Access to banking schemes, licenses, or card processors will depend on what you wish to provide your clients.

Fortunately, a lot of those more laborious and technical tasks can now be outsourced to professionals, allowing businesses to concentrate on their core competencies. This is made possible by the emergence of embedded finance and BaaS firms in the fintech space.

Because Edenred Payment Solutions currently has all the necessary contacts and infrastructure in place, it can sometimes establish an integrated finance solution in as little as 72 hours.

How can businesses modify their business plans to more effectively utilize embedded finance?

Suvarna Radha:

The industry is continuing to shift from the "euphoria stage" to the "prudent execution" phase, where the deployment of actual use cases that provide client value is the main focus.

Previously, over-strategizing, emphasizing embedding over consumption, or pursuing use cases where others control the point of context and economic interests are common reasons why embedded finance programs have failed.

In order for banks to succeed, they must :

• Recognize which use cases will benefit consumers the most.

• Choose monetization strategies that provide the necessary capabilities and allow for financial gain.

• Make a clear plan for bringing a BaaS solution to market and choose partners that can speed up delivery.

Finastra will carry on facilitating and arranging things in this area. Our portfolio of embedded finance solutions, Fintech alliances, and network of thousands of financial institutions and embedders will expedite market access and monetisation.

O'Halloran, Peter:

Businesses that maintain their flexibility and adapt their business strategies to the demands and preferences of their customers will succeed.

The rise in digital commerce in recent years has increased customer expectations for convenience and choice in their purchasing experiences. Developing a more integrated commerce experience has become crucial for companies.

Therefore, integrated solutions should give customers access to pertinent payment choices at logical points in their journey, regardless of whether they are making a purchase in-store or ordering something for pickup through a mobile app.

Buying data may help retailers better anticipate client requirements and personalize their products through targeted discounts and rewards, therefore these solutions are also advantageous for larger company planning.

Businesses may increase their potential income while forging stronger, more meaningful ties with their consumers by utilizing integrated solutions in this way.

Karine Martinez:

Not only can embedded finance improve the consumer experience, but it may also provide organizations who use it with some really useful data.

All of a sudden, you can keep tabs on user interactions and transactions, determine what's hot when, and cut back on spending on underperforming items.

By analyzing this data, businesses may gain incredibly valuable insights into the behavior, tastes, and market trends of their customers. As a result, they can make better informed decisions and create more focused development and expansion strategies.