Embedded Finance And Its Impact On The Financial Services Industry

Image source: Dealroom
Image source: Simon Torrance Blog

Types of embedded finance solutions:

  • Embedded payments: Payments infrastructure is integrated within a platform/app to create a seamless payment flow.
  • Consumer lending: Credit products are embedded within non-financial digital platforms. Non-bank institutions can provide loans to consumers within their platforms. BNPL is an example of embedded credit and lending. On Amazon, for instance, at checkout, a consumer can convert their purchase into EMI without having to leave the platform.
  • Embedded insurance: This refers to insurance bundling within a product or a service purchase. For instance, Tesla’s auto insurance is offered at the online point-of-sale and during in-showroom purchases.
  • Embedded investments: Platforms can offer investment services to their customers and integrate stock market investing into their offerings. Brokerage firms kickstarted the trend with APIs reflecting every microservice from opening an account, trading, funding, market data, and portfolio management.

The way forward and future impact of the embedded finance industry

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