What the heck is Embedded Finance!?
Strong financial institutions have been a staple in the lives of all individuals for ages. Their references go back to the times when the word banking was not even a proper thing, people used to lend and borrow money from others, especially kings to finance their wars ( you see where it is going 😉, Iron bank GOT). But actually, this was what was and is how traditional banking institutions work around the world. Now all of this revolutionized when some clever people proposed and merged the two worlds i.e. internet and banking and the genesis of the world of fintech began. Now gradually over the years, we have familiarized ourselves with Venmos, WeChat, and PayTMs, but these offerings were underserving our complete need, and there was a void that needed to be filled for better integration and software optimization of the fintech and non-fintech offerings. This is when the seed of EMBEDDED FINANCE was sought.
At the heart of it, Embedded Finance applications are software companies that add significant value or sometimes even transform the financial product offering embedded in it.
Let’s dig deep and explore with a generic example of how embedded finance works in real life and navigate the progress and current applications that are at the apex of this revolution
Now consider a very simple and mundane task of ordering groceries from an app called FasDo (this actually is a live app operating in India). You order your usual stuff, bread, butter, pulses, and milk, and land on the checkout page. What embedded finance integration here will do is let you stay on the same page and handle your billing. If you see it from a quantitative angle this simple integration will help you, as a developer, increase customer retention i.e. LTV due to less cluttered exit pages and a real-time money actuation will take place due to the amalgamation.
Owning to its seamless integration and value addition to users embedded finance startups have picked up a rapid acceleration in their growth in recent years some of its examples being Liberis, Plaid, and Finix.
There are various other ways embedded finance startups can empower and catalyze the ecosystem than just mentioned in the above example. It is just the beginning of the many other ways left unexplored by the EmbFin world.
