As one of the hottest trends in payments, embedded finance is emerging as an attractive credit proposition for consumers and businesses.
Executing it will require a complex web of collaboration and technology, and may even intersect with another hot concept: open banking.
As Tribh Grewal, Head of FinTech Partnerships at Discover Global Network, told PYMNTS’ What’s Next in Payments series, embedded finance “embeds everything” at the point of a consumer’s financial and We strive to meet your payment needs. Consumers are now wary of problems with transactions or when payments are stopped prematurely due to authorization.
On a more technical level, Grewal said embedded finance revolves around how to provide data sharing and open banking to consumers. Open banking involves sharing data. This isn’t just payment or banking data, it’s data about you that allows us to develop new use cases.
These use cases will become extremely important in financial services, Grewal said, adding that consumers’ appetite for new experiences is growing. In the era of e-commerce and ridesharing, payments are built into the background and technologies are being introduced to provide these programming interfaces through APIs and integrate different services.
collaboration is key
Fintechs are offering different “pieces” to these transactions, whether across a wide range of platforms or through security or customer-facing convenience, he said.
“People expect to make these payments without any friction and expect to have choices, such as when gig economy workers accept access to earned wages,” Grewal said. ” he said.
Along the way, we’ve seen an increase in banks/fintechs and non-financial brands working together to enable these experiences, meeting consumers where they want to meet. For example, technology companies also partner with banks to provide payment services.
Also driving embedded finance is banking-as-a-service, allowing banks to lend their expertise to fintechs and drive new business they would otherwise lose. All of which leads to broader financial inclusion.
“From a banking perspective, banks want to maintain relationships with their customers,” so they need to provide credit and lending facilities to fintechs and platforms and innovate and invest in digital transformation. Grewal said.
Joint efforts between banks and fintechs, and support from companies like Discover to align programs with the “right” providers, will enable the personalized movement of embedded finance, providing customers with installment plans and point-of-sale options. You can offer a buy now, pay later option. The platform uses the connections and data you have to make instant decisions, Grewal said.
These platforms are characterized by total cost transparency and different payment options, allowing them to “provide you with the products and services you need (at the moment), rather than just pushing irrelevant offers,” he said. . .
SMB benefits
Grewal said that as embedded finance gains momentum around the world, small and medium-sized businesses (SMBs) are seeing the same benefits that individual retail consumers enjoy. In an environment where working capital and financing are tight, platforms can step in and offer credit from the same companies providing merchant acquisition services based on small business transaction data.
“Embedded finance is about giving consumers and businesses access to the financial services they need without ever leaving their app or portal,” he said.
Looking to the future, Grewal says embedded finance has the potential for growth because it is a starting point. As open banking and data evolve, it has the potential to expand across sectors such as real estate, utilities, healthcare, insurance, and other industries.
More information: API, Banking-as-a-Service, Banking, Credit, Discover, Discover the Global Network, Embedded Finance, Featured News, Financial Inclusion, FinTech, News, Open Banking, PYMNTS News, pymnts tv, SMB, Tribh Grewal , Video, WhatsNextInPaymentsSeries, Next Steps in Payments: Embedded Everything 2024
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