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by Finage at May 23, 2021 4 MIN READ

Finage News

How to Accelerate FinTech Development

Wonder why you should consider embedded finance as not only the future of finance but also its present? See How to Accelerate FinTech Development with Embedded Finance now!

 

Many experts in the field will say that the future of finance lies with embedded finance. Contrary to popular belief, embedded finance is not a replacement for FinTech. It is rather an improvement.

 

Embedded finance allows companies that are not exactly in the financial industry to offer their services and products. In other cases, these companies will not always offer their services, instead of acting as a bridge between smaller firms and financial services. With it, companies from various sectors can delve into the world of finance. For this reason, it is important to take a closer look at embedded finance and its effect on the financial world.

 

Contents:

What Is the Importance of FinTech in Embedded Finance?

  1. Providing a foundation for other tech systems
  2. Simplifying financial solutions
  3. Providing a complete picture of financial status

Conclusion

 

What Is the Importance of FinTech in Embedded Finance?

Let’s help you look into the industry and find the importance of embedded finance. We can highlight three main benefits:

1. Providing a foundation for other tech systems

The multitudes of financial products and ecosystems in circulation have one thing in common. This commonality is the fact that they will have embedded finance apps and FinTech as their base. The experience can only be better if these ecosystems possess embedded finance, which is easier and more efficient to use. There are many ways in which companies incorporate or embed financial programs into their products and they are as follows:

  • A company that is not well versed in the FinTech industry will often try to offer other financial services. This includes companies that offer easy-to-use banking services and even offering bank accounts. MTN and Airtel are two telecommunications companies that practice this, especially in Africa.
  • As mentioned in the introduction, some companies would rather be a middleman between financial services and organizations not in the field. This is usually done through data transfer networks and apps that have embedded finance as their base.
  • It can also be done by hiring a business whose sole objective is creating and embedding the necessary infrastructure into products and services. Such an ecosystem has the potential for rapid growth and an increase in transactions made.

 

2. Simplifying financial solutions

Embedded finance is revolutionary in that it does not require a third party lender or bank, bridging the gap between a consumer and their transactions. This was a problem in the past when a third party was required to make all purchases.

 

There are a few instances where we can see the impact of embedded finance in a consumer's everyday life. Companies looking to incorporate embedded finance in their financial products should capitalize on this. The following are ways in which embedded finance has made all aspects of banking easier:

  • Making a purchase can be a tedious task. Oftentimes we are faced with having to use cumbersome cash or the tough to monitor credit cards. Credit cards in particular are difficult to get around as they may have an array of complications even as you pay. Embedded cash has simplified the whole process greatly, by having a purely digital method of buying and selling. Many of the more popular companies in different sectors have adopted this. These include companies like Starbucks, which allows its customers to pay via an app on their mobile devices.
  • Because of embedded finance companies can pay their employees by use of branded debit cards as opposed to writing checks or making direct deposits. PayPal is an example of a company that practices this.
  • Embedded finance has also led the way in the creation of easier and more convenient methods of asking for a loan called embedded lending. Where in the past, loans had to be approved in a process that could be lengthy, embedded lending is instant.
  • Embedded finance also makes investing in a business of interest easy and seamless. This is usually automatic and any spare money in an account can be invested and monitored.
  • Because embedded finance essentially eliminates the middleman in your transactions, the same will apply to buying insurance. A broker was usually necessary if one wanted to buy insurance, but that is no longer the case.

 

3. Providing a complete picture of financial status

Embedded finance will allow companies and users to have access to their financial information with little to no effort. Through one’s mobile device, for example, information such as bank balance, credit score, and past transactions are instantly available at the tap of a button. This is done all while keeping data encrypted.

 

Conclusion

All the above points are things that fintech can do. However, the speed and efficiency with which fintech with embedded finance can carry out all of them are remarkable. Its impact on the financial world and the normal people who don’t understand it is equally mind-blowing.

 

It has helped individuals with no knowledge of finance make responsible choices even in avenues such as insurance. It is for this reason that all should consider embedded finance as not only the future of finance but also its present.

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