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4 Key Benefits of Embedded Finance

14 March, 2023

At a high level, embedded finance applies financial-institution-like activities to retailers, apps and other settings. Financial institutions are, effectively, taking their services and “embedding” them into an online point of sale, as an example.

Retailers, in particular, benefit from offering these kinds of services due to the increase in transactions, amount spent, and the overall customer experience.

Similarly, providing this kind of service offers financial institutions an opportunity for scalable growth. Consider the following when thinking of embedded finance opportunities for your financial institution.

Market Case

According to Bain and Company, embedded finance transactions will account for $7 trillion by 2026. With embedded finance already accounting for $2.6 trillion in 2021, the large footprint combined with the projected growth makes the prospect of pursuing embedded finance particularly enticing.

Streamlined Customer Experience

The path to purchase is fundamentally smoother with embedded finance in place. In particular, at the point of sale, an app or online portal with customer payment data on-hand can speed up the transaction process, overcoming potential hesitations and boosting overall customer experience.

Financial institutions should actively seek out retail partners, holding transaction data in front of them, along with customer experience metrics, to make a case for an embedded finance partnership. More so, financial institutions who can find a way to prove their competitive edge in the space compared to other organizations will tend to win out.

Increased Transactions

Frequency, dollar spend and sales conversion all improve with the embedded finance. Beyond storing payment information, financing options play a major role in the landscape of embedded finance, with flexible payment plans helping customers to overcome sticker shock and create a more appealing deal the aligns with their finances.

Wealth of Growth Opportunities

Above all else, the opportunity to partner with retailers, apps and beyond creates a venue for financial institution to create meaningful, long-term relationships that can fuel growth for both parties.

Embedded finance will be a major player for financial institutions in the future, and offers a venue for scalable growth in the near and long term.