What is Embedded Finance? Impact on FinTech Industry

Learn what is Embedded finance and its impact on the FinTech industry that is creating new prospects

Embedded Finance can be defined as non-financial companies offering financial services such as e-commerce websites and mobile applications. The impact of FinTech Industry embedded Finance is that it creates a more convenient user experience and enables FinTech companies to expand their reach by partnering with non-financial companies.

Embedded Finance is a new trend in the FinTech Industry that can help improve customer experience, reduce costs and increase operational efficiency and create new opportunities for innovation. The benefits of embedded finance are making financial services more accessible, increasing competition in the industry, and also drive the growth of digital payments. As the benefits are many, so do the challenges since embedded Finance faces competition in the same industry. They need to comply with the same regulatory requirements as traditional financial institutions, particularly for small and medium-sized enterprises. A few examples of embedded Finance are Embedded payments, embedded credit, embedded insurance, and embedded investments.

Embedded Finance had a significant impact on the FinTech Industry, the major being the ability to reach to new customers by partnering with non-financial companies. Users can access financial services without switching to different applications or websites. Thus, another impact would be improving customer experience. Customers use different apps and by integrating a banking app into an online shopping app, users experience a more convenient and efficient experience, thereby building a stronger relationship with customers. New revenue streams pop up as companies find new ways to add value through embedded Finance. This is through integrating Financial services into their platforms without building and maintaining their financial framework. This reduces costs and increases operational efficiency for businesses. The partnership between businesses or brands and financial providers is necessary to gain strength across sectors or companies. Additionally, as financial services become widespread and more non-financial companies come up, the existing financial companies will rethink business models as they compete for new frontiers. In short, embedded Finance transforms and has a greater impact on FinTech Industry by improving user experience, creating new opportunities for innovations, and increasing operational efficiency for the business.