Embedded Finance: Service Categories Enabled
The Embedded Finance trend may have began with enabling payments (think Uber); but it continues to grow and expand into enabling all kinds of financial services, from lending to investment, & even insurance. Here are the main categories of Financial Services being enabled, along with selected examples. All of them add value to end-customers (both consumers & businesses), by making these more easily accessible, and linked to what they are trying to get done.
Payments
Tik-Tok has partnered with e-commerce giant Shopify so that users can experience in-app shopping experiences. Many of Shopify’s customers are quoted saying that social media has been key to their sales. This partnership helps creators and users by decreasing the number of actions to complete a purchase (thereby increasing sales).
Lending
Small businesses (and small business distributors/ embedders) now have access to technology like Previse: an AI-based solution that helps track which invoices are unlikely to get paid so businesses can seek prepayment/ advances faster. Previse can embed its service in Purchase-to-Pay platforms, payment processing platforms, and Enterprise Resource Planning systems.
Saving
Savvy is an embedded savings app aimed at young Indian citizens looking for easier ways to save. The team shared that their app can be embedded into any financial or non-financial app to boost the ease of saving as a by-product of other actions in a distributor/ embedders environment.
Insurance
Tesla has entered the insurance market by allowing drivers to purchase insurance directly from their Tesla app. A driver’s real-time driver behavior determines their premium. While novel, this has limited the service to certain states only.
Investing
The world of investments in equities and ETFs is well-established and has many players. But newer advisors (aka. ‘robo-advisors’), including Wealthfront, Betterment and Personal Capital (now part of the Empower.com have not only automated much of the investment process - they also have embedded high-yield cash accounts into their platforms.