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Designing an embedded finance strategy that works for your business

Dubai, UAE - November 04, 2021

“In the not-too-distant future, nearly every company will derive a significant portion of its revenue from financial services” – Angela Strange.

Embedded Finance is transforming global consumer purchasing habits, allowing non-finance companies of all shapes and sizes to capture payment and lending service opportunities as additions to their existing business models.

Although they didn't have much choice, Shopify, the online storefront provider, provides merchant loans, payment, and other financial services to its ecosystem. Shopify is a great example of a company that has embraced this golden opportunity and experienced explosive growth because of it.

According to an article written by Protocol, “Its gross payments volume, a measure of gross merchandise volume processed in-house through Shopify Payments, was $17.3 billion in the first quarter, or 46% of GMV processed, up from 42% in the same period a year ago.

Many of the biggest organizations around the world are also seeking innovative ways to bring the ease and simplicity of digitized payments into new verticals within their businesses.

By simply adding embedded finance into your business though is not enough, how can your organization reap the benefits of embedded finance in a way that adds real business value?

In this article, we will help you navigate this complex ecosystem by designing an embedded finance strategy that works for your business and understanding the various available opportunities for embedded finance.

How to design an effective embedded finance strategy?

1. Identify your Embedded Finance needs

As with any other strategic decision, you need to identify the goals of an Embedded Finance solution. Find out how to leverage financial services in a way to better serve your customers, better retain them, and drive more margin. Here are some questions that might help you decide:

  • Is it going to answer consumer needs/solve a problem they experience?
  • Are you launching an entirely new venture to fulfill a specific need?
  • Are you aiming to increase loyalty or add additional revenue streams to your business?

2. Understand the ecosystem and find your position There are several methods to embed finance and banking programs into a non-financial business. To engage embedded finance in a meaningful way, you need to decide on the role you want to play in this model.

Opportunities for Embedded Finance

A. Embedded Payments

The integration of a payment infrastructure to foster seamless payment processes within an app or platform is referred to as Embedded Payments. Payments generally represent the basic financial service to be embedded into a non-financial product experience. Embedded payments have evolved to essentially become a fundamental part of the value proposition of any SaaS or E-commerce platform. Subscription-based payment for SaaS platforms, E-wallet integration in E-commerce platforms, payroll automation software, and more are all examples of Embedded payments.

B. Embedded Card Payments

Embedded cards allow organizations to simplify the process of paying employees and contractors and digitize a number of business payments. Companies can transfer funds electronically into their own branded cards without the need of issuing a check or making direct deposits.

SimpliFi offers card issuing services in MENA and Pakistan. We offer multiple customized card programs – Corporate Partner Payouts, Corporate Spend, Buy Now Pay Later, and Consumer Spend cards.

C. Embedded Insurance

The embedded insurance model represents the bundling of coverage or protection with the purchase of a product or service. It entails abstracting insurance functionalities into technology enabling a third party to seamlessly integrate innovative insurance solutions.

It is transforming the insurance distribution model. Embedded Finance companies provide transactional APIs which allow insurance solutions to integrate with apps and websites.

D. Embedded Investment

Investing often seems complicated and out of reach, and this is exactly where Embedded investment comes into play. It allows platforms to integrate stock market investing into their service offerings. They are professionally managed portfolios made accessible through consumer apps. Portfolios are automatically adjusted based on the market and accordingly, money is automatically transferred to user accounts.

Want to find out more? Get in touch with our team today!