Articles

Embedded Fintech: Moving the World Towards Fingertip Finance

Getting comfortable with embedded fintech

Amanda Kilmer
Contributor
Date Published
(
February 10, 2022
)
Read Time
(
min
)

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Embedded fintech

Financial innovation can’t — and won’t — be ignored as it’s constantly driving business forward and bringing us along for the ride. As consumers, we’re often looking for new and easier ways to manage our finances, no longer wishing to be tied to traditional banking services. Consumers are seeking solutions that allow them to access their finances as they see fit. 

Mobile banking options are becoming particularly common and table stakes, making it easier for people to manage their bank accounts from their smartphones, along with applying for loans, signing up for credit cards, investing in stock, or buying cryptocurrency. Consumers are moving further away from paper and traditional finance methods while running towards solutions that are flexible, accessible, and easy to use.

Embedded fintech is one such way that banks and other financial institutions are attempting to provide a better customer experience for their users. By using embedded fintech, banks share their data with a third party which uses that data to develop software that improves banking operations. In other words, embedded fintech allows solutions to be created for banks. However, this is not to be confused with embedded finance, which refers to a third party like Bond using banking data to create financial products for a non-financial company. Embedded fintech improves upon the resources that banks already have, while embedded finance allows non-financial organizations to incorporate financial products and services into their business. 

Both embedded fintech and embedded finance are paving the way for better financial solutions of the future. Partnerships between banks and fintech companies are yielding positive, helpful results for consumers and this is even more relevant in an era where an increasing number of people are managing their finances online or in conjunction with a third-party service. 

The more options that are available to customers, the more satisfied they’ll be with the services provided, whether through a financial institution, an embedded fintech solution, or an embedded finance product. This is why it’s so important for banks and non-financial brands alike to continually search for ways to improve upon their existing services. They might come up with solutions on their own or look to embedded fintech examples for inspiration.

What is embedded finance?

Embedded finance allows third parties to utilize banking data in order to create financial products and services for non-financial businesses. As companies consider integrating embedded finance solutions, they should look at embedded finance statistics to get a better idea of how these solutions will impact their business and whether it’s worth investing in. There are also plenty of embedded banking examples one can research to better understand these types of embedded financial products and services. 

Bond is an example of an enterprise-grade embedded finance platform that allows users to build financial services for barbers, entrepreneurs, savers, wealth advisors — any company can fit this bill and build their own fintech. By leveraging a multi-bank, multi-vendor approach, companies can gain an edge on a host of features like getting to market faster, partnered with more flexibility and increasing FDIC coverage on deposits. Companies can build their next product using one modern and consistent set of Application Programming Interfaces (APIs), one secure connection, and one fully-featured sandbox

Additionally, with Bond businesses can monitor transactions across payment types and programs rather than integrating the data sources solo; the platform allows users to understand how their programs are performing using dashboards that show the health and growth of their business. This allows companies to tailor offerings to their end users, giving clients products that they actually want and will use while also creating new revenue streams.

Embedded finance use cases

To learn more about embedded finance or how to incorporate it into your business, there are plenty of embedded finance examples you can look at to get a sense of what these services entail; it can be especially useful to focus specifically on examples of embedded finance that relate to your industry.

Embedded finance use cases are also helpful in understanding what exactly embedded finance does. For instance, the Buy Now Pay Later (BNPL) model offers consumers the option to pay for their purchases over time through installments; a third party then helps facilitate these payments each month. Other use cases related to embedded finance involve QR code purchases, credit scores on banking websites, and educational expenses. There are many different ways that embedded finance can be used and new solutions are popping up all the time.

What is fintech infrastructure

Fintech infrastructure allows fintech companies to access banking data and offer financial services, even though they are not banks themselves; fintech infrastructure makes banking as a service (BaaS) and embedded finance possible. Fintech infrastructure requirements generally center around uptime and reliability, security, and compliance with local or national regulations. 

Fintech as a service (FaaS) platforms enable companies to offer financial products directly to their end customers through embedded fintech. This can be a great option for those that lack the tools and resources to incorporate fintech-related products solely on their own. As the demand for fintech grows, so do fintech as a service platforms. As fintech continues to expand, it offers new ways for banks to serve their customers and fintech infrastructure will grow alongside it. Better infrastructure leads to better fintech overall for everyone, so looking for ways to improve upon existing technologies is incredibly beneficial.

Fintech infrastructure companies

Established fintech infrastructure companies like Bond, Plaid, Square, and Stripe use banking data to erect platforms where a myriad of embedded financial products can be built. Financial infrastructure startups have something extra to offer in terms of new financial services and products like virtual credit and debit cards, access to lending, or credit-building charge cards. The top fintech SaaS companies are bringing new and exciting ideas to the space, contributing to the ever-expanding world that is fintech.

Bond is a fintech infrastructure company that brings together brands and banks to build well into the future of finance. Bond has an end-to-end software infrastructure platform that gives brands and banks the ability to connect safely and at scale to serve their customers and drive revenue. You can build financial services from Know Your Customer (KYC) to account opening and money movement to card issuance all in a single, unified platform.

Bond Studio allows users to easily build financial services right into their digital products. It bundles all the capabilities needed into one simple and intuitive experience so its customers don’t need third-party integrations or additional vendor contracts. Companies are able to avoid spending months evaluating sponsor banks and bespoke banking infrastructure vendors, negotiating arcane contracts, and struggling with incomplete documentation and poorly-designed APIs. Another offering from Bond is a full-featured sandbox that enables users to build their own vision of their products, simulate transactions, and flip to production without changing environments.

Embedded finance market size 

Consistently, the embedded finance market size is growing and this is good news for those businesses considering the implementation of an embedded finance strategy as they are likely to attract a sizable new customer base over time. Embedded finance startups are also becoming more and more common, seeking to expand the reach of embedded finance services and find new ways to bring those services to a wider range of users. 

While embedded finance is still relatively new, it can be difficult to predict an embedded finance market map. However, it is clear that embedded finance will help strengthen customer loyalty and open up new revenue streams for all involved. With that being said, now may be the best time for businesses to consider investing in embedded finance technology. Many customers are already using embedded finance services without even realizing it which presents an opportunity for ambitious companies to swoop in and fully show the benefits of embedded financial services

Embedded banking companies

Essentially, embedded banking is the same thing as embedded finance and is offered by banking as a service (BaaS) companies — embedded banking companies offer the tools necessary to create and implement a solid embedded finance service or system. Banking as a service companies allow digital banks and other third parties to connect and build new banking services. Brands then pay to access banking as a service platforms and are given access to the tools and information required to create these services. Embedded finance providers play a critical role in advancing embedded finance services and its technologies.

There are a number of advantages to brands using embedded finance platforms like Bond to create products for their customers. By streamlining the administrative burden of launching financial products so that Bond’s users can focus on building new customer relationships using powerful data and insights, Bond becomes a trusted partner to companies and proves to be an invaluable relationship for getting started with embedded finance products.

Bond OS provides all of the tools to launch and scale any program. This platform offers guided onboarding, performance dashboards, and transaction monitoring giving users everything they need to take their customers’ experience to the next level. For companies that lack the ability to perform these services independently, using a platform such as Bond is a great way to get involved with embedded finance.

Ready to chat to learn more? Contact Bond. Still curious? Jump into our sandbox and start building your fintech!