[Flourish Conversations] Embedded Finance Plumbing
With the pandemic and economic lockdowns, people around the world adopted new habits - work from home, online shopping and online banking. The trend of introducing traditional financial services—such as online payments and online credit—into apps that consumers use daily took off.
We think about this technology trend as “Embedded Finance” (where financial transactions are integral to an app’s functionality) and break it down into three components.
- Platforms that are online, relevant and immediately helpful to people in their daily lives. These include gig worker platforms that offer online jobs; logistics platforms for online deliveries; agritech platforms to connect farmers with online customers, and social media platforms for online postings and interactions. All of these platforms have rapidly growing users, enjoy customer trust and high engagement, and generate proprietary data and insights into online behavior.
- Plug-in products that can leverage the high engagement and data insights from digital financial services such as online shopping and online payments and provide faster, easier, less expensive services than those from traditional financial providers like banks and insurance companies.
- Plumbing—or the backend and technology—that connects these new online financial services and consumer apps with the required regulated balance sheets or capital markets that finance and manage the risks of the required financial intermediation.
Gain an in-depth understanding of each of these three components with our three-part series.
Embedded Finance allows traditionally non-bank businesses—such as consumer tech companies, retailers, small businesses, and manufacturers—to provide financial products within their offerings and better serve their customers. Financial products like payment options, credit, and insurance are being offered within apps and saving customers time, money and resources. Now, as the world moves increasingly online, consumers and small businesses can achieve their goals through easier, more transparent and embedded access to financial services.
The second panel in Flourish Ventures’ 2021 Embedded Finance Series tackles the plumbing that connects digital customer interfaces and product providers with the regulated balance sheets and/or capital markets needed to finance and manage the risks on the back-end.
Venture Partner Sarah Morgenstern will sit down with three leading global fintech founders from Unit, a U.S.-based banking-as-a-service platform; YAP, an API platform for banking and payments products in Asia, and Brazil-based SWAP, a platform that powers businesses to embed financial services to discuss:
- What pain points they solve and the use cases they enable
- Why and how infrastructure tech stacks differ across the globe
- How leading market players differentiate themselves
- What ecosystem developments are needed to accelerate market innovation
- Where embedded finance is headed next, and how plumbing solutions might evolve