Capitalizing on the embedded finance revolution

Growth Reimagined Capitalizing on the embedded finance revolution

Here's what you can expect to find in our whitepaper:

Executive Summary
What is embedded finance…and why you should pay attention
Embedded finance value chain explained
Embedded finance market opportunity
Entering the market - strategic and technical considerations
Key takeaways

Executive summary

The concept of embedded finance is, at the face of it, a simple one to grasp, be it a loan at the point of purchase, or an insurance offer when you rent an apartment.

While it simplifies the lives of consumers everywhere, the embedded finance proposition is not a simple one to grasp from an investment perspective. Is embedded finance a fad or a revolution? And how should you approach it - whether you’re an established FI or a fintech looking to make its mark?

Embedded finance is here to stay

The reason you can be confident that embedded finance is not a fad is that it arrives on the wave of a much more fundamental shift in the way we do business in the 21st century.

It used to be enough to have a bold product, service, idea, and/or marketing approach. Just think Nike, McDonald’s, or American Express.

Today, you still need the above, but above all, you need a powerful alliance — an ecosystem. In a world made of specialists, it is necessary for partners with different specialties to come together in order to play on each other’s strengths and neutralize each other’s weaknesses.

Embedded finance is merely an embodiment of the much broader shift of value towards ecosystems. If you want to win in the market — you better bring an ally!

SMEs will fuel embedded finance growth

In addition to bringing the right allies and adopting early, an understanding of where the market is headed is crucial to success in the embedded finance market. The surprising part is that the future of embedded finance is B2B, not B2C.

SMEs are currently underserved by the traditional FIs, and they have been for a long time. They have trouble obtaining loans as they’re not as attractive to banks as their corporate customers, and yet have more complex needs than an individual. SMEs are also underinsured, and fly under the radar of traditional wealth managers and benefit providers. The list goes on.

And yet, SMEs are not intuitive to understand. Mom-and-pop shops actually prefer traditional FIs, while it’s the larger SMEs that have the opposite preference. Getting this segment right is not easy, but the ROI — as you will see — could be beyond your wildest expectations.

Flawless execution is essential

Traveling and charting new territory has been fraught with danger since time immemorial. The unexplored landscape of embedded finance is no different.

Ecosystems imply complex partnerships. Risks to one person are distributed to all partners. Add to that the regulatory complexity inherent to the financial services domain.

Each partner in the ecosystem will have to execute near-flawlessly and maintain both domain and technical expertise. Metaphorically speaking, they must speak the same language — even if it is not their first. Banks will need to have an understanding with their tech providers. Tech providers need to ensure not to run afoul of FS regulations. Each should choose your partners wisely.

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