Embracing the Era of Embedded Finance
Whether as consumers or merchants, simplicity is key when it comes to purchasing goods and services. While merchants have historically offered in-app payment options, this is merely scratching the surface. Embedded finance represents a paradigm shift, integrating a spectrum of financial services into non-financial applications.
Embedded finance is rapidly replacing embedded payments as the ultimate financial solution to eliminate financial transaction friction. Independent software vendors (ISVs) empower merchants with a consolidated platform to manage their cash flow. From accepting payments to accessing instant capital loans without credit checks, merchants can benefit from a financial toolkit. Soon, even more services will be added that utilize artificial intelligence (AI) to predetermine the exact type of additional products a merchant might need and offer them at the right time.
By embedding a suite of financial services within familiar apps and platforms, ISVs enhance the user experience, creating a unified ecosystem for financial management.
For small- and medium-sized businesses (SMBs), the importance of comprehensive embedded finance solutions cannot be overstated. Typically, the median small business has about $12,000 in the bank; for SMBs, cash really is king. To make payroll, purchase inventory, and pay rent, they need real-time cash visibility. They need to know where it is (and that it’s safe), where it’s going, and how to get there without delay. SMB owners may not have a deep background in finance, so user-friendly interfaces and intuitive designs are crucial to ensure they can easily navigate and utilize embedded finance tools effectively.
For ISVs, embedding financial services within their business apps broadens their market appeal. It makes it easier for merchants to understand their entire money management chain, create multiple bank accounts to diversify locations for cash, access financial solutions when needed, reduce the time it takes to access funds, and strengthen protection against cybercriminals.