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Embedding Finance: A Solution for Companies to Stay Ahead in the Evolving Payments Ecosystem


The rapid growth of ecommerce is shining a spotlight on payments ecosystems, and whether businesses can keep up with evolving customer demand. Customers expect multiple payment options and high-quality service. The market evolution pushes payment companies to deliver high-performance and resilient payment infrastructure.


The challenge for companies is to deliver on these fronts without losing focus on their core business. Winning in this environment starts with leveraging the infrastructure of third-party providers.


Adopting an Embedded Finance Approach

Not too long ago, companies would typically approach a bank if they needed to set up a financial service involving payments. But today, they can access such services via an ever-expanding pool of software applications, available across multiple channels including mobile and web.


Companies seeking to increase their customer lifetime value can leverage financial services from fintechs that offer their products as a service. Seamlessly integrating financial products and services into a company’s broader offering is known as “embedded finance”.


Many companies are already using embedded finance to increase their value proposition and customer loyalty. For example, digital banks leverage the infrastructure of third-party providers so that their customers can get debit cards, buy and sell cryptocurrencies, send money overseas, buy and sell stocks or gold, get insurance and even loans. At the same time, they’re able to focus on expanding their core business.


Big tech companies, such as Airbnb, Grab, Uber, and Amazon also now offer a range of financial services to their customers, from debit cards, instant payouts and currency exchange to loans. Meanwhile, most telecom operators now offer digital wallets and innovative solutions for cross-border payments direct from their software application.


Driving Value and Sustainable Growth


By adopting the embedded finance approach, companies can develop a wide range of new offerings including lending, global payouts, trading, and card issuing, while also improving and streamlining their internal operations. Overall, the unit economics are better for all parties and the value created is augmented by their existing consumers or businesses.


Take the example of a marketplace containing thousands of businesses that it helps to connect with buyers all over the world. Typically, these businesses need a fast and reliable way to pay supplier invoices in different countries – a process that requires an extensive payments network and specialist knowledge. Where the marketplace lacks these capabilities, it makes economic sense to turn to embedded finance providers such as Thunes to provide them.


Or think of a bank looking to gain competitive advantage by enabling their customers to send funds quickly and easily between different countries. By leveraging the capabilities and API of an embedded finance provider such as Thunes, banks can offer this service in their chosen markets without first having to build their own technical stack. Thunes is a plug-and-play technology provider, so it’s a simple process for banks to connect its systems to their payment infrastructure. The benefits aren’t just technical, however – they’re also regulatory and operational. A payments-as-a-service solution can result in faster, more efficient service delivery, which in turn can support more competitive pricing.


Enabling Future Success

Today, payments-as-a-service providers are helping companies build and scale financial services capabilities by eliminating complexity, via API integration. Launching a new bank, sending funds all over the world, or offering credits has never been easier. The trend for embedding financial services within a large pool of applications is accelerating, driven by vendors such as Thunes that deliver financial infrastructure. Companies that take advantage of this will gain better unit economics, along with improved customer loyalty and a boost to their value proposition.


Will yours be one of them?


 

ARTICLE WRITTEN BY: THUNES

Thunes is a part of our Batch 5 Fintech Program in Singapore. To find out more about our programs in Singapore, click here.

Interested in joining our programs, click here.

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