In the past year, we have seen more non-financial organisations offer financial, banking-like services, from wallets to credit-based payment plans. As predicted by Angela Strange, General Partner at Andreessen Horowitz in her well-known speech, “..nearly every company will be a financial services company” as a result of embedded finance technology. An innovation that is predicted to more than triple its market value in 5 years.

WHAT IS EMBEDDED FINANCE?

Embedded finance is the integration of financial services and banking software in other industries, through Banking-as-a-Service (BaaS). Here, non-traditional banking companies can offer these financial services within their own platforms, i.e. websites, mobile apps and without directing users to third-party platforms.

These financial services can be employed in a wide range of industries as a simpler and more convenient way for customers and businesses alike to access financial services.

For example, ride-hailing services like Uber could offer personal car loans to drivers on their platform. These loans may be dependent on driver ratings, distance travelled and other information. Loans could then be repaid in instalments or as a percentage of every ride fare.

Payroll platforms could also offer credit options like payday loans and salary advances to employees at friendly, affordable rates. 

HOW TO APPLY EMBEDDED FINANCE

There are many ways to apply embedded finance, and here are a few examples:

1. Investing: Users of investment and stock-broking applications are able to buy and sell stock and other investment options on their own terms. They are able to invest according to their financial habits and do so periodically.
2. Buy Now Pay Later (BNPL): Just like with credit cards, this is an option that empowers shoppers to buy what they need now and repay over time. Here, the amount of credit provided is dependent on the user’s creditworthiness and transaction history. It is a win-win situation for consumers and merchants because consumers can buy higher value products while staying within budget, and businesses can sell these high-value goods off faster.
3. Insurance: This gives customers access to specific insurance options for their products. For example, an automobile-selling platform may offer insurance services upon car purchase. This is an easy, convenient way of managing insurance payments.
4. E-commerce: Just like the BNPL model we saw earlier but on a larger scale. Credit products can be embedded for MSME customers on B2B E-Commerce digital platforms. They offer in-context loans to merchants at the point of sale and make credit more accessible. From merchant cash advance to buy now pay later, there are various ways to implement this.
5. Logistics: Logistics platforms may provide flexible business loans to MSMEs, allowing them to pay logistics fees at a later date or periodically. This helps their customers fulfil more on-demand while increasing the total business done on the logistics platform.

HOW HOLLATAGS CAN HELP

Our  APIs are unique and efficient, allowing you to build unique mobile features that all kinds of customers can access with or without mobile internet. With our APIs, your customers can utilise USSD, SMS or voice calls to:

• Initiate transactions and interact with your automated systems
• Access digital wallets, make mobile peer to peer or utility payments,
• Check their balance and transaction details,
• Receive notifications, alerts, and updates via SMS
• Subscribe, update or cancel subscriptions and so much more.

These features are not limited to smartphone owners alone, any customer with a phone is able to carry out transactions with all kinds of phones. Other use cases include a Text-To-Speech solution for the visually impaired or users looking to interact with your system in multiple languages via voice. With the increased levels of accessibility and financial inclusion our services provide, embedding financial services to cover all kinds of customers is easy.

SUMMARY

Embedded finance is a game-changer. It is consumer-driven, providing users with convenient financial services and business owners with new revenue streams. It also gives non-finance organisations an opportunity to set themselves apart from their peers, building customer loyalty and trust.

As more businesses adopt this model, customers may begin to demand more from their current service providers or turn to other platforms that provide these services. Why not use HollaTags’ APIs today to stay ahead of the curve?