The benefits of embedded finance

As the fintech industry continues to change, accessible and straightforward interfaces for end users are key to helping financial institutions better engage their customers. 

One way many fintechs are creating a superior user experience for customers is with embedded finance. It’s a way to make financial processes like payments work seamlessly with other end-user platforms to make transactions easier and faster. 

When they can make transactions easily, your customers are more eager to buy, and your company gets more business. Efficient and user-friendly, embedded finance is a growing trend for many institutions, and it can offer a variety of benefits to your company.

Embedded Fintech Advantages for End Users

Embedded finance is increasingly common because it brings so many benefits to end users and businesses. It streamlines experiences such as shopping with buy now, pay later (BNPL) or loan programs, as one example. 

By cutting out a step in your customers’ buying process, embedded finance creates an interface that makes transactions easy. For instance, if there’s an option for a BNPL program integrated into a customer’s checkout process, they’re more likely to buy than they would be if they had to go through multiple steps and directly interface with a third party.

For users, the benefits of embedded finance include:

• Increased convenience.
• Faster transactions.
• A more accessible interface.

When they’re offered a process that’s easier to use and saves them time and energy, customers are often willing to spend more. The perceived value of usability and convenience is greater to many customers than the financial costs, making them more willing to take financial risks.

Embedded Finance Benefits for Fintechs and Companies

Embedded finance benefits companies as well as customers. As it engages customers and streamlines transactions, it also boosts revenue and brings in new resources for fintechs and companies.

Reselling a third-party service — such as promoting a lending service for customers to use when they buy your product — has been the common option for enterprises in the past. However, by giving your customer a single transaction interface instead of sending them over to use a second service, you can streamline processes across your company. 

Embedded fintech brings many advantages to your company, including:

• Generating additional revenue streams: Offering embedded financial services gives your company the chance to find new revenue channels. For example, you can earn up to 1% in revenue every time a client swipes a debit card (or uses it for online purchases) with Hydrogen’s debit card embedded finance features!
• Increasing your product’s stickiness: With a user-friendly interface that will improve the overall customer experience, your customers will want to keep using your products. 
• Increasing the conversion rate for your store or site: When transactions are more convenient, more customers will convert.
• Owning more customer experience data: Better understand how to serve customers by getting more visibility into their transactions.

You can use embedded fintech to your company’s advantage for many different business functions, from payment processing to payroll and insurance services to compliance management. Assess how you adapt it to your company’s and consumers’ needs, and be creative in how you make it work for you.