EMBEDDED FINANCE: ECOSYSTEMS
Embedded finance: A combined effort Global financial software solutions company, Finastra, recently hosted a panel looking at the future of contextual finance and BaaS. These are the key takeaways… Customers are required to place a lot of trust in their banks: they rely on them to take actions on their behalf that will benefit them. The events of the past two years could be seen to have tested that trust, bolstered it, or made it more necessary than ever. That was the opening gambit in a Finastra panel discussion earlier this year, which looked at the future of contextual finance and banking-as-a-service (BaaS), and the best way to handle potential challenges ahead. The event was hosted by Finastra’s Angus Ross with contributions from Eli Rosner (Finastra), Andy Hirst (SAP), Mark Williamson (HSBC), and Valli Ardalan (Visa). For Mark Williamson, maintaining the trust that HSBC has earned over more than 150 years, with both retail and corporate customers, is incredibly important. Embedded finance, he believes, will help cement the bond. HSBC’s goal, he said, was ‘putting finance in the right place, at the right
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TheFintechMagazine | Issue 22
time, for our customers’. Which is precisely what contextual or embedded finance sets out to achieve, too: being able to access services and make transactions at any time, from any place, and do it in a way that’s accessible, efficient and woven into the customer journey. And if providers can deliver those benefits at pace – preferably, immediately – then even better. Visa’s Valli Ardalan saw the pandemic as a catalyst for change, a trigger for the evolution of embedded finance. “Businesses have been forced to re-examine the way that they pay and get paid, to stay ahead of it and, ultimately, thrive in today’s environment,” Ardalan told the panel. So, who holds the keys to this evolution? The banks, the retailers and their payment processors, or the fintech aggregators and ‘embedders’? The panellists tended to agree that, in this age of contextual finance and BaaS, there was no single winner. What there was, however, was a recurring theme of collaboration. No one has all the numbers on the bingo card. Rather, it is the
communication between all the various actors that drives the market forward. Finastra’s Eli Rosner described it as ‘a push-pull game’. He painted a picture of money coming in from big brands and corporations; larger institutions like HSBC and Visa analysing the dynamic demands, so that they could step forward and provide the capabilities necessary to meet them; and, at the heart of the operation, organisations like Finastra, which bring the two sides together through an open financial ecosystem, connecting thousands of relationships. So, if you follow the money, what you see is a supply chain that requires clear roles, with all players doing their bit. The panel heard that global, regulated banks like HSBC are continually looking at how they can embed financial services into the digital ecosystem. Visa sits at neither the beginning nor the end of a payment transaction, but it is working on its network-of-networks strategy with a view to being a single point www.fintechf.com
