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Financial Services Here, There and Everywhere: The Embedded future of Finance Opening access to customer data and functionality in banks platforms has given way to an avalanche of innovation as fintechs find new opportunities to create value for financial organizations and their customers. Innovators in this space are only just starting to uncover the huge potential that lies in the access, analysis and transfer of data, revealing patterns that anticipate customer needs and enable, highly personalized, immediate and convenient services. By Chris Crespo
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mbedded finance is an evolution of Open banking, the colloquial name given to a concept brought about by an EU directive requiring banks to create digital interfaces to data and functionality in their banking platforms. The aim was simple, make data a shareable asset by enabling it to travel securely between a customer’s bank account and any authorized third party. Yet, the whole concept of openness was a significant departure from a culture of confidentiality, self-sufficiency and tight regulation that has always permeated financial services. Today open banking is a reality on which many companies are building new services, business models and exciting ways of serving customers. With the rails in place, a spike in innovation has led to businesses like retailers, airlines, utilities, and other financial institutions, to integrate financial services like payments, insurance, and even investment into their customer experiences. “It is about increasing business and getting more loyal customers” says Fredrik Neumann, Nordics Country Manager for Worldpay. “If you can offer more value to the customer by adding, not only the
payment part, but lending, insurance, and other financial services into the customer experience you can increase business and create a loyalty component in the experience”, adds Neumann. Embedded finance is a lifestyle The idea of embedding financial services in unlikely places has been a reality for several years in other markets. In Asia where embedded finance has become a lifestyle, users of mobile Super apps can access an entire service ecosystem with a common financial layer that enables them to transact with one another. Back in the Nordics, where no clear Supper app has yet emerged, the trend is developing in a multipronged way. Frontrunners are leveraging the new digital interface infrastructure to develop narrower customer value propositions along several financial services. Embedded Payments The idea behind embedded payments is that it makes little sense to ask customers to repeat a payment protocol every time they want to make an online or mobile purchase. Instead, by embedding the payment process into the purchasing process the whole experience becomes
Fredrik Neumann Country Manager Nordics, Worldpay Solutions
seamless. Through embedded payments, customers need to complete a one time only step, that links their bank account to the merchant. After that, the customer is free to transact with that company without friction. Nordic users are familiar with this form of embedded payments from companies like Wolt, Lime, or Share Now. Once an account is setup and linked to the user’s bank, they can eat, ride or drive and technology takes care of the payment in the background. Embedded level: “Stealth Mode” A more extreme example that made its debut in the US back in 2018 with Amazon Go stores, but that is now available in the Nordics through walk in, walk out stores in Sweden and Finland, lets customers take items from the
