Embedded Finance and Its Many Use Cases

"Embedded Finance" is not a mere buzzword: It's the path non-financial institutions increasingly embark on to make financial products related to their products directly accessible –? thus becoming more attractive for customers and merchants alike.

But the term "Embedded Finance" encompasses a sprawling variety of different financial services such as:

Embedded Payments

Companies offer payment services directly on their platform. It’s a common use case for any platform selling goods and services on the web. A BigTech company branching out in various fields and markets will probably consider?launching its own payment solution, too. Or even settle for?an electronic wallet system with balance management and payment options?in line with their business.?

Embedded Lending

Companies present one or several loan options to “clients”, enabling them to buy or enjoy a service without disposable funds. “Client” is a varied term here: While some companies concentrate on deferred payments and loans to end-customers, marketplace platforms like Amazon often feature business loans to their merchants or suppliers as well.

Embedded Banking

Companies offer various banking services like saving accounts, transaction management or credit card issuing. Sometimes the term is used almost synonymously with Embedded Finance, as most financial transactions are backed by banking infrastructure. And where the non-financial company caters to a specific customer group, we could argue their Embedded Banking offerings represent?a form of Vertical Banking.??????

Embedded Insurance

Companies offer insurance products right beside their regular portfolio. For e-tailers and online marketplaces, insurance offerings are a natural fit: Customers may make expensive purchases and some will want those purchases to be protected in case of loss or damage. As with Embedded Payment and Banking, such offers have Insurers as service providers behind them, often connected via API.

Embedded Investments

Companies present would-be investors with a shortcut to the stock markets. They no longer need to leave their favourite retail or social media platform to trade. In the latter case that’s very convenient, as they get the latest news and market influencer news delivered to the same platform. But Embedded Investments are not only composed of stock trading. We can class mutual funds, retirement plans, crowdfunding – even?trading with NFTs?– among Embedded Investments.

Or Embedded Anything…

There is plenty of room for use cases not neatly fitting into the above categories. Our scenario of buying and trading valuable collectables in video games would stand as an example for such a more exotic use case.

Want to learn more about Embedded Finance? Check out the full article!