Embedded finance is revolutionizing access to financial services.

Embedded finance not only makes financial products more accessible, it redefines the way these services are integrated into people's daily lives. This approach accelerates time to market for new products and services and allows companies to offer financial solutions through integrations with partners without having to be a traditional financial institution. This democratizes access and raises the bar, as traditional players who previously had exclusive control over the service offering no longer enjoy this advantage.

What is embedded finance?

Embedded finance is the integration of financial services into non-financial platforms such as applications, services, or products. In other words, users do not need to interact with traditional banks. This model makes it possible to offer solutions such as payments, loans, insurance, or savings in a seamless and accessible way.

Segments Underserved by Financial Services

Embedded finance offers a great opportunity to engage segments underserved by traditional financial services:

• Unbanked: Individuals who do not have accounts with traditional banks and have been victims of fraud or mismanagement in the past, leading to distrust of financial institutions.
• Underbanked: Individuals with limited access to financial services, often have difficulty obtaining credit or managing their debt.
• Banked, underrepresented: Those who have access to banking products but feel that traditional banks need to adequately understand or meet their needs.

Use cases for embedded finance.?

Some sectors are already using embedded finance to create value:

1. Transportation and mobility: Transportation apps, such as those used by motorists or delivery drivers, have integrated microloans directly into their platforms. These loans allow users to access funds to cover immediate expenses, such as vehicle maintenance or equipment purchases. Offering this financial solution without going to a bank removes a traditional barrier, improving efficiency and user experience.
2. Health and wellness: In the health sector, companies are integrating health insurance and treatment financing options into their platforms. This allows users to pay for medical consultations or treatments without interacting with traditional financial institutions, making access to healthcare faster, more flexible, and more accessible.
3. HR and employee payments: Integrated digital account solutions are gaining popularity in the HR space. Companies can now offer employees banking services such as payroll, savings management, and even personal loans directly from their platforms. This type of integration improves the agility and efficiency of internal financial management and provides benefits that increase employee satisfaction.
4. Retail and e-commerce: E-commerce platforms and major retailers are using embedded finance to offer instant loans or installment payments directly at the point of sale. Companies such as Amazon have integrated financial services to allow customers to finance their purchases without going through traditional banks, improving accessibility and the shopping experience.
5. SMEs and small businesses: Small businesses are embracing the embedded finance model to access quick loans and credit services without the time-consuming paperwork of traditional banks. By integrating these solutions directly into invoicing or inventory management platforms, SMEs can access financing more quickly, facilitating their growth and expansion.

Embedded finance changes the market

The great attraction of embedded finance is its democratization. In the past, traditional banks monopolized access to banking products. But today, more than 50% of banking products can be delivered through embedded finance.?

This model not only accelerates time to market but also creates a more robust value proposition for customers by offering products that are more tailored to their needs and consumption habits. Fintechs, technology companies, and even retailers now have the opportunity to offer banking services directly to their customers through partnerships with financial service providers.

The opportunity to bring everyone into the financial system

Embedded finance is not only a competitive advantage; it is also a tool for financial inclusion. It makes it possible to offer solutions to those who have historically been excluded from the financial system. This not only democratizes access but also opens up new business opportunities as companies of all sizes can offer customized financial products.

As a strategic partner, Crombie can help you integrate financial services into your platform through software development. This will enable you to harness the full potential of embedded finance to enhance the user experience and provide accessible and tailored solutions.

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