Recently we wrote about how the future of payments is embedded, and how multiple segments, together making the digital commerce ecosystem, will soon have the ability to provide a seamless payment journey to its customers.
Today we go a little deeper to understand what makes embedded finance special, or different and why all digital businesses should be willing to offer this feature as part of their overall offering.
- Personalization
All businesses today focus heavily on hyper-personalization, be it in the products, the offers, or the communication. Now, along with customized offerings, if the customers get the added benefit of tailored payment options and schemes as well, it will not only help the merchant or the business retain the customer but will also motivate the customer to increase their shopping basket value, ultimately leading to additional revenue for the business.
- Unifying the Purchase Cycle
Leveraging the power of open banking – getting access to customer’s financial data from the bank via APIs after getting the customer’s consent - the business can create and offer tailor-made financing options to the customer or can provide the best-suited insurance plan for the product bought, or in an ideal scenario – do both!
This not only helps the customer complete the entire purchase cycle – from identifying - to financing and payment - to post-purchase formalities like insurance all in one go but also simplifies the post-purchase management by reducing the number of stakeholders involved in the transaction to just one.
- Creating Strong MOATs
Embedded finance creates strong moats for businesses as it helps hold the customer from all ends (hence saving any churn) while creating additional recurring revenue streams for itself. A customer journey closed from all ends – if executed properly – is able to create long-lasting business loyalties which make the service switching cost for any customer very high.
Considering these salient features, businesses are seriously considering embedding finance into their core offerings. But it’s not that simple! Embedding payments and other financial services into a business is exciting but tricky.
Most businesses already operate on complex business architectures and have their own core capabilities. Adding an additional layer of service, as complicated as payments, can sometimes do more harm than good to the already operational business. It is because of the complexity of these services that they are mostly offered by established and experienced FinTech players.
But with Payments-as-a-Service catching up within the industry, and with the benefit of having open-banking-enabled financial services, the complexity of execution gets reduced significantly. All one needs to do is find the right technology provider!
Finding the right technology partner
For such situations, what businesses need is the right partner, an experienced payments technology service provider, who can provide the necessary technical know-how around payments business and a set of easy-to-integrate APIs to help the businesses easily integrate these capabilities into their core offerings and ensure that the customer completes the purchase journey seamlessly. By doing this, businesses will be able to offer the services of a FinTech, without necessarily being one.
At FSS, we are building future-ready payment applications and technology that will enable such integrations as well as nurture an ecosystem of innovation.
To know more, write to us at products@fsstech.com
