Amelia Hamer, Airwallex director of strategy, ANZ. Source: Supplied.
We all use ‘embedded finance’ products everyday. From purchasing items on Amazon, to catching an Uber or using points to book a flight.
It’s a term that sounds more complicated than it is. At its core, embedded finance involves embedding financial tools or services (like lending or payments), into a non-financial product. This enables customers to access financial services without leaving their preferred platforms, and allows businesses to offer financial products without having to worry about building out the infrastructure or acquiring financial services licences. Amelia Hamer, Airwallex director of revenue strategy, ANZ shares how to embed finance in products everyday.
For example, at Airwallex, we’ve been working with campervan and motorhome company Camplify to deliver an embedded finance solution so they can collect customer card payments from Australia and overseas. We’re also working with wealth management platform Stake to collect, convert and payout on transactions like share trading.
Embedded finance is a key component to successful business strategy in the digital world. Whether it’s helping to identify new revenue streams, reach new customers or deliver an exceptional customer experience, embedded finance can keep you one step ahead of the competition. These solutions offer a more seamless and integrated customer experience, and have the potential to drive significant growth and revenue for businesses.
The pandemic accelerated the digitalisation of businesses, such as high street retail stores, creating a large market for embedded finance. Pressured by a sudden and rapid change in market conditions, these businesses realised that regardless of the nature of their operation, integrating at least some financial service into their new online business model had to become an integral part of their ecosystem.
At first sight, the global economic situation – characterised by a slowdown in economic activity, high inflation and overall uncertainty – may signify that now is the right time to make major operational changes. It is during times like this when resilience and scalability will ultimately decide a business’s success.
If you’re a business owner and decide that an embedded finance offering is how you’re going to keep growing, how do you go about doing it?
In most cases, business scalability and product enhancement is best achieved by partnering with companies that focus on embedded finance solutions and adding these solutions to your business. This allows you to focus on your core competencies, while still offering a full range of financial services to customers.
To do embedded finance well, there’s a range of legal and technical requirements your business needs to take into consideration – but the good news is, these can often be taken care of by a fintech provider.
Laws require that banks make consumer data available to any third party if the customer requests it. This is called ‘Open Banking’, where any company can use technology to build applications, products and services based around the data traditionally held only by financial institutions.
What really helps Open Banking is the use of application programming interfaces (APIs). An API is effectively an extra layer of software that allows an application to exchange data and communicate with other applications. When a third-party application sends a request, the application will respond to that request with a particular set of data.
Providers like Airwallex allow companies to interact with customers through the Airwallex Open Banking Service. The API acts as the ‘key’ for us to interact with our customers’ applications and products to implement embedded finance solutions for them.
The current state of embedded finance tends to be focused on banking and digital platforms for startups and SMEs, but we can all see that technology, market conditions and customer needs are constantly evolving. All this means even more accessible financial services that help create an even better user experience for your customers.
The good news is that enabling this experience doesn’t mean a total business redesign.
You can easily scale and enhance what your business offers by partnering up with companies that focus on embedded finance solutions and adding these solutions to the ecosystem of your business.
Airwallex is a global fintech payment platform with a mission to empower businesses of all sizes to grow without borders, and by doing so, contribute to the global economy. With technology at its core, Airwallex has built a global financial infrastructure and platform to help businesses to manage payments, treasury and expenses internationally, without the constraints of the traditional financial system. Today, the business operates with a team of over 800 employees across 12 global offices.
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