Stripe Treasury<\/a>, which enables its customers to embed financial services into their own platform. With help from bank partners, it offers platforms the technology to create accounts, offer digital wallets, and issue cards.<\/p>\nThese are just a few examples \u2013 these companies are quickly expanding the banking and financial services their customers can get directly from them.<\/p>\n
But according to Rick Oglesby, president of AZ Payments Group, the offerings are going beyond these broad, high-profile solutions to more specialized niches as well. As just one example, software platforms in the property management industry are enabling tenants to finance security deposits, he said.<\/p>\n
Why have these companies stepped into territory that was historically left to its own providers? According to Mike Bradley, senior vice president of growth for Infinicept, the reason is simple. Companies have started offering these services because of the value they provide for their merchant customers.<\/p>\n
\u201cFor customers of these embedded financial services, this mode of distribution [getting short-term financing, for example] through your relationship with your payment provider becomes more seamless and more tailored to that merchant\u2019s needs,\u201d Bradley said.<\/p>\n
These new providers are able to add these new offerings this because of what Bradley calls \u201cdisaggregated finance.\u201d<\/p>\n
\u201cThe monolithic value chain that was a bank is now being broken down into many discrete, a la carte services,\u201d he said.<\/p>\n
These new a la carte offerings have created new, strong business models and opportunities, Bradley said.<\/p>\n
Oglesby agreed. As a result of this movement, he said, companies that enable embedded finance offerings \u2013 such as banks, merchant acquirers and other fintech companies \u2013 have begun investing heavily in their product sets to offer these more expanded options.<\/p>\n
That has allowed software companies to incorporate new services into their own platforms with relative ease. In addition to deepening and strengthening their relationships with their customers, the offerings are providing new revenue streams as well.<\/p>\n
And many software companies already embedding payments within their platforms have found that going farther is a natural fit.<\/p>\n
\u201cWhat is currently evolving is the recognition that embedded payments companies provide a critical aggregation point in terms of numbers and deep insight into those merchants,\u201d Bradley said.<\/p>\n
\u201cAnd notice that we use the term \u2018embedded payments\u2019 companies, and not just \u2018payments companies,\u2019\u201d he said.<\/p>\n
\u201cBy definition, embedded payments companies have far greater data set for a given merchant than a traditional payments company \u2013 the embedded payments company \u2018metadata\u2019 of the merchant and its transactions enables these new modalities of financial services.\u201d<\/p>\n
The hot new thing is not without its challenges, however. Navigating the players, their offerings and the regulatory structures that impact the different types of financial services creates some hurdles.<\/p>\n
\u201cIt\u2019s still early in the adoption cycle, so it\u2019s tough to source niche solutions. Even the broad market products are new and offered by only a few enablers,\u201d Oglesby said.<\/p>\n
So, is offering these new services for everyone?<\/p>\n
Both Bradley and Oglesby say companies should take a careful look at what makes sense for their own customers. And start by building out from what you have, Oglesby said.<\/p>\n
\u201cThey should build their business cases around high-probability, more-proven revenue streams and product, like payments. They can then incrementally expand into additional areas,\u201d he said.<\/p>\n
Beyond considering the most appropriate financial services for your own company, you should also take a look at what your requirements would be for market coverage in the geographies you\u2019re hoping to reach, Bradley advised.<\/p>\n
Finally, you\u2019ll need to evaluate your options for integrating the services into your platform.<\/p>\n
While it may not yet be your company\u2019s time to expand into embedded finance, Bradley says that time is likely coming.<\/p>\n
\u201cEmbedded finance will become a competitive imperative. Established embedded payments companies have already launched embedded finance \u2013 or, you can bet, will do so in the near future,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Firmly planted at the center of their business customers\u2019 operations, software companies provide the essential tools businesses need to succeed. Now, many are expanding into financial services traditionally offered by other providers. These services include things like deposit accounts and lending. You could think of the expansion into payments as the first wave of this…<\/p>\n","protected":false},"author":43,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_FSMCFIC_featured_image_caption":"Image Source: Shutterstock","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[1023],"tags":[],"class_list":["post-7549","post","type-post","status-publish","format-standard","hentry","category-business-economics-learn"],"acf":[],"_links":{"self":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/7549","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/users\/43"}],"replies":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/comments?post=7549"}],"version-history":[{"count":1,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/7549\/revisions"}],"predecessor-version":[{"id":7550,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/7549\/revisions\/7550"}],"wp:attachment":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/media?parent=7549"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/categories?post=7549"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/tags?post=7549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}