FINTECH FOCUS: EMBEDDED FINANCE ‘Embedded finance should be everywhere the customer needs it to be‘. That user-centric vision of financial services is redefining both individual and corporate relationships with the institutions that have facilitated finance for so long. But what does it mean for traditional business models? “It’s a powerful shift,” says Florian Redeker, VP of Product at German Solarisbank, which, with its European banking-as-a-service (BaaS) platform, is doing its best to disrupt those models. “Before, the incumbent banks were able to get away with subpar user experience because they had a monopoly on their processes and market entry barriers were so high. There was no incentive to
improve because they had built this walled garden and they had it very comfortable in there. Maybe those times are over, because, with technology and a new view of finance, it is possible to create seamless user experiences and deeply integrate those financial services into a multitude of use cases. This is what people care about. “With embedded finance and BaaS, we make banking a commodity. We do our best to move financial burdens to the background." You only need to have taken an Uber ride once to know what that means for a truly painless customer journey – quite literally. Those in the driving seat are benefitting from embedded finance, too. Uber Instant Pay uses Visa rails to allow the ride-hailing firm’s employees to cash out their earnings up to five times a day using the Uber Driver app. But Redeker’s concept of ‘commodity banking’ is, of course, anathema to legacy banks, who fight for brand recognition every day. Should they – and can they – keep doing what they’re doing, or is their destiny to become anonymous and leave the customer dog fight to others? According to Agnieszka Walorska, executive director at global technology
and management consultancy Capco and founder of Creative Construction, the design consultancy it acquired in 2020, ‘the battle is not yet lost or won’ for legacy institutions… but the future is unclear. It depends on what, as-yet-unimagined, applications emerge of embedded finance – or what Walorska prefers we call ‘contextual’ finance, because it’s basically in the context of whatever the customer happens to be doing at the time. “Being right there where they need it –this is the future,” she says. “We will see more and more finance in every service.” Customer experience – be that an individual or a business – is the key here. Retailers ‘got’ that decades ago, which is why brands like IKEA and Apple are now so keen to enter financial services, not necessarily because they’re empire
Magıcal bankıng Technology is sprinkling the fairy dust of frictionless journeys on everything from trade finance to Uber rides. So where does that leave the traditional bank? Michael Pierce from Mambu, Florian Redeker of Solarisbank and Capco’s Agnieszka Walorska conjure up ideas
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TheFintechMagazine | Issue 21
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