Not every new innovation has to lead to the death of others before it. To some, the old guards need to be put down before new champions emerge from the ashes, but what ancient text actually made this a thing? This is where embedded finance stands out in the new world of possibilities for financial services, and reaching even more consumers than ever before.
On one hand , we have multiple financial service providers and on the right-hand-side, there are distributed financial services. Whoever you are on the left, you can participate on the right-hand-side because as long as you are embedding your service, you are fine. In a McKinsey & Co article on ‘What the embedded-finance and banking-as-a-service trends mean for financial services, it is emphasised that more nonbank companies are offering financial services, such as bank accounts or wallets, payments, and lending. The companies’ embrace of embedded finance—banking-like services offered by nonbanks—aims to retain customers and increase their so-called lifetime value.
Imagine Spar or Ebeano with a Kuda bank app of theirs. That is one of the possibilities embedded finance offers, yet, the bank with the underlying infrastructure does not get undermined. Every Spar customer using the app is able to pay after shopping at the hypermarket, and can also pay for their Uber ride home after shopping, pay bills, utilities or other services, all from that Spar or Ebeano app.