Banking and financial services of a non-bank company?

Embedded finance platforms benefit businesses and change the financial sector

By Philippe Buschman, CEO and Co-Founder, AAZZUR

According to integrated finance expert Simon Torrace, brands and businesses today “are looking to add more functionality and value to their customers, and financial services are a very attractive part of that. It’s a way for all kinds of businesses in all kinds of industries to integrate into people’s daily activities, create new relationships with their customers, and help businesses think differently about their space in the world.

Now, if you had asked someone 10 years ago who they thought would provide these financial services, they most likely would have said banks. Indeed, since companies offer additional financial services (like loans or credit cards), these services are mainly provided by banks.

And while far from the frictionless user experience available to consumers today, these are truly the earliest examples of integrated finance – that is, the integration of financial services into non-financial spaces – it is just that no one called it that back then.

But, for the most part, today is not banks offering these services. They are fintech companies. “Buy Now, Pay Later” (BNPL) through companies like Klarna and Afterpay; payment rails and digital wallets from Railsbank and Treezor; Financial Exchange and Wise Transfers; and aggregators like my company AAZZUR, which bring all these services together in one place.

Today, thanks to these innovative fintechs, companies and traders from all sectors are improving their own offer by adding financial services. In the UK, Germany and Belgium, 75% of retailers are using integrated finance to offer credit cards, BNPL programs and loyalty incentives, while 56% plan to introduce other financial services into a near future.

There are several main reasons why integrated finance is becoming so popular among businesses.

Additional revenue streams and increased KPIs

In addition to their main offer, companies can offer tailor-made financial services to their customers and generate additional income. This can come from commission from vendors, charging fees for additional services or specialized accounts, or earnings on exchanges.

Adding these services has also been shown to increase retention and engagement. 87.5% of non-financial businesses that started offering financial solutions increased their levels of engagement, while 85% said they attracted new customers.

Quick and economical integration

Thanks to APIs, integrating with a financial services provider is quick, easy and cost effective and there are thousands of amazing and innovative financial products that online retailers can offer their customers to enhance their experience.

Also, thanks to integrated financial aggregators like my business AAZZUR, adding multiple different services can now be done with a single integration. This is a relatively new development. In the past, even similar products had entirely different APIs. So while integrating with a single financial services provider was quick and cost-effective, researching and partnering with multiple providers could be surprisingly expensive.

A good way to think about it is how your laptop, phone, tablet, router, headphones, and sound system all have entirely different charging ports. Buying a charging cable is fine. Buy several charging cables – less. The solution? A multi-adapter. That’s what an aggregator is. This is what AAZZUR offers.

Businesses can become one-stop-shops for financial services

Any digital business in any industry can now access new financial products for their customers, including business loans, cards, virtual accounts, wealth management, insurance, cross-border payments, foreign exchange, etc

Businesses can essentially become one-stop-shops for financial services, allowing their customers to conduct all of their financial activities on their site and platform. They can even become banks themselves, something modern consumers are looking for. According to a report, most consumers under the age of 55 would be willing to open a bank account with non-bank providers like Amazon, Google, Starbucks and Uber.

Customer journeys can be hyper-personalized

Increasingly, these services can be tailored to each individual customer and will not just be offered at the point of sale but exactly at the point of need. At AAZZUR, we work with our customers to map trigger points based on certain purchases. Customers are then offered the value-added financial services they really need, exactly when they need them.

Think about how Google uses data to monetize search, how social media uses data to monetize relationships. Integrated finance – with the help of open banking – allows businesses to do something similar with spend data.

With this data, they can create hyper-personalized customer experiences that give customers the financial top-ups they really need, when they need them. From the most specific types of insurance to wealth management, from travel money to carbon offsetting, all triggered by specific transactions and spending habits.

By offering these personalized services, companies also tend to see their sales increase. According to a Gartner report, organizations that invest in personalization typically outperform the competition by 30%.

Whenever I write about integrated finance, I always think back to this famous quote from 2019 by Angela Strange of Andreessen Horowitz.

She said “every business will be a fintech.” With embedded financing now readily available to nearly every business in the world — and estimated to be worth $3.5 billion by 2030 — it’s becoming pretty clear that she was right.

Stephen V. Lee