Embedded Finance can be segmented into several key categories, each with a unique B2C application case. In my opinion, these are Payments, Lending, Insurance, Banking, and Investment. If we look at payments, a great example would be solutions like integrated payment gateways within ecommerce platforms which enable seamless transactions, similar to how Shopify incorporates payment systems directly into their merchant sites, simplifying the checkout process for consumers. In lending, an example of a B2C application would be platforms like Klarna, which offer point-of-sale financing, allowing consumers to make purchases and pay in instalments, improving the shopping experience by providing immediate credit options.
Looking at the insurance category, companies like Lemonade have revolutionised the landscape by embedding insurance services within other consumer platforms, offering on-the-spot coverage tailored to specific purchases, such as travel insurance offered during flight booking. Finally, platforms such as Robinhood have embedded investment services, allowing consumers to trade stocks and manage portfolios seamlessly through user-friendly mobile apps, making them an example of a B2C application for investment cases.
In my opinion, 4 main verticals could currently really benefit from Embedded Finance - Retail, Healthcare, Travel and Hospitality, and Automotive. Looking ahead, sectors like Education and Real Estate could also greatly benefit from embedding financial services, providing students with better loan options, and making property transactions more reachable, achievable, and seamless. Definitely two key battleground areas for the younger demographics.
I believe that we can anticipate several changes in the future. First of all, I think regulators are likely to increase scrutiny on data privacy and security, especially concerning how financial data is shared and stored within embedded systems. Improved consumer protection laws may be introduced to ensure transparency and fairness in lending and insurance practices. I also feel there will be a push towards standardising fintech regulations across different regions, facilitating smoother cross-border financial services. One thing, in my opinion, is certain – all changes implemented will be focused on driving greater trust and adoption of Embedded Finance, which might also increase compliance costs for providers.
In what ways do you see financial inclusion being addressed through fintech innovations in the next years?
Fintech innovations hold tremendous potential to advance financial inclusion in the coming years in several ways:
Micro-lending and credit: platforms offering micro-loans and alternative credit scoring can provide underserved populations with access to credit, helping them build financial stability.
Mobile banking: expanding mobile banking services in emerging markets can bring financial services to the unbanked, offering them a safe and convenient way to save, transfer, and invest money.
Affordable insurance: embedding affordable insurance products into everyday transactions can protect low-income individuals from financial shocks, promoting economic resilience.
By leveraging technology, fintech can bridge gaps in financial access, creating opportunities for millions who are currently excluded from traditional financial systems.
Unlimit BaaS has an exciting future focused on further growth and innovation. We aim to broaden our range of embedded financial services, offering more comprehensive solutions to meet diverse consumer needs and expand our footprint even further on a global scale, particularly in emerging economies where there is a significant demand for fintech solutions. We will also continue to forge strategic partnerships with other tech companies, leveraging synergies to drive innovation and improve our service offerings. We plan to play a leading role in the Embedded Finance sector’s evolution, driving financial inclusion and fostering a more connected, efficient financial ecosystem for generations to come.
This editorial piece was first published in The Paypers' Embedded Finance and Banking-as-a-Service Report 2024, which is the latest comprehensive market overview and analysis focusing on the key players and products within the Embedded Finance and BaaS ecosystem.
Jovi Overo has over 20 years of experience across Fintech, Payments, Banking and Lending-as-a-Service space. Currently, Overo serves as Unlimit's BaaS division's Managing Director and is responsible for conceptualising and establishing innovative BaaS solutions from inception to fruition, spearheading the expansion of this product for the company.
Founded in 2009, Unlimit is a global fintech company that offers a large portfolio of financial services, including payment processing, multicurrency accounts, banking as a service (BaaS), and an on-ramp fiat solution for crypto, DeFi, and GameFi.
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