Exploring Embedded Finance For Mobile Apps In 2023
Embedded Finance” is quite a new term in the eCommerce market; however, it is competing with BaaS (Banking as a Service) in such a short span. Technically, embedded finance is the new name for integrating financial services for non-financial products. Now, you may wonder about the connection between mobile apps and embedded finance!
Well, the success of a mobile app depends much on how fast and secure the payment process is. This is also a reason behind customer retention on mobile apps, no matter which industry or products a company deals with.
Embedded financing allows the merchant to put almost all sorts of financial services in the app itself. As a result, your users can make purchase decisions wisely and fast. So, let’s get ready for a quick understanding on embedded finance:
What Is Embedded Finance?
Embedded finance is the process of integrating financial services in the non-financial sector. In easier words embedded finance is offering the financial services to the customers. Here, we will be talking about the incorporation of embedded finance in digital marketing. To be more specific, inculcated finance in mobile apps.
In simpler words, non-financial products/sectors can introduce financial services like credit, debit, insurance, and investment to the users. By doing so, the merchants free the users from the hassle of going to the bank to get financial services.
How Does Implanted Finance Work?
Embedded finance is cleverly added to the users’ journey – for example, a BNPL pop-up while using an app for shopping. For another instance, when you offer health insurance while renewing any plan is also a result of embedded finance.
Embedded finance is basically a third-party service provider that takes care of financial services on behalf of the merchant/app maker. Firstly, it takes the initiative of financial licensing in the form of an API. Next, businesses use these APIs to offer inculcated finance services. On the next level, the company can use branding as its own. Alternatively, these APIs can also be used to create some unique products.
Estimated Market Of Embedded Finance
Embedded finance is now globally adopted – a prediction says that embedded finance will have an estimated market value of $138+ billion in 2026.
Still wondering why you need embedded finance for business growth? You may need to reconsider due to these forecasts:
Another forecast says that the market value of embedded finance will reach $230 billion by 2025, and by 2030, it will reach $7 trillion. At present, 88% companies have implemented inculcated finance that amounts to $3.1 billion. 85% of the users admitted that it helps them in acquiring new customers.
Check out the image below to figure out the revenue forecast of inculcated finance for consumer lending, insurance, and payment.
Therefore, it is not wrong to claim that investing in embedded commerce for your mobile app will undoubtedly be a wise decision to lead your business toward huge growth. And it is growing since the time it starts, the next image showcases exactly that:
Why Do Native Mobile Apps Need Embedded Finance Right Now And Beyond?
Still, not convinced? Wondering why a native mobile app even needs embedded finance? Is there any benefit at all? Well, indeed, embedded finance makes mobile apps more successful and thereby helps in growing their business.
Check out the following sections to know how specifically embedded finance benefits mobile apps:
Convenient Usage
On a mobile app, embedded finance makes A-Z related to transactions easier. For example, buyers automatically get suggestions for the installment amounts when they decide to pay for a particular good in installments.
Similarly, they get insurance and loans all under the same roof with embedded commerce. One-click payments, safe payments, etc., also are included in it. All these make the entire shopping time very convenient for the buyers.
Additional Revenue Streams
Embedded financing can activate newer revenue streams with the convenience it brings. Wondering how?
Well, the process is pretty simple – Users, who complete their shopping journey more conveniently than before, bring further customers to your app by recommending it to their acquaintances.
Also, it is said that 1% of revenue increases every time a customer uses a debit card to make transactions. At the same time, satisfied customers spread their good experiences to their acquaintances and on social media. And, it successfully activates additional revenue channels.
Higher Stickiness
Embedded finance does not stop at unlocking new revenue streams – it also brings a stickiness to the mobile app with its advanced features. This gluey element keeps the customers stick to the mobile app. In short, it improves the customer experience
It furthermore creates a win-win game on the mobile app. Now, we all know how vital stickiness is for a mobile app – so integrate inculcated finance on your mobile app and see more conversions in your app.
Better Understanding Of Customer Experience
Embedded commerce reveals the customer’s specific requirements after a very short time. For example, it learns the payment methods most customers prefer. Also, it indicates the most preferred installments.
As a result, the next time the same customer shops using your mobile app, it becomes easier for the app’s AI to recommend payment options based on their previous decisions. So, it will make your app more reliable than before.
Therefore, it will be suitable to claim that embedded finance strengthens your understanding of customer preferences. Also, it thereby attempts to improve their experiences further with the help of this understanding.
Booster Of Brand Awareness
With embedded finance, a brand can also stand out – seems unrealistic? Well, with inculcated finance, customers actually develop a preference for the brand itself.
Customers deliberately look for your app when they need to shop for something similar where they get a pleasant experience. So, the use of embedded commerce will strengthen your brand for a more extended period. Customers remember your brand for providing some fantastic features while making the payment.
All these will gradually result in a higher conversion rate on the mobile app. With time, the use of embedded commerce will bring higher traffic and a much higher retention rate on your mobile app too. But, these results will take time; you have to allow sufficient time for embedded finance to perform, and it will take some time to do so. So, be patient and wait for the results embedded finance can bring.
Along with these benefits, embedded finance will bring more partnerships which will boost your business for a long run. It will not bring instant results, but gradually, you will get results.
How To Choose An Embedded Finance Service Provider For Your Mobile App?
Right now, you know that a mobile app can help it in getting more traffic, conversion, and retention. But a question is yet to be answered, i.e., how to get the best-embedded finance service provider for your mobile app?
Only the right inculcated finance service provider will help your mobile app to stand out. So, we have jotted down some key points you need to consider to get the best:
1. A One-Stop Solution
While choosing your embedded finance service provider, ensure you get everything (regarding mobile app financing) from them. Be it local or global payment or any other financial services – all need to be included here. It will enhance the efficiency of your mobile app as a whole, and the users will feel more satisfied. Therefore look for an all-rounder to integrate embedded financing on your mobile app.
2. Flexibility during payments
Another essential factor to consider while choosing an embedded finance service provider is the payment options. At present, users pay using different methods. So, the embedded finance service provider must not have any sort of stringency or shortage of payment options – variation is a MUST.
Remember, the absence of users’ preferred payment method may lead them to find an alternative. And this will not be good for your business, so check whether the service provider is flexible enough with the payment methods.
3. Secure payments
There needs to be more than just listing multiple payment methods to consider an embedded finance solution for your mobile app. You also need to check how secure it is. For this, check its review from its actual users.
You must be aware of the fact that, at present, safety is a matter of concern for all online shoppers. Indeed, users have a shopping spree sometimes, and if they love any product they come across, they will leave no stone unturned to get that. However, a minimal safety issue can turn them down. As a result, they may immediately drop their purchase from the app with security glitches. So, pay attention to the inculcated finance service provider’s security before you invest with them.
4. Openness to integrate the latest payment technologies
When it comes to online payment, there is always the latest technology. For example, blockchain, stablecoin, and crypto are currently IN. So, remember to check whether your embedded finance service provider is offering these services, along with being aligned with the latest financial trends. All these will help you to provide an enhanced service to your customers and make your app future-ready.
5. Payouts
Integration of payouts is another factor you must consider when selecting the right embedded financial services. With payouts, it becomes easier to offer seamless transaction management. It will not just be helpful to help customers, it will make payment easier for all – employees, suppliers, sellers, and everyone else. So, make sure your service provider integrates the payouts.
We recommend you not to hurry while selecting the embedded finance service provider for your mobile app – take your time, do some research, and then take your call.
Use Cases Of Embedded Finance In The Advanced Mobile Apps
Now, let’s check out some current embedded finance examples in mobile apps as well as in the eCommerce industry:
1. Embedded Payments
There was a time when embedded finance and payments were taken as synonyms. But in reality, embedded payment is the most famous example of embedded finance. It enables the payment system for each and every product on the app or website. Due to this feature, right on the product page, users can view all the payment details.
Also, adding new payment methods and making the transaction process streamlined fall under it. All these contribute much in improving the user experience and making your business a hit.
2. BNPL
BNPL, or buy now pay later, is a recent favorite feature of users during online purchases. It is the installment system used in the offline purchase system for days. By adding embedded finance, you can take BNPL to the next level on your app.
But for quite some time, online purchasers had to pay the entire amount during their purchase. BNPL had literally removed this pressure from the buyers by introducing some easy installments. BNPL includes the calculation of
- Down payment during the purchase
- Installment amount and duration
- Variations of installments
While purchasing costly home decorations or hardware items, BNPL is extremely useful. Embedded financing had an up-leveled BNPL system with the integration of credit score and credit history. It uncovers the gateways of larger purchases by offering credits both online and point of sale (POS).
3. Investment and Trading
With the help of embedded finance, users can access stocks and funds. Buyers can integrate their stock market investments while making the purchase. At the same time, the sellers can introduce some exciting offers for the stock owners, thereby increasing their sales.
Brokerage firms can also get its benefits and manage the end-to-end flows along with account opening, market data analysis, trading, funding, and more. So, are you ready to integrate all these on your app? If yes, integrate embedded finance today!
4. Integrated Insurance
Offering insurance has become the latest trend in all industries. Businesses offering non-financial services are also selling some kind of schemes, subscriptions, and insurance to make the path of future conversions smoother and more accessible.
If the merchants can market these products well, they can gain loyalty and retention for a long period. It will surely grow your sales as well.
Embedded Finance Trends
Time to wrap up the article, but before that you may need to know the biggest trends of embedded financing for 2023 and beyond. Well, here are the top 3 picks:
- The all on one service
- Open API and openness to technical changes
- Growing demand
End Words
Embedded finance will make mobile apps much more productive with its all-round financial services. As a result, shoppers can shop without worrying about payment. It opens the opportunities to get more customers and conversions on the mobile app by freeing them from the pressure of making the payment immediately, offering credits, splitting bill amounts in easy installments, and much more.
Embedded finance is undoubtedly a futuristic solution for any mobile app, and its integration can enhance its overall performance. It can be predicted as one of the most preferred financial solutions in the eCommerce market.
So, are you ready to offer all these to your users by integrating embedded finance into your mobile app? Or still, deciding?
Let us know in the comment section if you need further discussion on embedded finance to help your mobile app with its performance.
