Is Embedded Finance the Next Evolution in Fintech? (2024)

• Imarticus
• August 11, 2021

What is Embedded Finance?

Over the decade banking services like lending, payments, remittance have shifted from being under the sole purview of banks to non-bank service providers. The various financial services have come to be embedded within the software and applications of the non-bank providers streamlining both customer and business enterprise experience. Embedded finance or embedded banking, as is popularly termed, is the future of Finance Technology (abbreviated Fintech).

It is essentially the merging of a non-financial service provider, for example, a telco or local SaaS business, with a financial service provider.

With embedded finance reshaping and creating new roles for technology companies in the financial world, a career in Fintech will prove to be highly rewarding in the coming years.

For this, it is imperative to know what is a Fintech professional and the best Fintech courses in India that one can opt for.

Role of Embedded Finance in the Industry

With the world increasingly adapting to the digital revolution, businesses, both local and international, are looking forward to expanding their horizons to provide banking services ranging from providing loans, cashless payments, credits, debit cards, and e-wallets. Earlier businesses had to create a Fintech arm within the company costing a fortune to oversee the financial operations.

However, with embedded finance infrastructure, this disadvantage has been overridden resulting in almost double the normal profit. And with the disappearance of third-party banks, the process becomes smoother for the consumer. It lures the customer with its easy transaction process thus monetizing him/her and expanding the business.

Apart from integrated payments, the other high point of embedded finance is the ease of accessing in-app credit programs and loans, enabling the customer to complete a purchase without leaving the app and converting it into an EMI at the checkout point as is seen with Amazon.

Embedded card payment involves the creation of the company’s own cash card in exchange for a white label debit card. The cash card is linked to the user’s bank account giving him direct access to his user balance. This can be arranged by the company at a small interchange fee with the partner bank.

Embedded insurance is also being integrated into the buying experience of customers to seamlessly complete the procedure of insuring a car or home or other such purchases without the inclusion of a third-party insurance company. This is not only cost-effective but also saves a lot of time and pain on the part of customers as demonstrated by major automobile companies.

Embedded banking has taken a step forward in the evolution of the Fintech industry by taking investment into its territory. Investment has always been a tricky affair for the common man. With API-based brokerage firms leading the way for embedded investments, it is no longer a faraway dream. Platforms have integrated stock market investing by building microservices beginning with opening an account and ending with trading and market data.

The Way Forward

Fintech Infrastructure stands upon three pillars - digital platforms, financial institutions, and embedded finance infrastructure companies. To make each of these pillars functional data science, AI, cloud management, and blockchain development work together. To understand what is a Fintech professional’s role and how to make a career in Fintech, you can check out the professional Fintech certificate course.

It is best to start young if you are looking forward to making a career out of Fintech and especially embedded finance. One can choose from some of the best Fintech courses in India and opt for a subject of his/her choice. An undergraduate course in finance, economics, engineering, commerce, or management followed by post-graduation in the specific field can open avenues for youngsters and aid them in building a lucrative career in Fintech.

Certified Investment Banking Operations Professional

Postgraduate Program in Banking and Finance

IIM Calcutta Executive Programme in Investment Banking and Capital Markets

IIM Lucknow Advanced Management Program in Financial Services and Capital Markets

Financial Analysis Prodegree

Credit Risk and Underwriting Prodegree

IIM Indore Postgraduate Certificate Programme for Emerging CFOs