Embedded Finance Is Reshaping FinTech

Embedded Finance is reshaping FinTech; and moreover, joint with Banking as a Service solutions - it herals a fundamentally new era in the entire finance sector.

πŸ“‰ Business models of traditional banks don’t work the way the used to anymore. Net interest margin has fallen rapidly, and so do their revenues.

net interest margins have been falling for two decades

πŸ™‹πŸ™‹β€β™‚οΈ Consumer needs have changed. Customers expect fully digital, easily accessible and cheap services. FinTechs and other new players have understood this fundamental change - and they are being rewarded. Growth is beyond anything banks have ever seen.

🎯 How so? FinTechs focus on customer needs, whereas banks traditionally focus on their business model.

As BaaS becomes more and more broadly available, the consumer experience and the customer in general moves into focus (where it belongs!)
It’s all about providing solutions in the right context. That’s where the term embedded finance originates from.

A customer context is the combination of events or circumstances and the touchpoint best placed to do the job they’re aiming to do.

πŸ›’πŸ’Έ Increase conversion in e-commerce? Offer 0% APY lending

πŸ’¬ πŸ’Έ Pay from within WhatsApp, because that’s where customers already interact with those who they want do send money to.


BaaS is a huge accelerator here. Brands focus on their main product and use BaaS providers to integrate financial services. Each of the two can focus on what they’re good at - their core product.

πŸ”—βš™οΈ Integrating a financial service sounds complex and costly? Not so much with BaaS providers. They understood their customer needs: easy to integrate to enable quick evaluation & GTM.

BaaS sales funnels only take a fraction of the time of what a traditional ones take.

[1] πŸ§‘β€πŸ’» Focus on developers

In an increasingly engineering-led industry, they focus on developer experience more than anything else.

[2] πŸ§ πŸ’¨ Provide quick access, no unnecessary sales calls

Easy sign-up for a developer portal, immediate sandbox access and self-explaining documentation for both experts and developers are way more valuable than any sales/demo call can ever be.

[3] πŸ’³πŸ’΅ Pricing

Flexible pay-per-use or subscription models with the option to upgrade to Enterprise scale. Covers 99% of all cases.

😁 While all this may sound somewhat pessimistic, the biggest part of the cake is still being distributed. But unlocking these new distribution opportunities will require an entirely new manufacturing and distribution model for the financial services industry.

This was just a short tl;dr of 11:FS newest reports. Go read them here.