The origins of embedded finance
Superapp platforms in Southeast Asia seemingly perfected the process of embedded finance early on. These platforms have seen tremendous success building interconnected systems of money movement that link a consumers’ wallet directly to in-app services. By leveraging the power of open banking, e-commerce, food delivery, transportation, utilities payment, and even insurance products can meet consumer needs in an effective way.
Ride sharing platform Grab recently expanded their financial solutions with a “buy now, pay later” solution, a micro-investment platform, and a consumer loan product — all are accessible in one app. Given that Grab is already so deeply integrated within the lives of its existing consumers, the push towards embedded finance naturally increases its customers’ usage as a one-stop-shop platform layered with financing capabilities.
Embedded financing evolving in the US
While consumer behaviors may differ in Asia and the United States, big tech players and SaaS providers in the US are well-positioned to recreate some of this secret sauce.
Large merchant and consumer networks are sitting on a trove of valuable data that can easily translate into increased engagement and lower customer acquisition costs. Many of these tech giants have already started to explore partnerships with banking-as-a-service (BaaS) providers to navigate the infrastructure and regulatory complexities of financial services.
Let’s take a deeper look at how these tech giants are evolving to meet the needs of the modern consumer.
Amazon, one of the most identifiable brands in the world has started to dive head-first into the embedded finance space by offering the following:
Amazon Pay: An e-wallet that allows consumers to checkout via their Amazon account
Amazon Lending: A credit line designed for merchants on their platform, in partnership with Goldman Sachs’ Marcus brand
Amazon Card: A co-branded credit card for consumers, in partnership with Synchrony Bank and Chase
A SaaS e-commerce enabler
Shopify continues to make waves as they threaten to disrupt almost every industry that is tangentially related to e-commerce. Recently, they have made a big push into embedded finance, including:
Shopify Capital: A small business loan product for merchants on their platform
Shop Pay Installments: A point-of-sale financing product, in partnership with Affirm
Shopify Balance: A bank account for merchants on their platform to consolidate all their cash flows in one place
A ride sharing application
Despite Uber’s up-and-down year, they continue to make a push into embedded finance.
Uber Money: A debit card and and bank account for drivers integrated directly into the Uber Driver app, in partnership with GreenDot
Uber Card: A credit card for consumers, in partnership with Barclays