“Embedded finance is in its first inning,” if the FinTech “revolution” following the financial crisis is still in its early stages.
We’re just scratching the surface, according to Matthew Valente, head of product strategy at FIS, as conventional financial institutions and FinTechs collaborate to provide everything from bank accounts to lending products to a wider audience through digital channels.
Whereas many onlookers could conflate the phrases embedded finance and BaaS, Valente explained the differences between the two. He put it this way: “Embedded finance is the real “experience” supplied to the individual consumer or business client, while banking-as-a-service is the “enabler” of embedded finance.
An Organic Evolution
We’re witnessing a development in embedded finance, he continued.
Uber may stand out as one of the pioneering instances of how to integrate payments seamlessly into the consumer experience, but Valente pointed out that restaurants, software platforms, and stores have all been catching on. According to Valente, banks, particularly those that use FIS as a service, have grown more interested in offering BaaS.
The macro headwinds that are now there won’t stop the rise of BaaS and embedded finance, he claimed. Most businesses, big and small, are revising their investment plans for the coming year. But since there is a need, as Valente noted, growing financial services, payments, and loans will be on their agendas.