Embedded finance is growing rapidly; its applications are endless. It gives businesses a new avenue to attract customers and build deeper relationships. Embedded finance has been around since the start of the internet but has quickly become something special. Businesses across a wide variety of industries can utilize embedded finance in their business and help set them apart from competitors.
In this article, we will look at the rise of embedded finance along with three real-use applications that are made possible with embedded finance.
What is embedded finance?
Embedded finance brings financial services, like payment transfers, insurance, and loans, to traditional non-financial companies. Many forms of embedded finance exist, such as embedded lending, payments, cards, and more. A great example is when airlines offer travel insurance to their travellers. Although this is just one example, the options are endless. From Buy-Now--Pay-Later to rounding programs, businesses can develop innovative customer solutions.
Further, embedded finance is not limited to customer solutions. Companies can utilize this for their employees as well. For example, Lyft offers its drivers branded debit cards for employees, which can accrue cash back, rewards, and more.
Importance of embedded finance for businesses
With API technology, businesses can now provide an extensive array of financial services directly within their platforms. Its impact on the customer experience is one of the reasons why businesses are looking to embedded finance for their solutions. In fact, embedded finance is expected to grow to over US$ 580 billion by 2023, representing a 23% CAGR.
Some of the important benefits of embedded finance for business include:
- Enhanced customer experience: Customers want more personalized shopping experiences, and embedded finance can deliver.
- Increased revenue and growth: Around 94% of companies saw increased revenue when using embedded finance solutions.
- Improved accessibility for customers: Those who are underbanked have access to various financial products and services to help them reach their financial goals.
The adoption of embedded finance is rapidly gaining popularity among non-financial firms as a strategy to boost customer engagement, drive sales and minimize friction in the consumer journey.
Embracing the future of financial wellness with Olive
As an embedded finance platform, Olive delivers open finance services for businesses by focusing beyond financial data and on outcomes. Our platform allows businesses to easily enroll consumer cards into new financial wellness, fundraising, and membership programs.
Olive's embedded finance platform links consumer cards directly to these programs instantly and offers real-time rounding, matching and rewards.
Driving recurring deposits for money managers
Reaching financial goals like saving and investing takes time and effort. It can take over five years to achieve long-term financial goals, such as paying down debt or funding a vacation. Many use financial applications to invest and save their money, but building consistency can be difficult. Over a third of Americans have zero dollars in savings. Money managers have an opportunity to meaningfully help their clients take the first step towards building a secure financial future with embedded finance. Further, they can provide ongoing support to help their clients maintain consistency.
A major question that money managers may have is: How can I support my clients in depositing funds into their accounts consistently and investing them instead of spending them?
With an embedded finance solution, money managers can allow their clients to turn roundups, matching, contributions, and rewards into account deposits with their primary credit. The power of consistent contributions will compound into a meaningful amount over long periods. This means their clients can reach savings goals, retirement goals, and first-home ownership goals, to name a few.
Embedded finance for loyalty programs
The major issue with traditional loyalty programs is that they often don't work. The problem lies in overly complex programs that lack personalization. Especially since the pandemic, there has been a growing consumer demand for personalized shopping experiences.
With embedded finance solutions, retailers can set up loyalty programs that stick. Customers earn the rewards with personalized, goal-oriented benefits, improving loyalty and customer satisfaction. Many businesses find embedded finance an attractive option in light of an economic downturn. Retailers can leverage these rewards in times of economic downturn and make their loyalty program stand out from the rest.
Increasing donations with embedded finance
Businesses are attracted to the versatility of embedded finance. Fundraisers are always looking for ways to attract new donors and increase total revenue. With embedded finance solutions like Olive, fundraisers can do exactly that. Olive helps fundraisers not only raise their total revenue but also ensures consistent recurring donations. At the point of purchase, donors can donate their cashback and rounding rewards directly to their favorite fundraisers.
Conclusion
With the rise of embedded finance, the path to financial success becomes more attainable for individuals across the globe. This is directly tied to Olive's mission and is why we are determined to make these services accessible to all customer programs.
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