The Problem With Embedded Fintech Trend

The Problem With Embedded Fintech Trend

The Problem With Embedded Fintech Trend

There is a lot of hype around the promise of embedded fintech and what it can offer companies and their customers. The idea that any business can now become a fintech entity through embedded fintech is what a lot of companies are embracing, and it might be an oversimplification of the trend that is causing more confusion than anything else. 

Below we’ll get into why the hype around embedded fintech could be a problem for organizations hoping to get more out of its use. 

What is embedded fintech?

Embedded fintech is a way for non-fintech companies to integrate financial applications, like a customer wallet or brand credit card, into their payment and finance-related structures. A company like Chipotle or Uber can integrate embedded fintech uses into their infrastructure, although they themselves are not a fintech organization. 

This allows customers to pay for goods and services within a single, unified application without having to go through an outside service. The entire customer experience takes place within the business platform, thus simplifying the process and allowing customers to benefit from functionalities that are usually provided by their banks. 

The promise of embedded fintech

The utility of embedded fintech – finding ways to make customer’s lives easier by simplifying and unifying steps around orders, purchases, and financial management – is getting clouded by the promise and hype surrounding embedded fintech. Companies that are not at their core a financial institution are focusing on becoming or branding themselves through embedded fintech and are forgetting the thing that matters – the customer experience. 

When companies integrate fintech functions into their services, the focus should be on how this can improve customers’ lives. Most customers won’t know what you’re talking about if you tell them you are a fintech institution; they just want to know how they can pay for their product or service and manage in the easiest manner and from any device.

Fintech vs digital banking

How does fintech differ from digital banking, and how can you best utilize fintech features to improve the customer experience? 

What embedded fintech does:

  • Allows companies to take advantage of innovative financial technologies and integrate them into their organization.
  • Is becoming a direct competitor to traditional banking methods. 
  • Is changing the way that people lend, invest, and make payments. 
  • Helps to make existing transaction processes easier for companies outside of the fintech bubble.
  • Includes mobile payments, mobile lending, cryptocurrency and blockchain, and other products/services within the financial technology world.

Digital banking: 

  • In basic terms, the digitization of all your banking needs and banking interactions.
  • Includes mobile banking and banking transactions that traditionally take place in a physical bank.
  • Ability to start a banking interaction/activity in-person and finish it online. 
  • Ability to access your banking needs from ATMs and other digital devices. 
  • Moves banking activities to online platforms like social media outlets.

Embedded fintech is a broad category that can help businesses make the lives of their customers easier, but it is not a replacement for banking and often companies will need to partner with financial institutions in order to adequately integrate their fintech applications. 

True embedded fintech vs white labeling

True embedded fintech is about customer-centered results. White labeling, on the other hand, allows companies to appear like they are true fintech institutions without having the financial infrastructure to really back up that image. Branded credit cards, for example, that rely on third-party contracts with financial institutions, are a great example of this. 

When a corporation attempts to build the technology from within their own infrastructure or partners up with the right technologies that can take their fintech uses to the next level, you have a true embedded fintech integration. 

How ACME payments can help

With ACME, your customers will have the power of a cloud-based, omnichannel payment system that allows them to sift between multiple payment options and access their orders anytime, anywhere.

ACME’s partnerships, including with Salesforce and Raiser’s Edge, will give you and your customers everything you need to have a seamless, personalized, and customizable ticketing, membership, and donor experience.

Click here to try the ACME demo today.

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