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Who is enabling Embedded Finance?

Embedded Finance is an ecosystem. It is an industry with a plethora of different players, and it is growing rapidly. Brands looking to leverage the power of Embedded Finance to help them develop new products or integrate financial services into their existing offerings can be overwhelmed by the options available.


If you’re looking for an Embedded Finance solution, it’s important to first understand how the ecosystem operates.


As in any ecosystem, different Embedded Finance participants have different roles. These can broadly be split into brands who wants to launch embedded finance services, the service providers, and the licence holders who support them in doing so.


Licence holders can be thought of as the ‘cornerstones’ of the industry. They are the ‘top tier’ players such as banks and Electronic Money Institutions (EMIs). They are licensed to carry out regulated financial activities, and they often control the fundamental infrastructure required to make fintech ‘work’, such as payment rails.


Service providers are primarily technology businesses. They offer access to specific parts of the banking ‘stack’ - for example payments onboarding, open banking, card processing, FX, card issuing, and so on. Some service providers will also be licence holders; others will lease regulatory coverage from a licence holder in turn.


Brands, meanwhile, contract with service providers to access the relevant parts of the banking stack. This is the crux of Embedded Finance: it allows brands to pick and choose the tools and services they require in order to build the products they have in mind, and removes the necessity for non-financial brands to secure regulatory coverage - an extremely time-consuming and resource-intensive process. Instead, they lease access to the services they need, including licences.


Here, however, there can be a further layer of confusion. Businesses without a firm grounding in financial services may find it difficult to identify what it is that they actually need in order to build their products. From an outside perspective, banking and payments terminology can appear arcane and obtuse. Furthermore, brands may require access to several or many parts of the stack at once. This could in theory require them to contract with multiple service providers - again, a time-consuming and costly exercise.


This is where the platform model comes into play. Platform operators such as OpenPayd offer a single point of access through which brands can enter the Embedded Finance ecosystem. Platform operators have relationships with multiple service providers across multiple specialisms and disciplines. Once signed up to the platform in question, brands can then add the services they need in a modular or ‘plug and play’ fashion. This is an extremely efficient way of building financial services. With the right platform partner, brands can go to market with banking or payments services in a matter of days. These solutions can be scaled rapidly, thanks to the modular framework used by the most reputable platform providers. Just as importantly, brands can experiment with Embedded Finance tools before launching live products thanks to the wide availability of development sandboxes.


Businesses wishing to leverage Embedded Finance should make sure that they understand the ecosystem before diving in. There is a growing range of sources of help and advice for brands at the start of their Embedded Finance journey as well as great fintech consultancies. If you’re confused about where to begin, try contacting a reputable platform provider; they will be able to guide you through the process and help you understand how to make Embedded Finance work for you.




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Embedded Finance

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