The financial services industry is now operating on its own account to convert finance into a generalized sector
Can you pay for a purchase without entering bank data? Yes, now with them embedded finance, if possible. This model is called Bank-as-a-Service and allows the integration of financial services through APIs.
The names “embedded finance” or “embedded finances” allow any type of company or online business to incorporate banking software directly into their websites or mobile ‘apps’ as an additional service within their offer, without having to direct their users to third webs.
Currently, banks, fintechs and other regulated entities can offer it infrastructure technology so that other companies can develop their own financial services.
In this way, with embedded finances or invisible banks, companies can use the knowledge of their sector to generate financial services to the extent of their users. For example:
- An e -commerce vendor incorporates a financing option at the time of payment.
- An e-wallet on the platform of a digital company allows consumers and suppliers to exchange money through an app.
- A real estate agent offers rental insurance on its platform to new tenants.
In this way, a company can integrate payments into its website so that customers do not have to enter their credit card data in each operation, offer the option of split payments through ‘online’ purchases, offer insurance or issue their own credit cards, among others.
Until a few years ago, being able to offer these services would require a large investment in resources, time and technological development. Now these integrations are much easier than ever thanks to the APIs (acronym for the term Application Programming Interface, Application Programming Interface in English), sets of instructions that connect two software between them, to facilitate the exchange of messages or messages. A system that acts as a bridge between companies, customers and banking entities.
“Any company that wants to invest in customer loyalty and experience must focus on the integration of financial services,” he noted. Roland Folz, CEO of Solarisbank‘fintech’ for reference in the BaaS sector, in a BBVA communication.
Search for these services new BaaS platforms like Solarisbank y some banking entities like BBVA which, through BBVA API Market, makes available to its technological partners and developers a robust catalog of APIs.
In addition, BBVA is promoting a series of alliances with technology giants that allow it – thanks to the APIs system – to integrate its services into third -party platforms and reach new markets..
Among the benefits of implementing equity financing for companies are:
- Greater control over the payment process: Debt financing eliminates the need for banks, so that any company can offer financial services.
- Added value for customers: embedded finances allow companies to transform their relationship with the customer. Merchants control the entire payment process, so they can offer alternative payment methods (APM) and customized solutions that are tailored to their customers. For example, the “buy now, pay later” (BNPL) option will help increase conversion among the younger generations.
- Dismissal of costs: merchants can prescribe intermediaries such as credit card networks or payment providers to facilitate the payment process.
- Major revenues: With respect to financial status, companies can also convert borrowed funds into an additional source of income, so that traders can offer credit to their customers to obtain benefits from the interests. The clearest example of this process are “buy now, pay later” solutions, which offer credit at the point of sale.