embedded finance
Fintech for Good Industry voices Paytech

Embedded Finance Bettering Financial Inclusion; With Thredd, Provenir, ConnectPay and 15Rock

EY estimates that the market size of global embedded finance will grow from $264billion in 2021 to $606billion as early as 2025. With the space set to dramatically disrupt the financial sector worldwide, The Fintech Times seeks to understand how.

Having already explored some of the challenges of implementing embedded finance; barriers facing the future evolution of the space; current cultural and technical barriers to embedded finance success and more, The Fintech Times now turns its attention to the good embedded finance can do – starting with improving financial inclusion.

Mitigating “understandable concerns about fraud or financial abuse”

Jonathan Vaux, head of propositions and partnerships at Thredd, said: “One of the greatest success stories of embedded finance has been its support for greater financial inclusion.

Jonathan Vaux
Jonathan Vaux, head of propositions and partnerships at Thredd

“Many providers have decoupled financial services ‘features’ from the underlying traditional banking ‘product’ clusters and processes, making it far easier for the unbanked to gain access to financial services such as payment capabilities. This separation has allowed providers to take pragmatic approaches to ensure faster and easier provision of services to a wider range of previously underserved user groups.

“Examples include the disbursement of benefit programs, access to emergency relief payments, and refugee funding. By utilising digital services easily accessed through a mobile app, the cost of provision can also be lowered without sacrificing the need for control.

“It eliminates the previous need for expensive (and slow) manual distribution of funds and can mitigate understandable concerns about fraud or financial abuse.”

“A more inclusive and fair assessment of credit and insurance products”

Chris Kneen, managing director of the UK and Ireland at Provenir, said: “Embedded finance has huge potential when it comes to supporting financial inclusion by offering more personalised and accessible financial services.

Chris Kneen, Provenir
Chris Kneen, managing director of the UK and Ireland at Provenir

“By leveraging data and analytics, embedded finance can deliver personalised offers that consider individuals’ unique circumstances, such as their affordability, life stage, and geography. This tailored approach allows for a more inclusive and fair assessment of credit and insurance products, moving away from a one-size-fits-all approach.

“Individuals who have been previously underserved, such as those with thin credit files or immigrants without a local credit history, can now gain access to financial services without relying solely on traditional banks. Embedded finance providers can analyse alternative data sources, including cross-border sources, open banking data, and non-traditional sources like telco information and utility bills, to build a comprehensive picture of an individual’s creditworthiness.”

“Market players can utilise embedded finance to best fit their target audiences’ needs”

Simas Simanauskas, chief business officer at ConnectPay, said: “The beauty of embedded finance is that you can focus on a specific target group and tailor the solution in a way that would fit the needs of a specific audience.

Simas Simanauskas on Embedded finance financial inclusion
Simas Simanauskas, chief business officer at ConnectPay

“Let’s take a simple example: if you are targeting overseas students coming to Germany, you would fit your onboarding flow to only ask questions that would be relevant to them.

“As you are aware that they require to wire a certain sum before they can apply for a visa and spend those funds on daily needs, you would adjust your monitoring rules to this flow.

“Creating financial solutions that fit all are very difficult because you have to think of all the possible scenarios of how to ensure you spot fraud, money laundering, or terrorist financing. However, when you know your audience, you can be more efficient and, in turn, deliver a much better user experience to end-users.

“In short, market players can utilise embedded finance solutions to best fit each of their target audiences’ needs.”

“Enabling seamless access to financial services for underserved communities”
Gautam Bakshi on Embedded finance financial inclusion
Gautam Bakshi, CEO and head of product at 15Rock

Gautam Bakshi is the CEO and head of product at 15Rock, an innovative climate risk management and decarbonisation solutions provider.

Bakshi concludes by breaking down how embedded finance can ultimately help improve financial inclusion: “Embedded finance promotes financial inclusion by enabling seamless access to financial services for underserved communities.

“By integrating financial solutions into non-financial platforms, traditional barriers to financial access can be broken down, also fostering more equitable growth opportunities.”

Author

  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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