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Embedded finance is banking reimagined

by wrich

By Philipp Buschmann Co-Founder and CEO of AAZZUR 

Customer experience is a big deal. Customers vote with their feet and moving from one bank to another is easy now that banking technology does all the hard work. That means that everyone in the FinTech sector has to continually up their game to attract and keep customers. 

It’s not just about keeping up with the latest tech, it’s about solving problems. The challenger banks’ initial success came from offering a modern type of banking that customers just weren’t getting from traditional banks. So what’s next? 

Hyper-personalization

Banking is personal – and it’s getting even more personal.

Everyone has a digital footprint; Google monetises search and social media monetises relationships. The financial sector is ready to use the same strategies to offer financial add-ons that customers genuinely need – when they need them. From the most specific insurance options to wealth management, travel money to carbon offsetting, all triggered by specific transactions and spending patterns.

I spend a lot of time explaining the strategy and outcomes of embedded finance to people.  A short description might be ‘embedding of financial products into the commercial sector’, but the possibilities go far beyond the basics. 

There’s far more to it than simply being able to offer POS loans to consumers. Imagine a situation where any retail business can offer customers an ecosystem of personalized services.

The Open Banking, Insurance and Investment initiatives make it possible to tailor solutions down to the micro-level. The end goal for many will be to aggregate multiple services into one place.  

As these services develop, we’re likely to see the variety of products in the space to widen as more companies are created. Data can be used to create increasingly niche products, safe in the knowledge that there is a ready market. 

Data access is only going to increase as multinational partners merge for scale. We’re already seeing this in recent mergers and acquisitions, such a Tinq’s acquisition of FinTecSystems

There are huge opportunities that will open up for personalisation. The future looks exciting – and it won’t just be banks who get involved.  Every company will be a fintech company.

It’s all about integration and collaboration

Let’s take Starling as an example. They’re the largest – and most profitable – challenger bank. It offers its payment rails to companies like Raisin and MasterCard, alongside giving its own customers personalized services in wealth management (Wealthify) and pensions (PensionBee).

Modern consumers want variety and personalisation and, increasingly, they want both those things in the same place.  That means that fintech companies cannot remain single focus. Cross-pollination is essential to integrate and collaborate.

This will create ecosystems of financial products that make a significant improvement in customer experience.

The plus is that alongside satisfied – or delighted – customers, this is also profitable. This will make a real difference to challenger banks – as only 5% worldwide have broken even so far. That counts as a win-win.

The likelihood is that companies offering integrated services will only thrive if they’re willing to work with others. The future will see many mergers as smaller tech companies join forces to offer a wider and more flexible offering to customers.

Expect serious growth for the big infrastructure players like the UK’s Railsbank and France’s Banque Treezor.  Railsbank’s recent $70m raise and a valuation estimated to be around $1billion shows a pretty big leap from its $200m valuation just a year before.

Beyond the horizon

What does the future look like? In the fintech supply chain banks and fintechs will build networks that can compete with Railsbank and other infrastructure providers. Plus, the sheer amount of data these ecosystems gather also sets them up to genuinely challenge existing data service providers. That makes the companies that are leading the field attractive to investors.

A few of the traditional banks have already figured out embedded finance, Lloyds are is working with Thought Machine, RBS with 11:FS. If that continues, the only way is up. But the most exciting work is taking place at Banking as a service (BaaS) and embedded finance companies like Toqio and mine, AAZZUR. Aggregating value-add-services allows fintechs and retailers to offer their own ecosystems without the time, effort and cost of building one from scratch. These can then be hyper-personalised for their customers. 

The speed of change in fintech is increasing. The traditional rules of banking no longer apply. The future has innumerable possibilities – and all are focused on giving the customer extraordinary personal solutions.

Philipp Buschmann Co-Founder and CEO of AAZZUR

About Philipp Buschmann, Co-Founder and CEO at AAZZUR

Philipp Buschmann is co-Founder and CEO at AAZZUR, a one-stop-shop for smart embedded finance experience.  Recognised as a rising star in the FinTech space, AAZZUR’s mission is to build profitable banking whilst at the same time empowering consumers to have access to better informed financial choices.

Philipp is a serial entrepreneur with extensive experience of working in Challenger Banking, Financial Services, IT and Energy across the world.  He took one of his business’s public – Ignis Petroleum was publicly listed in the US and Germany.   

Having started as a developer in Financial Services, Philipp has first-hand experience of the banking revolution from both a technology and financial perspective. His interest in behavioural economics helped inspire AAZZUR’s revolutionary work on customer centricity in banking. 

About AAZZUR

AAZZUR build better and smarter banking with a one-stop-shop for embedded finance.  Their data-driven embedded finance experience platform enables businesses and banks to better understand and support their customers by offering them tailored financial services as and when they actually want and need them. All seamlessly handled via AAZZUR’s smart integration within just one app.  

From budgeting tools to insurance and carbon offset programmes, AAZZUR’s capabilities include personalising existing mobile and/or web apps with smart embedded finance blocks.  This ecosystem of services can help challenger banks to create loyalty, increase revenue and ultimately become a valuable and profitable business.  AAZZUR is also helping neobanks and businesses to create entirely new mobile banking apps from scratch within weeks thanks to their modular smart platform. 

Website – www.aazzur.com

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