Embedded and Bundled Financial Services are Increasingly Being Offered by Fintech Platforms, Industry Professionals Reveal

Sophie Guibaud, Chief Growth Officer at OpenPayd, a UK-headquartered API-based Banking-as-a-Service (BaaS) provider, notes that Fintech and other industries have had an “extraordinary” 2020. She pointed out that major scandals (like Wirecard) have “rocked the industry,” however, we’ve also seen significant progress that should help pave the way for an improved finance industry.

As 2020 showed us, predicting what will happen in the future is almost always a “difficult proposition,” Guibaud acknowledged. However, she has still offered some predictions for next year.

She claims in a blog published by Finextra that “impropriety” in the Fintech space this year has “dented hard-won trust.” Guibaud believes that it will take a lot of hard work to rebuild that trust, and to “demonstrate the sustainability of Fintech.”

Like many other industry professionals, Guibaud thinks compliance is clearly “vital.” However, when things go wrong or not as planned, we should “learn lessons and take concrete steps to ensure that our industry is secure.” Guibaud recommends “proactive cooperation between regulators and industry players.” She claims that the UK’s Financial Conduct Authority (FCA) is the “gold standard” for regulation, and thinks that “goodwill and cooperation” can ensure “sustainable trust.”

While sharing her predictions for 2021, Guibaud points out that banking challengers have fundamentally changed the consumer landscape. But she thinks that they’re just the first or initial step in what will be “a true Fintech revolution.”

According to Guibaud:

“Embedded finance is the future of financial services. Over the last 12 months we’ve seen an explosion in embedded finance/BaaS use cases, and the extraordinary potential in this space is becoming clear. During 2021 and beyond, we’ll see an increased focus on very specific segments, such as marketplaces and remittance, where the use case is most clear.” 

Guibaud predicts that in 2021, BaaS providers will create new, “more bespoke” products that could help brands “achieve big things in niche spaces.” She thinks that the successful BaaS platforms will be able to transition from providing “broad” products to offering “highly targeted integrations to solve specific needs.”

In addition to embedded finance, Fintech industry professionals have also predicted that several other key services will be integrated into so-called “super apps” so that users may access many different features from a common or unified interface.

As covered recently, embedded insurance may offer a $3 trillion market opportunity according to business transformation specialist, Simon Torrance.

Torrance, a Senior Advisor at Rainmaking, has explained that embedded insurance is part of a wider movement towards embedded finance which is about gaining access to more affordable or economical and personalized insurance.

He recommended:

“All players – insurers, banks, Fintechs, investors, non-financial retailers, product manufacturers, service providers, digital platforms and software companies – should look carefully at this fast-emerging space and define strategies of ‘where to play’ and ‘how to win’.”

While sharing other financial technology-focused business strategies, trends, and developments, Fintech advisor Efi Pylarinou had noted earlier this year that many companies are taking part in a “re-bundling” (of products and services) race or competition, particularly in Europe and the US.

Pylarinou had stated:

“As technology [continues to] commoditize products and services at an ever increasing rate, re-bundling catch up is the name of the game for grown up and well-funded Fintechs.”

She pointed out that in the US markets, which have significantly more Fintech unicorns (firms valued at $1 billion or more), this trend is more prevalent.

She added:

“SoFi first comes to mind, which started with a laser focus on refinancing student loans (a large sector in the US market), then offered personal loans and mortgages; and then grew a wealth management offering that includes, equity investing, issuing ETFs, crypto investing; and a sizable money offering with a debit card, a credit card, a checking account, savings accounts; and partnerships with brands like Mastercard, Samsung, Lyft, etc.”

She continued:

“In addition to the business need to monetize [while] pushing towards rebundling, there is … a consumer push towards convenience. … customers … want to be served [in a] seamless [manner] anywhere and in a personalized way. SuperApps are the natives in the East and their approach has been strongly validated during the recent crisis. The West is on its own journey that is [focused on] rebundling which varies by region and is shaped by regulations and culture.”

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