Embedded Financial Services Can Offer Better User Experience, Fintech Modulr Explains

Modulr, a Payments as a Service API Platform for digital businesses, notes that embedded financial services can be considered the fourth platform.

UK-based Modulr writes in a blog post that embedded financial services have kicked off an “exciting innovations race.” The company also mentions that non-traditional financial services providers such as Google or Ebay have managed to acquire a considerable market edge over their competitors by providing financial services within their online platforms, enabling clients to take advantage of a wide range of functionalities without “ever leaving the brand.”

According to Modulr, the embedded financial services trend is transforming the financial services sector, and it’s also putting more pressure on other financial service providers that are struggling to “differentiate” themselves in a digitized economy that has “little patience for slow, cumbersome, traditional processes.”

Modulr adds in its blog post:

“A full suite of financial capabilities awaits ambitious businesses of all sizes, including digital payment accounts, cards, Faster Payments, Direct Debit transactions, Payment Initiation via open banking, Confirmation of Payee and 24/7 access and notifications.”

Modulr explains that this collection of new services, supported via APIs, has the potential to streamline and improve financial services across industries, “radically.”

Modulr also notes that non-financial service providers have been launching products “inspired and supported” by Fintech firms via API-powered solutions. However, the company asks what are the benefits or advantages of adopting this approach and can a business improve from all this?

As noted by Modulr, some of the advantages are as follows:

  • Create better customer experiences – “by integrating disruptive features into your platform or on-demand service, you can focus on optimizing the customer experience”
  • Offer wider choice and flexibility – “by incorporating API-connected infrastructure, you can seamlessly improve your offering, faster than your competitors”
  • Provide new channels of financial service access for your customers
  • Good to know: While Modulr works with marketplaces that offer credit, those marketplaces “do so under their own credit license while Modulr only performs the operational payments side of the lending process including disbursements and collections.” This is “because we’re an infrastructural payments platform and obtaining credit permissions, such as a banking licence, is not part of our business model.”

Modulr also mentions that online marketplaces can leverage APIs in payments to “strengthen their businesses.”

While there’s greater differentiation between online marketplaces than with some other services, the experiences for merchants “remain incredibly similar,” Modulr claims while noting that selling items via eBay or Etsy will not get you paid faster than if you’d used Amazon or other digital marketplaces.

Modulr further notes:

“If we apply embedded payments thinking to marketplaces, suddenly, merchants have a lot more incentive to stick to one platform over another, thus providing greater choice and affordability to the marketplace’s buyers.”

As mentioned in Modulr’s blog, embedded payment APIs would allow merchants to benefit from “complete control over their finances,” including:

  • Quick access “to manage funds and balances”
  • Immediately “spend earned sales with a prepaid business card”
  • Digital payments account functionality “as an alternative to a bank account – allowing merchants to managing their finances, pay bills and transfer funds.”

Marketplaces benefit from:

  • Create new revenue streams “to differentiate platforms from competitors”
  • Gain valuable insights into merchant behavior and financial activity – “facilitating the creation of optimised financial services for merchants.”

It’s possible for on-demand platforms and marketplaces to enable embedded financial services into their businesses by working with an API payments platform, such as Modulr, which claims to understand “the scope of the opportunity” of these new financial services.

Modulr’s platform offers embedded payments infrastructure, so that businesses are able to lower operational costs, acquire new clients, and “more reliably control and automate treasury management for efficient cash flow.”

The Fintech firm also noted:

“Modulr helps marketplaces and on-demand platforms install innovative and secure payment services that provide an unbeatable competitive edge for customers. We help you unlock operational efficiencies and eliminate processes that could hold you back.”

You can use Modulr’s Payments Map to examine the state of your business operations.

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