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Embedded Finance: 5 key practices for a successful implementation in your company

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Embedded Finance gained prominence in late 2023 and is poised to be a trend that will heat up the financial sector in 2024. This new practice involves integrating financial services directly into third-party platforms or applications, extending beyond traditional financial institutions.

The range of possibilities for offering new services is expanding, and as a technology company specializing in digital products for the Financial sector, we always seek to understand where each innovation can benefit our clients.

With the growing demand for financial technology, especially for traditional banks, Embedded Finance emerges as an opportunity to enhance competitiveness between major players and rapidly growing fintech companies.

According to McKinsey’s Global Banking Revenue Pools in 2022, the practice of Embedded Finance reached $20 billion in revenue in the United States alone in 2021.

This involves incorporating financial solutions such as payments, loans, insurance, and others directly into non-financial environments, such as shopping apps, e-commerce, transportation apps, or any other digital service.

There is no doubt about the role of innovation in this context, and in this case, innovation must be aligned with sustainability, quality growth, and customer focus.

So, how can we gain benefits from this new model and ensure that its implementation is strategic and adds value to the business? We’ve outlined 5 practices that favor the implementation of Embedded Finance in your company. Check it out:

1. True Understanding of Customer Needs and Enhanced UX:

In the Embedded Finance concept, it’s important to conduct market research, data analysis, and direct interactions to identify gaps in existing offerings and understand how financial services can add value to the customer experience. This practice is essential in the lifecycle of any digital product, including updates or redesigns.

An impeccable User Experience (UX), combined with good usability practices, is a significant differentiator to be evaluated within the implementation of Embedded Finance. By integrating financial services intuitively, it ensures that users can navigate effortlessly between financial services and the core functionalities of your platform. Personalization, simplicity, and clarity in information are crucial for a positive experience.

Establishing strategic partnerships is crucial. Select vendors and partners that offer scalable, secure financial solutions compatible with your Embedded Finance vision. The right choice of partners can be decisive for the success of the implementation and ensure the trust of your users.

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2. Security First:

Security is a non-negotiable priority when dealing with financial services. Ensure that all customer transactions and data are protected by robust cybersecurity measures. Adopt best practices for compliance and stay updated with financial regulations to ensure user integrity and trust.

By implementing customized security measures based on user behavior, such as adaptive multi-factor authentication and alerting for suspicious transactions, we ensure personalized financial security and a security process with lower fraud risks.

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3. Hyper-Personalization:

Offer flexibility for customization. Each user may have distinct financial needs, and the ability to customize services according to individual preferences increases the attractiveness of your platform. Still within the customer experience territory, hyper-personalizing their journey in the payment process will make the user’s path unique and tailored to their reality.

Personalization in Embedded Finance improves the user experience but also contributes to fostering longer-lasting relationships between consumers and platforms. However, it is crucial to balance this practice with data privacy and security, ensuring compliance with financial and privacy regulations, as mentioned above.

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4. Customer Service Attention and UX Writing for Your Product:

Keep your users informed about the benefits and security of embedded financial services. Develop educational materials, tutorials, and customer support to ensure that your users fully understand the offered advantages and feel comfortable using these new features. Accurate and truthful information about services further solidifies customer loyalty to the new Embedded Finance offering.

5. Continuous Monitoring and Updates:

Embedded Finance is dynamic, and customer needs evolve. Stay updated with changes in the financial sector, monitor the performance of embedded services, and be prepared to implement continuous updates and improvements. Agility is key to success in this constantly changing environment.

By adopting a strategic, customer-centric approach aligned with security principles, significant gains can be achieved with the implementation of Embedded Finance.

In fact, a study by Juniper Research found that the value of Embedded Finance will exceed $138 billion in 2026, compared to only $43 billion in 2021.

This model not only boosts competitiveness but also opens up new opportunities to offer a more comprehensive and convenient customer experience.

Stay ahead of the curve, leverage innovations, and create an embedded financial ecosystem that effectively responds to the needs of your target audience.

Embedded Finance is gaining attention in the financial sector, and you can be a pioneer in this offering. Feel free to talk to our experts to understand your current scenario and explore new possibilities, so we can apply what we do best: deliver business results with Technology, Design, and Data. Access here.