Embedded Finance Innovation for Fintechs and Digital Platforms
October 4, 2021
By Seth McGuire, Chief Revenue Officer, Galileo Financial Technologies
The landscape of financial services is changing quickly before our eyes. Innovation that began with fintech startups and standalone apps has evolved. Banks and other financial institutions are leaning heavily into digital finance to deliver the types of integrated, mobile and connected experiences that consumers increasingly demand. Embedded finance is emerging as the next big wave in this transformation, as a new way to surface financial services in context and at the point of need for consumers.
At Galileo, we’re noticing that in addition to banks, insurance companies and investment firms, an increasing number of non-financial enterprise companies are embracing embedded finance for new ways to attract and retain customers, unlock additional revenue opportunities as well as reduce customer acquisition and service costs.
According to a new embedded finance report by Accenture sponsored by Plaid, a Galileo partner, embedded finance can:
• Add $230B in revenues for financial services providers by 2025 (Lightyear Capital)
• Allow companies to increase revenues between two and five times per customer (Andreessen Horowitz)
Accenture surveyed more than 1,000 non-financial companies (director level and up) about their embedded finance strategies and found it is already a priority for many companies—nearly half (47%) of U.S. respondents said their companies are already developing related offerings. Those that have begun implementing embedded finance strategies said they were either “successful” or “very successful” at increasing engagement levels (88%) and at attracting or acquiring new customers (85%).
Market shifts are happening everywhere as consumers embrace digital finance, creating opportunities in almost every segment of the market. As with many pivots, change lies in asking the right questions. Non-financial companies considering this area should start with their customers: What are my customers trying to accomplish and how can financial services make that easier for them? It’s less about embedded finance as the goal and more about simplifying the jobs to be done.
Companies must be able to assess whether they embrace three core qualities if they hope to be successful in their embedded finance journeys: customer trust, relevance, and business impact. This exercise is as much about measuring customer loyalty as understanding how the brand fits into their lives.
Working with partners like Plaid, Galileo is helping companies in many industries, including Fortune 100 companies, implement embedded financial services to extend revenue opportunities and engage customers in new ways.
In June, Galileo announced it’s supporting Verizon to deliver Family Money, a new service for parents to help their kids as they take charge of their financial future.
“With Family Money, we’re showing what’s possible when tech and financial services come together,” said Todd Oberstein, Executive Director Product Management and Development at Verizon. “Family Money provides even more value to our customers based on their unique needs. It’s the perfect way to help kids learn the ins and outs of managing money and yet another way we’re providing real benefits to our customers outside of the reliable connectivity they know and love us for.”
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