By Alistair Cotton, Co-Founder at Integrated Finance

There’s never been a better time to build a Fintech platform. Software has driven the unbundling of banking services into a defined stack of providers, which means assembling a Fintech today is made possible by picking the best-in-class vendors at each level of the payments stack and re-bundling them together into a seamless experience for users. But a lower entry cost has its downsides, notably – it’s increasingly difficult for fintech companies to reach their customers at the scale needed to achieve long term success. This is due to both increased competition and the ubiquity of large social media platforms that increasingly dominate people’s attention and time.

Designing for customer-centricity

In this competitive industry there is a race for customers attention, and fintech companies are finding they need to innovate to gain access to users. Choosing a niche, really understanding their pain points, and building a tailored experience around this, is one route to customers. However, they also need to target where the customers already are; inhabiting platforms that already have their attention (e.g. WhatsApp, Facebook, Reddit) and then inserting financial products that interest customers directly into these communities.  This customer-centric approach is something that would, historically, have been considered later in the development phase of any financial product, with scalability being the primary concern.  As Embedded Finance matures, and technology infrastructure helps companies build and test products quickly, fintech companies are now able to become more customer-focused earlier on in their growth story. 

In customer-focused businesses, embedded finance can leverage a loyal customer base and give fintech companies access to new revenues streams within a community. For example, if a retailer is selling high volumes of low margin goods to users, adding a branded payment card and bank account can increase customer retention and, on the bottom line, sometimes add as much 2-3% to overall margins; a significant figure when considered at scale. 

Cost is no longer a barrier to entry

There are plenty of mid-level SMBs that historically wouldn’t have been able offer financial products to its customers because costs were too high. However, now they build on top of infrastructure that does the heavy lifting, and these businesses can reduce development costs and improve time-to-market timelines. For those businesses that don’t have millions of customers to absorb such costs, this approach offers real value because products and channels can be tested with customers and iterated rapidly, without huge, fixed set-up costs. 

Embedded financial technology also gives businesses much more visibility over data, allowing businesses to create a continuous feedback loop based on customer behaviour within their community, and then offer additional financial products which meet their needs. This then helps a business to become even more targeted with their product offering, and ultimately further increases customer spend. 

A specialised service for customers

Embedded Finance allows fintech to reach communities via their own communication channels providing a highly specialised service for customers. Financial services are now capable of analysing behaviour and delivering a customised experience to communities in a cost-effective way, removing the monopoly that big banks once had in the space. 

Whereas the industry previously focused on a great unbundling of financial technology, which nurtured innovation, this re-bundling of fintech services has shifted the emphasis back onto customer experience, giving fintech companies the opportunity to fully leverage the real value of each customer. 

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