Embedded finance and digital transactions


Do not you feel that paying bills and purchasing things have become easier on digital platforms? Something has reshaped traditional methods.  

What is it called? “Embedded finance”.  

Covid led to more digitalisation and a shift of old modes of services across the globe. Financial products and services underwent vital changes. 

Embedded Finance is on the podium and it can be the future of financial services. Embed means to attach firmly or to implant. Embedded Finance means tying financial services and non-financial platforms. This will boost the customer’s experience as they get the financial services along with other products at the source itself.  

Amazon, Apple, Facebook and Google are amongst the giant companies that have tried their hands in embedded finance.  

Payments, Card payments, Lending, Investments, Insurance and Banking is now under the umbrella of embedded finances.  

For example, we can make the payment for the food in Zomato and Swiggy without switching the respective apps. This makes the purchases easier.  

Embedded cards are more economical than the usual ones. Smart cards with electronically encrypted information can be a satisfactory alternative to cash. Embedded lending is also possible through these types of virtual cards. Customers can purchase using these cards, companies can gift using these cards and even people can exchange such cards among them. 

The virtual platforms also offer the scope of investment in mutual funds, the stock market, etc. much more easily. As per the S&P Global Market Intelligence data, India is the second-largest insurance technology market in the Asia-Pacific region.  

India is one of the fastest-growing insurance markets in the world. Hence,  insurance technology investors are captivated by the Indian market. Owing to the complexities of traditional investment and insurance plans, embedded finance is a better choice for customers.  

We can explain this framework as an affair where the banking services are offered by non-banking entities. Financial services can meet the customers directly. This is more profitable because a lot of physical credentials are not needed. This is time-saving due to easy accessibility. Therefore, it is convenient.  

We can expect the traditional players to take embedded banking to a superior phase. 

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