What does today mean for embedded finance?

During the on-going global crisis, it is easy to focus on the many negatives we are all experiencing right now. We're witnessing certain industries suffer - struggling to stay afloat, while others are finding creative ways to keep business up-and-running. Amidst all the negativity, we can take a look at some silver linings and try to see opportunities peaking through these hardships.

Embedded finance is an interesting area to consider. Even before the crisis, embedded finance was making waves and gaining prevalence as a potential new norm. It seems the global crisis may accelerate embedded finance to become the next big thing. It is possible that in our world today, embedded finance has never been needed more.

To take a step back - what is embedded finance. As simply as possible, embedded finance describes the notion that financial services become integrated into other experiences, products and ecosystems.

A great analogy can be seen in the transportation industry. Think of Uber, Lyft - the major players of the ride and ride-share apps. Before these services existed, people would have to dial up a taxicab or go hail one from the city streets. What these services did was disrupt, in a positive way, how people get around - they embedded calling a cab into people's typical interface, the mobile device. And not only did they embed a transportation service into the customer's ordinary use of a mobile device, they also enhanced the ride and ride-share experience by leveraging mobile device technology to add features that never existed before.

If you apply this thinking to financial services, you get embedded finance. Think of Facebook Pay as a direct example - Facebook integrated a peer-to-peer (friend-to-friend) payment solution into a digital platform - people were already routinely using. As more and more major brands and companies adopt embedded finance solutions, we will very likely see a shift to financial services existing seamlessly in the background of any given user experience.

The shift to embedded finance was already taking place before the global crisis. Arguably, the current conditions of our world today may accelerate the overall adoption, leading to embedded finance quickly becoming the standard.

And Wise is part of this movement. This is exactly what our mission here is to do - to embed business banking and payment solutions into our customers' pre-existing digital ecosystems. By doing this, we create a more streamlined banking experience for businesses, and importantly, improve the business banking experience through enhancements and new capabilities. We bring banking and payments into the business owner's world, helping businesses move forward while our products are working behind-the-scenes.

We have always been able to see the immense potential of embedded finance, but today's crisis truly illuminates how significant not only embedded finance solutions are, but the significance of digital ecosystems and embedded solutions as a whole.

Without digital ways of conducting business, without digital ways to take care of the most basic errands, things would feel even more challenging right now. It is an amazing thing that services like Grubhub and DoorDash exist when a crisis like today's hits - many restaurants can keep doors open via delivery services, ones that are keeping others employed through this time. We see an undeniable major economic impact from the crisis, but we are able to maintain some strength and hope - to power through with the help of digital technology.

It will be interesting to see how embedded finance evolves - is it the next big thing? It seems that embedded finance shows as a promising opportunity amidst the crisis - a silver lining that will largely and positively impact our daily experiences (and often already is).

At Wise, we strive to be part of this silver lining for all our customers, old and new, and to be here to help businesses keep moving forward throughout this challenging time. Embedded finance is here to stay, and Wise is, too.

October 27, 2020
Arjun Thyagarajan