5 reasons to embrace embedded finance

Reason #1 : Enhance the customer experience 

Become more efficient by providing end customers with financial services via a BaaS platform, thanks to intuitive, seamless apps which they are now accustomed to using on a day-to-day basis. This is how a company like Uber, for instance, has managed to offer a seamless payment journey which is fully transparent for users. The integration of seamless payment systems in customer journeys has an immediate effect on user loyalty: effortless payment increases the purchase conversion rate. Uber’s app might be one of the first in the world to have used embedded finance modules, but nowadays the vast majority of apps feature a payment component.

Every newcomer on the tech market can henceforth increase their value proposition by embedding finance into their customer journey. One such example is Leeto, a platform providing solutions for employee representative bodies. “Although the payment part isn’t the core feature of our offering, it is a key aspect of our value proposition. In this way we can set ourselves apart with very strong added value,” Arthur Reboul, CEO of Leeto, explains. He adds: “We have noticed tremendous interest in our solution since we introduced the payment account. In three months, we have registered twice as many new customers as during our first two years! The payment account really does make life easier for employee representative bodies.”

Stronger customer loyalty has also been observed at Skipr, the corporate mobility solution. This equips the employees of its corporate customers with payment cards for settling all mobility expenses. Three years after founding Skipr, “the payment card has become a cornerstone of our offering,” Arnaud Biebuyck, CFO of Skipr, tells us, pointing out that: “Right from the launch, we needed robust and flexible technology that could easily fit into our customer journey.” The BaaS solution has thus enabled Skipr to quickly build payments into its service range.

Reason #2 : Better understanding of your market and your customers

While the KYC regulatory requirement might appear tedious for fintechs eager to get their solutions quickly off the ground, it is also a sign that the BaaS solution used is dependable and robust.

Right from the outset, Treezor has made conformity compliance its trademark. This commitment was strengthened in 2019 when Treezor was acquired by Société Générale. Treezor doesn’t make any compromises when it comes to the regulatory requirement of verifying customers’ identities. That said, the BaaS platform strives to streamline the KYC verification processes with its teams through innovations that keep the customer journey moving fluidly. For the fintech, the data collection happens seamlessly and does not require them to intervene. “We collect data about the transactions and payments carried out by our customers. This data is collected by the Treezor embedded finance module. This way, we are able to concentrate on our added value: coming up with alternative solutions for our customers and solutions for offsetting their carbon footprint,” says Kamel Nait-Outaleb, founder and CEO of OnlyOne.

Over and above the regulatory aspects, the KYC process is an incredible source of information for businesses. “ Treezor collects all of the banking data for us. We are able to use this data to tell our customers what the carbon footprint of their purchases is. Based on this carbon footprint, we suggest alternative solutions for lowering their impact. With the Treezor module we can also collect KYC data to enable us to subsequently promote products and services more in line with our customers’ expectations,” adds Kamel Nait-Outaleb.

By integrating financial and banking services, data can be collected about customer profiles and their consumer habits. New services can be developed based on the analysis of such data too.

Reason #3 : More efficient and productive organisation

The digitisation of businesses is underway. Whatever their size or business sector, every business now uses digital tools. These are not only for the attention of end customers, but also for internal use with HR or cash-flow management platforms. By integrating financial services, companies can increase their efficiency through, for example, ERP automation and the integration of management systems for staff. All business lines are concerned: from finance departments digitising their cash-flow management reports to marketing departments producing scores of their campaigns, not forgetting customer service departments using AI in their modelling.

Organisational procedures across the board are therefore being redefined as digitisation gains ground. Companies are moving towards more flexible management systems that can be adjusted in real time. This manageability is largely powered by embedded finance modules which can be seamlessly integrated into apps. Thanks particularly to the development of BaaS platforms, this is how “neobanks” have emerged.

All over Europe, new banking providers are challenging traditional banks on their markets. These new institutions provide financial services with low-cost solutions for individuals and professionals. We could cite Qonto as one such example, which offers an account alternative for professionals, and became a unicorn in 2022.

Reason #4 : New revenue sources

Adding financial services to a digital solution or app opens up new opportunities. Payment cards and credit solutions are potential new revenue sources for a fintech or business.

One of the major strengths of embedded finance is the interoperability of solutions, whereby new services can be added to a system.

Aware of this strong potential, Treezor integrated the Franfinance API into its one-stop shop offer, which now means it can provide its customers with a consumer credit option.

A BaaS platform forms the building blocks of Pixpay, a payment solution for teenagers. “Today, just 26% of teens have their own payment card. Given the inflexibility of the banking system in France, traditional banks have little to offer this age range. And yet, practices are evolving: we really do think that, in 5 years’ time, most teenagers will have their own payment card,” Caroline Ménager and Nicolas Klein, co-founders of PixPay, tell us. The growth of embedded finance has thus disrupted markets previously served by banks and is ushering in new value propositions.

Reason #5 : Technology of the future 

Embedded finance harbours tremendous opportunities for growth, and not embracing it could mean missing out. Over and above the customer knowledge aspect, BaaS solutions provide fintechs and businesses with new revenue sources. In the current economic context, the first unicorns are incidentally those who tapped into embedded finance tools to accelerate their time-to-market.

Far from being a fixed technology, BaaS platforms are constantly breaking new ground and coming up with new solutions. The payments sector is evolving quickly, and providers right across the board have significant challenges to face, including technology. Growing numbers of fintechs, once sufficiently developed, are choosing to operate under their own license from the French regulator while continuing to use the core banking of a BaaS solution. The unicorn Swile is one such example, as Quentin Vigneau, its Head of Product Payment, explains to us: “We have been a recognised electronic money institution since April 2021 and a Principal Member of Mastercard since December 2021. Treezor now concentrates on services that we aren’t looking to bring in-house, namely card processing and the SEPA Gateway. For Swile, Treezor provides the link between issuers and banks for the payment part. This is a major challenge. So we are working together to enhance the processes and the technology.”

True to its core values, Treezor is constantly improving its solutions, closely in line with its customers’ expectations. As such, Treezor is currently working on optimising its core banking to be able to address the concerns of all its customers, be they fintechs, unicorns or large corporate groups. “When our customers bring the regulatory part in-house, there are still two other parts remaining: the technical and the banking aspects. In technical terms, Treezor provides all of its customers with its services, including strong identification and instant payment for example. Such pooling enables us to make this full range of features available at highly competitive rates” André Gardella, CEO of Treezor, points out.