Embedded Finance

Lee Schlenker
6 min readJan 22, 2021

Will embedded finance increase your organization’s revenue per customer 2–5x?

Image Credit: GIlly on UnSplash

Embedded finance involves integrating payment, loan, insurance, and investment services into your organization’s technology platform and apps. For consumers, embedding financial services saves time, is more convenient, and can provide a significantly improved customer experience. In the short term, this minimal investment creates direct revenue opportunities for retail organizations by capturing a larger percentage of the benefits of each sale at a marginal cost.(1)

Over the long run, finance as a service provides sales organizations the data needed to fuel a deeper understanding of customer experiences that drive loyalty and repeat purchases. In this contribution, we explore the vision of embedded banking, example use cases, and what next steps can transform this opportunity into reality for your organization.

Redesigning your revenue stream

Market analysts predict that the market for embedded banking will be worth $7 trillion in less than a decade.(2) This market is driven by recent technological innovations and regulatory decisions that have facilitated access to financial services, which up until now have been the privy of traditional banks and financial institutions. Although the design of payment, loan, and investment services has been challenging, current BaaS (Banking as a Service) providers have built the technology foundation necessary to ensure the future growth of embedded finance. As Apple, ING, PayPal, Tesla, and Shopify have now demonstrated, this profitable opportunity is within reach of organizations today willing to invest in the right knowledge and skill sets.

The precise business benefits of embedded finance depend on where your organization sits in the market. For retail organizations, embedded finance opens up a range of sales possibilities and economic benefits tied to each commercial transaction. For Fintech operators, embedded finance offers a much larger market to grow partnerships and ecosystems across various industries and verticals. For traditional retail banks, embedded finance provides a strategic opportunity to disintermediate retail industries in monetizing their knowledge of consumer spending patterns. For the ecosystem as a whole, the transactional data…

Lee Schlenker

Dr. Lee SCHLENKER is a Professor of Business Analytics and Digital Transformation and a Principal Consultant of the Business Analytics Institute

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