How Embedded Investing is Disrupting Fintech

Embedded Finance is here, and it’s already transforming the way financial services are delivered and consumed over the coming decades. In this blog we explain what the hype is all about, the various forms it can take, and why it is transforming the investing landscape.

Finance-as-a-Service

In simple terms, Embedded Finance is the use of banking and payments services delivered over api, as-a-service, or “on rails”. It’s an umbrella term encompassing all financial services offered by both banking and non-banking companies. In time every brand could “be a fintech”, with any platform able to integrate financial services alongside their existing products, and to quickly and cost-effectively develop entirely new ones.

Embedded Finance as a sector is expected to reach $230 billion in revenue by 2025 and reach up to $1 trillion in value, and is unlocking creativity and innovation across the fintech landscape and enjoying a significant rise in investment. Businesses essentially ‘lease’ access to tools and services offered by Embedded Finance providers, like WealthKernel, and use them to build new and creative financial products, without requiring the traditional development or compliance costs.
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Payment services was the first widespread application of financial services delivered this way, with providers like Stripe and Square two obvious examples, and now, thanks to the Banking-as-a-Service boom led by the likes of Railsbank and Solarisbank, companies can integrate banking services into any product or ecosystem, even traditionally non-financial ones!

Investing: The last great frontier for the embedded finance revolution
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Believe it or not, some of the newest investing products you’re seeing at new startups, major fintechs, and traditional managers are already being built on external stacks via API. Embedded investing, the newer sibling of the embedded finance sector, enables platforms to seamlessly integrate investment products and services into existing offerings, or build new propositions entirely on an investing stack delivered via API. 

Providers in the space offer everything from custody, trading, brokerage, portfolio management, and tax account wrappers in a vertically integrated suite, enabling fintechs and existing companies to rapidly build and roll out new investing products. Not only is it unlocking innovation from a product perspective: improving access to capital markets, providing lower cost access to portfolio management and robo-advisor technologies, but Embedded Investing providers are also enabling brands to offer products and services to new and traditionally underserved markets, too.

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Advantages of Embedded Investing 
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• Access a reliable technology stack without having to build it
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• Access fragmented and regulated capital markets with ease
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• Make transactions fast and convenient 
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• Streamline processes across the company via a single transactional interface 
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• Reduce back office admin
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• Generate additional revenue channels
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• Opportunity to dramatically enhance customer experience

With the rise of fintech as a sector, there has been an exponential increase in technological adoption across finance, with directives like PSD2 and Open Banking popularising the development and use of APIs and improving regulations encouraging innovation. With the help of embedded finance and embedded investing, fintechs and established wealth managers are dramatically improving finances and investments for millions of users around the world, irrespective of account size.

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WealthKernel’s embedded investing infrastructure enables fintechs and established companies to bring investing products to market with ease. Our platform makes investing easy, allowing the businesses to embed investing products alongside existing products, giving you the agility that you need to build and scale.
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Contact us at marketing@wealthkernel for more information.