Scarlett Sieber - Embedded Finance

We call this “embedded finance” because the finance is embedded in another context—a checkout line, a mobile app, etc. From the consumer perspective, it could be summarized as “invisible payments” or “invisible finance,” because the key message is that the financial transaction becomes naturally integrated into what you are doing to the point it feels invisible.

Embedded finance is different because it enables companies across industries, with existing audiences, to cater to their customers’ financial needs at the point of context. It is an enabler of new revenue streams, stronger customer engagement, and better visibility and access to key pieces of data. Most importantly, it equips technology companies, brands, and retailers with the ability to provide a banking and payments experience to their customers in a seamless, convenient, and authentic way by providing financial services when they need it most, naturally integrated into the experience.

Those of us who have ever gone to a car dealership and explored the option of purchasing a car (new or used) will be familiar with car dealers offering loans on cars. The dealer is not making the loan himself, he is a conduit for the loan, which is made by a bank or a captive finance company affiliated with an automotive manufacturer. The dealership is not offering finance as an act of charity. Without it, the dealer wouldn't make the sale to you, and he earns a percentage of the money you pay for on the loan as well. This works for all sides though, because without the loan, you might not be able to buy the car.

Another classic case of embedded finance in today's world is through Buy Now, Pay Later (BNPL), which happens at the point of sale. You are at an appliance store and want to purchase a $500 TV but only have $200 available to spend. The appliance store, typically backed by a network of partners, will front the money and you, the consumer, have a certain period of time to pay it back.

Buy Now, Pay Later is experiencing a tremendous renaissance today. A recent study from the financial marketplace LendingTree notes that 33% of consumers have tried BNPL and 67% of them plan on continuing to use it. 1 Later in this book, we will explore the reasons behind this trend, and the companies and factors driving it.

This book was written to capture a moment in time as well as to serve as a guide to what lies ahead. Whether you operate within financial services, technology, a brand, or business in general, or if you happen to be tech curious, this book is relevant for you because embedded finance is here and only growing and, as with much of life, it is best to be prepared. Embedded finance, by definition, is a global phenomenon and is not limited to any one region or demographic. It touches everyone, which is part of its power. This book tells that story.

It begins with the consumer. She has lived through great financial upheaval, experienced changes in the delivery of services, and is comfortable performing financial transactions digitally. She has a need that a financial product can meet. How does the product get to her? This book tells that story, along with many others. How have her needs and expectations evolved in the digital age? How has the ubiquity of computing power and internet access in the mobile era empowered her? What will her life look like in 2030?

This book will look at all consumers, not just those in the middle class who have the luxury of choosing from financial providers. We will also look at the underserved, the struggling consumer who works multiple jobs and needs innovative financial solutions to make ends meet. For this consumer, investing, and even saving, may be only a dream. How will embedded finance help all consumers live stronger, healthier financial lives?

And while consumers are a crucial part of the story, embedded finance is not only for them, but also for the small businesses. It is for the small businesses who are growing and scaling rapidly, not only the ones who will become the next big IPO, but it is also for the struggling businesses who need a loan to hire that extra pair of hands to take their business to the next level. It is for those small businesses traditionally overlooked by traditional banks but who have great ideas and interesting data points to support a strong probability of success in the future. Those businesses who can utilize embedded finance to make a massive difference in their story.

From an industry perspective, this book provides a glimpse into the future of financial services. The industry is evolving at a rapid pace and while at one time in the past, the bank was the only place you could get a loan or deposit your money, now there are many options. What role will banks, as we know them today, play in the future? How will banks adapt to this new role? Which banks are poised for success and what are the strategies and technologies they have in place to make this happen? We will look at the banks that are embracing the change and thriving, and the banks that are building new products for the new digital age.

Scarlett, the Strategist and Leader, and Sophie, the Entrepreneur and Operator, have been friends for a number of years, sparked by their shared passion around the conversion of technology and financial services. Their combined experience offers a unique, truly global approach to embedded finance. Scarlett has experienced these changes first hand in the boardroom while designing the strategic roadmaps for banks, large and small, on the global level, with a particular focus on the approach to Banking-as-a-Service (BAAS) and the opportunities that lie within. On the other hand, Sophie has spent the last 10 years designing the go-to-market strategy and execution of BAAS providers and more recently, embedded finance propositions across the continent of Europe.

As Jelena McWilliams, the chairman of the FDIC puts it, “Scarlett's and Sophie's combined backgrounds give them a unique perspective into the future of this space. Their strategic thinking, operational excellence and deep understanding of key players and technologies afford them background knowledge that few people have mastered.”

With deep expertise in the space, they share a vision and excitement about where and how embedded finance will impact the lives of everyday consumers and the role that Big Tech companies and beyond will have as they become a monumental part of the fintech ecosystem.

After many conversations and many sleepless nights contemplating the vast opportunities, they have agreed that now is the time to tell this story.

Whether you're a banker, work at a fintech company, are a business owner, or just a curious consumer excited about the space, we have a lot to share about this new way of connecting consumers with financial services and most importantly, share how your day-to-day life will be impacted for the better.

Banks need to learn to adapt to remain relevant in the new hierarchy. Fintech companies need to shape the financial products that the consumer-facing businesses will ultimately deliver. Once financial services can be delivered through a company or product consumers use every day, there is a tremendous opportunity to reach a greater number of people than ever before, and there is already evidence from early success stories that more progress is possible. We are just at the beginning.

The book will provide you everything you need to know about the evolving world of embedded finance from inception to predictions for the future. We will cover:

The Early Days: Proving the historical context and lessons learned from early players and how their efforts shaped the future.

The Present: Identifying the global enablers today, including detailed case studies about their approach with key takeaways you can start enacting immediately as well as highlighting the role that traditional financial service providers continue to play.