Any business can offer financial services: the benefits of embedded financing

The development around fintech and Open APIs makes it possible for all kinds of companies to offer financial products themselves. Not only has it become easier, consumers across Europe are also increasingly open to it. Such ’embedded finance’ provides benefits for businesses, fintechs and consumers.

Customer trust is invaluable, especially in financial services. In the relatively highly digitalized Netherlands, services such as internet banking have been common for years, but now confidence in these services is also increasing at European level. Companies that are not a fintech or financial institution can also benefit from this because with white labelsolutions, almost any organization can offer its own financial services. Such services from companies that are not primarily financial institutions are what we saw embedded economy to call. In this article, I explain why any business should consider offering digital financial services.

Digital financial products: Holland at the forefront, Europe at the heels

The introduction of digital financial services is already well under way among Dutch consumers. Research (pdf) from the Dutch authority for consumers and markets shows, for example, that almost half of Dutch people have taken out new health insurance online via the health insurance company’s website (48%) or via a price comparison website (21%). According to figures from the Dutch Financial Markets Authority, the number of independent investors in the Netherlands increased from about 830,000 (pdf) to one million Dutch households between 2019 and 2021. This is the group that normally uses an investment app.

There are several reasons for the growth of digital financial services. Logically, in the Netherlands, the fourth most digitized country in the EU, one gets used to dealing with digital media and tools a role, as well as the increasing quality of digital products and services. In 2017, 83% of all Dutch people already used internet banking.

Corona as driver

In recent years, the corona crisis has unmistakably been a flywheel, even outside the Netherlands. Not only are more and more online payments being processed, but a recent survey by Stripe and YouGov showed that 70% of all European respondents used digital financial services such as internet banking and digital banking during the corona crisis. wallets, budget management apps and online money transfer services. They also plan to continue using it in the future.

Confidence in these services also increased significantly in the EU countries surveyed. According to the survey, as many as 42% of all European respondents trust digital financial and fintech providers as much as traditional financial institutions. As a result, the idea in Europe seems to slowly but surely crumble that only the traditional house bankers can rely on money. This fact not only opens the door for fintechs, but also represents an incentive for traditional financial institutions and banks to offer innovative new services that make their businesses future-proof.

Embedded Finance is the future

Customers are constantly making higher demands, especially when it comes to ease of use. This is partly a result of the ever-improving solutions from fintechs and digital companies that are active in other industries, such as e-commerce. All of these factors influence consumer behavior and desires and needs. To meet these consumer needs, we are seeing more and more collaborations between fintechs and established players outside the financial sector.

In addition to this continued increase in financial services, embedded economy central. This term refers to the integration of financial services using application program interfaces (APIs) of companies whose core activities fall outside the financial sector. For these services can also be of particular interest to these companies. The so-called API economy enables companies in all sectors to quickly integrate financial services with their existing service offerings and thus expand their scope.

For example, companies can issue their own credit cards or enable bank account management. With the introduction of PSD2 and the advent of Open Banking, there are significantly more opportunities for companies to offer consumers value-creating digital services. The necessary APIs for this provide innumerable benefits. Open APIs greatly simplify data exchange. This provides significant benefits for IT companies that can access APIs for banks and financial institutions.

On the other hand, banks can much more easily integrate new technical solutions with their service offerings to offer their customers an optimal user experience. At the same time, APIs help companies in all sectors with a greatly simplified integration of digital services. Using third-party APIs can eliminate the costly development of internal solutions, compliancetasks and the need to apply for permits.


Many companies are already using embedded economy As a result, we are already seeing good practical examples of a wide range of services. to online wallets and payout services, Shopify is a good example: with the integration of these services, Shopify resellers can manage their earnings directly on this platform and get paid out on average three days faster than when working with an external bank.

We also see parties integrating the supply of loans. For example, Jobs, a provider of home care software, offers flexible financing options to home care companies so they can access capital to help them grow. Another service that we often see companies offer is the debit card. Such as AtoB, a software company for truck transport companies, whose payment cards with functions for, among other things, the purchase of fuel, spare parts and repairs are specially tailored to this target group.

To remove any last doubt: when using embedded economy there are only winners. Businesses can use this to expand their range of services. Fintechs and platform providers take advantage of the opportunity to implement their infrastructure as white labeloffer a solution. And consumers, in turn, can call for new services. A winning situation for everyone involved.

About the Author: Margreet Brenkman is Head of Northern Europe at Stripe.

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