Embedded finance: Helping programme managers compete

FinTech Magazine discusses how programme managers can leverage embedded finance to compete with fintechs in financial services, sounding out the thoughts of Paynetics Executive Chairman and Co-founder Ivo Gueorguiev. 

Why do programme managers need to compete with fintechs, how has the market changed? 

Financial services have undergone a bold transformation in the past few years. Technology has catapulted innovation beyond a brainstorm's wildest dreams. 

From startups disrupting payments with artificial intelligence (AI) and digital wallets making transactions simpler than ever, there has been a paradigm shift in the consumption of financial services.

Consumer power has raised the bar for delivering an unforgettable payment experience. Now, experiences are valued much more than traditional banking consumer relationships. 

Steeper competition from fintechs fuelled by abundant capital and pressure from clients embarking on their own payment and banking reinvention journey means the territory of programme managers is at risk.

There has been a lot written about the conflict and co-habitation of banks and fintechs, yet nowhere near enough attention is paid to the relationship between established programme managers and fintechs. 

It’s time for programme managers to regain control and get back into the race.

How is the market defined by consumers today? 

We’re in an era of empowered consumers, demanding, rightfully, superior and accessible user experiences. 

Fintech startups have been addressing an endless stream of new use cases, many of which encroached on the territory of traditional and well-established programme managers. 

As a result, the financial services landscape has changed the rules of engagement.

Consumers want more control over their finances and how they pay. They want the businesses they are dealing with to have their back, particularly in economic uncertainty where trust is at an all-time low.

 No longer is offering their preferred payment method enough. It’s about giving consumers resources to make smarter payment decisions and reducing the steps to complete the buying journey.

For this reason, programme managers must put pen to paper to go beyond their core offering to capture the attention of their target audience.

Is there a danger payments providers can get left behind? 

The rapid move to digital prompts the question of how long legacy payments have left in the financial ecosystem. Fintechs are bringing value by the bucket-load to consumers. 

To avoid falling into the legacy trap, programme managers need to reinvent themselves. One way is to capitalise on value-added services to compete with challengers.

Payment is purely a necessity for consumers, and services like cashback, discounts, coupons and earning reward points make the user feel valued. 

Programme managers can offer financing offers such as Buy Now, Pay Later (BNPL) and pay in instalments to enable consumers to pay in a way that suits their needs.

Including additional services to a core offering is the first step. The most important aspect of deployment is creating high-quality features that are easy for the consumer. 

Businesses can achieve this by upgrading their technology infrastructure to include advanced analytics and artificial intelligence for robust and reliable execution.

How can embedded finance help programme managers strike gold?

Embedded finance is another way to introduce a new revenue stream for programme managers. 

It includes different business models, such as partnerships, Banking-as-a-Service, and open finance, for businesses offering a product that requires a payment element.

The rise of embedded finance is a game-changer as non-financial businesses can offer financial products. 

For example, a retailer can offer financing options in their application (app), or a taxi service can enable passengers to search, hail and pay in one place. 

As a result of embedded finance, programme managers can respond to widespread demand for convenience.

In-app data also must not be ignored. Embedding payments allows programme managers to extract high-quality data with AI from all parts of the payment process. 

Businesses can use the data to build their offerings and deliver a hyper-personalised and enriched payment experience for each customer.

Should perceptions around regulations also change? 

With embedded finance increasingly adding value to non-financial customer journeys, where does regulatory compliance fit? 

There is a reputational risk, so maintaining compliance end-to-end requires heightened awareness for businesses to remain resilient.

Embracing the automation of Anti-Money Laundering (AML) procedures, streamlining transactions, and risk management will allow programme managers to adhere to European standards. 

Businesses can then make informed decisions on technology and partnerships, ensuring regulatory compliance and trustworthy services are present throughout.

As programme managers take the steps to operationalise embedded finance, they need to confront the risks head-on, but this doesn’t have to be at the cost of a positive customer experience.

What does all this mean for the future?

Financial services have transformed because of technology. Consumers are more powerful than ever, and programme managers face an increasingly competitive market to retain a seat at the table. 

Consumers demand greater control, convenience, and simplicity with where and how they pay. 

Programme managers must reconsider their legacy-driven infrastructure and modernise their processes to meet those needs. Additional services such as payment plans and rewards will keep existing customers coming back for more.

Embedded finance has created an exciting opportunity for programme managers to simplify the payment experience and speed up conversion rates like never before. 

As with all the hype and excitement around new digital innovations, compliance must not fall by the wayside. 

However, innovation does not have to suffer at the hands of regulation and with the right precautions can go from a burden to a benefit.

Programme managers, it is now your turn for the spotlight. 

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