The evolution and promise of embedded finance

Embedded finance is rapidly transforming the financial services and e-commerce sectors.

Once a niche concept, it has now become a cornerstone for businesses looking to enhance customer experiences, increase revenue and improve loyalty.

One such company is Alviere, a platform that enables enterprises to seamlessly integrate financial services into their ecosystems.

Pedro Silva, CEO and co-founder of Alviere, recently discussed the evolution and opportunities of embedded finance in a conversation with McKinsey’s Roshan Varadarajan.

Here’s a closer look at the insights from their discussion and what they mean for the payments industry.

From Mezu to Alviere

Alviere began as Mezu, a peer-to-peer payment app designed to offer privacy-focused transactions.

Initially, the app addressed a gap in the market by allowing users to exchange money without sharing personal information. However, building a robust platform proved challenging due to a lack of infrastructure and regulatory hurdles.

By 2018, the team pivoted, licensing their own operations and transforming the app into a scalable platform.

Enterprises soon recognised the platform’s potential for white-label solutions, prompting Alviere to adopt a business-to-business (B2B) strategy.

Today, Alviere enables large enterprises to embed financial services directly into their operations, eliminating the need for businesses to build compliance and regulatory frameworks in-house.

The Value Proposition of Embedded Finance

Embedded finance platforms simplify the integration of financial services for non-financial enterprises, enabling them to offer banking products such as digital wallets, payment processing and even cobranded debit cards.

For businesses, embedded finance is not just about providing financial services—it’s about enhancing their core operations.

For instance:

• Retailers use embedded wallets to drive future purchases while eliminating network fees.
• Airlines and hotels integrate cobranded debit cards to expand loyalty programs while reducing rejection rates associated with credit cards.
• Marketplaces offer balance storage within apps, reducing transaction costs and enabling monetization through features like debit cards or international payment fees.

This tailored approach to diverse industries should ensures that providers are offering a solution, not just technology.

Overcoming Challenges with Embedded Finance

The growth of embedded finance presents challenges for enterprises, particularly around compliance, technology integration and customer adoption.

Silva emphasises that successful solutions must address four key factors:

1. Enhancing Core Business: Financial products must align with the company’s goals, driving revenue, reducing costs or increasing loyalty.
2. Regulatory Assurance: Enterprises require platforms that minimise reputational and regulatory risks. Alviere stands out by obtaining direct licensing and maintaining rigorous compliance.
3. Modern Technology: Easy-to-integrate, scalable solutions with a forward-looking roadmap are essential.
4. Simplicity: Businesses prefer turnkey solutions managed by a single provider, from compliance to customer support.

By addressing these concerns, a good provider enables enterprises to focus on their strengths while delivering financial services that enhance customer value.

The Future of Embedded Finance

The demand for embedded finance is growing across industries, driven by its ability to improve customer experiences and create new revenue streams.

As Pedro Silva highlights, the opportunity lies in offering products that meet the unique needs of each business while ensuring scalability and compliance.

For enterprises ready to leverage embedded finance, the potential for innovation and growth has never been greater, it’s becoming a strategic tool for businesses across industries.

By addressing regulatory, technological and operational challenges, embedded finance platforms are paving the way for seamless financial integration.

As this sector evolves, businesses that embrace embedded finance will gain a competitive edge, driving value for both themselves and their customers.

 

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