Embedded wealth: how fintechs can radically alter the way we invest

Smartphones with embedded payment services created a seamless experience for consumers. Now embedded fintech technology is poised to radically alter the way we interact with investment services. Daniel Tammas-Hastings predicts existential problems for financial institutions that don’t understand the threat of a new embedded finance world.

 
The term embedded finance was first widely used in payments and is now moving up the financial service value chain into lending, wealth, and other associated markets. Smartphone take-up of greater than 90% in the EU, UK, and US means that residents of most markets are familiar with paying for services through Android or Apple apps. If you’ve used a popular ride-sharing app or taxi service, or enjoyed a take-away from Deliveroo, then you’ve benefited from embedded finance.  It is all around us and here to stay. For those firms that understand the opportunity, billions of dollars in profits are possible. For legacy financial institutions who don’t understand the threat, existential problems could emerge as they lose market share and relevance in the new embedded world.

Consumers could receive huge benefits from the embedded revolution through new and improved services, more competition between service providers, and lower prices generally. These benefits have to be underpinned by strong regulation and better integration of technology, though. It’s also worth noting that worries about indebtedness (think “buy now, pay later”) and gamification leading to poor outcomes mean that there can be losers as well as winners.

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Πηγή: blogs.lse.ac.uk