• Financial technology is expected to grow at a compound annual growth rate (CAGR) of 23.41% over the next decade.

  • Embedded Finance is taking off withIn the financial services industry and is becoming a significant trend, with Alviere taking bold steps to define Fintech 3.0

  • As a result new opportunities are on the rise driven by this greater awareness, and more traditional brands’ desire to be part of the Fintech Revolution

The evolution of financial technology (FinTech) has greatly impacted the global economy. Researchers have pointed out that the phenomenal growth in the FinTech sector has changed what consumers demand of banking services.

FinTech companies have created a wide range of consumer-oriented apps and services that enable people to pay digitally, both in person and online. Banking, trading stocks, managing funds, and investing in various and new types of assets has become central to the transformation of financial services from the dated and old to the vibrant and new.

In 2020, the total transaction volume of digital payments alone reached over $5 trillion, and is expected to increase. But this is just the beginning. Established brands are aiming to launch into this lucrative market. U.S. based startup Alviere is launching an Embedded Finance platform in Europe and the U.K. this year that will allow household name brand companies to build on the trust and their existing relationship with customers in order to offer complete banking services, challenging companies such as Wise, Revolut, Curve, and others in the FinTech sector.

The development of digital platforms and the increasing number of people using them are creating a flourishing environment for FinTech companies. According to a survey conducted by Harris Interactive and Plaid, 59% of Americans relied on FinTech apps to manage their money during the COVID-19 pandemic.

Benefits of Embedded Finance

Embedded Finance platforms simplify the process of launching, running and managing financial services offerings - mainly for companies that do not offer any kind of financial service today. By launching a range of financial services, existing name-brand global companies can eliminate the need for traditional banks. Unlike existing branding partnerships between banks and brands, one of the key advantages that Embedded Finance provides is the ability for the brand to continue to own the customer and manage the customer journey, as well as own and mine the data customers generate.

Embedded Finance allows brands to rethink their relationship with their customers. By providing a whole new set of financial services they can offer their customers more effective solutions and tailor the offerings of their core products or services.

In return for partnering with Embedded Finance companies, brands will see their new financial services offerings turn into a new and robust revenue stream successfully transforming customers’ relationships with traditional banks.

Experts weighing in on new age banking

According to Yuval Brisker, Co-Founder and CEO of Alviere: “Financial services are no longer exclusively the purview of financial institutions. You do not need to be a financial institution to provide financial services. More than a decade into the FinTech revolution, the people who still hold all the power are the traditional banks, so it’s still fair to say that this is the oldest industry that has still not been comprehensively impacted by the technology revolution. The question I ask myself is: What is it going to take to devolve some of the power out of the hands of these financial institutions? My answer is: It’s going to take brands that are willing to embrace the idea that banks don’t have exclusive ownership of their customers; brands who have mainstream recognition and trust with the vast majority of consumers in order for the main majority of banking customers to convert. I believe that there is a huge potential for customers to have a vibrant financial life with many,and that there are paths to achieving this.”

According to Angela Strange, general partner at Andreessen Horowitz: “Every company now, as we saw with Uber, Lyft, and Spotify, should be thinking about how to leverage financial services to better service their customers, better retain their customers, and drive more margin… In the not too distant future, nearly every company will be a financial services company and get a significant portion of their revenue from financial services. This [new] infrastructure is driving fundamental transformation, and more importantly it’s going to fundamentally change banking for everyone. For startups, you will be able to launch your company faster and cheaper. For existing financial servicing institutions, you might finally be able to launch new products quickly or spend less on IT maintenance”.

Keeping track of new-age banking solution providers at a time when the sector is exploding with growth requires a thorough understanding of the industry and how value propositions are evolving. Globally, companies such as Alviere, Mercury Banking, Nubank, Chime, and Sofi are all attracting a lot of attention right now. Each, of course, opting for a unique route to market based on differentiated business models.

Suggested video:

Alviere has created the technological, business and regulatory infrastructure that allows any company to offer financial services to its customers. The firm is now one of the leading providers of global Embedded Finance serving any business with a brand and audience. The Alviere platform enables its clients to easily and securely embed various financial products and services into their existing infrastructure. This allows them to generate more revenues, attract new customers, and gain valuable customer insights.

Final take:

FinTech has come a long way and it is thankfully evolving to the point where consumers and merchants are no longer hostage by the first-movers in the sector.

Fintech 1.0 was PayPal – global brand recognition; global transformation; significant disruption.

Fintech 2.0 occurred after the global financial crisis in 2008 when public trust in banks and governments was lost and people sought ways to do things differently. This brought about cryptocurrency and neo banks, providing financial alternatives.

Alviere and other innovators represent Fintech 3.0. Here, we will see offerings from existing and trusted brands to make progressive direct banking services available to a much greater pool of consumers. This also serves to open up a path for the unbanked and underbanked, who are more likely to be open to a banking relationship with a brand they know and trust.