Embedded finance: a win-win for both customers and banks

What is embedded finance and how is it helping business owners & banks?
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Fintech has a new target in its sights: routine business admin. Many businesses continue to spend significant amounts of time on recurring tasks that, until now, have required interactions with financial institutions. We sat down with Nick Heller, CEO of tomato pay, and Kevin Stefton, co-founder of untied, to talk about how Fintech is offering businesses dramatic time-saving opportunities.. 

To start with, what exactly is embedded finance?

Embedded finance takes financial processes like invoicing, requesting loans, and recording tax information, and integrates them directly with a business’s digital systems. This connection between a business and its financial service provider removes the need for them to spend time executing tasks in person.

In Nick Heller’s words,

Embedded finance moves financial services into the background where they become a passive operation..”

It’s about practical things like automatically sending invoices when a job is done.

Embedded finance can help business owners in a variety of ways – some of them unexpected ways. For example, they can automatically categorize transactions so that tax reporting is taken care of in real-time. . Similarly, they can combine embedded finance with open banking to truly understand their bank accounts – when they can expect payments and when extended cash might be needed. All of this without a need to log into internet banking.

“We often see people worrying about how to get on top of this admin work. And the more we can take advantage of data that already exists, the more powerful this is.These things just happen automatically in the background.” – Kevin Sefton

The evolution of financial services

The finance industry’s incumbents are often innovating, , and embedded finance is no exception.

While customers benefit from convenience and time-saving, it’s a win for the banks, too.

“Banks gain greater visibility on when they will be paid . If you’re an incumbent bank and you’re offering a service like that, it opens up a wealth of possibilities. Not only are you able to better service your customers, you’re also gaining helpful intelligence on them. You can use data points to find the optimal moments to offer relevant services.” – Nick Heller

If you want to hear more of Kevin’s and Nick’s thoughts on embedded finance, head over to the full  Banking on Air episode. You can listen to it on Apple Podcasts, Breaker, Google Podcasts, Overcast, Pocket Casts, Spotify or here:

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Full transcript of the episode is available here.

Here’s a rundown of the episode:

  • 01:09 Nick’s and Kevin’s introduction
  • 05:10 What is embedded finance
  • 15:00 How should business owner implement embedded finance
  • 18:20 Incumbent banks and embedded finance
  • 26:00 Non-financial institutions

Nicholas Heller is a serial-entrepreneur with over 20 years of experience as a corporate leader and founder whose experience expands across capital markets, e-commerce and telecommunications. Nicholas is currently CEO and co-founder of the award-winning, payments company, tomato pay, and previously led the European R&D team at Google.

Kevin Sefton, untied, the UK’s personal tax app – Kevin is a serial entrepreneur with a background in both taxes and payments. Originally a chartered tax adviser for a Big Four accounting firm, he moved into launching tech businesses including one of the first internet payment businesses. For a long time, Kevin wanted to make taxes simple for people with the use of transaction data – and that why untied was launched in 2018. It’s a simple idea which uses open banking and other data, makes tax sense of it and then files tax returns directly to HMRC without the need for an HMRC login. untied is the first end-to-end app recognised as compatible for Making Tax Digital for Income Tax and recently powered the UK’s first open banking payment to HMRC as part of a partnership with Fractal Partners.

‘Banking on Air’ is the official Vacuumlabs podcast covering the challenges, opportunities, perspectives and opinions that matter to our community. The podcastlooks under the hood of the changing face of tech: the acceleration of all things digital, the impact of regulation (and disruption), the need for collaboration – and the spectrum of businesses competing to be fintech and financial service suppliers around the world.

This podcast is brought to you by Vacuumlabs.We’re sharing our experience and expertise in creating digital solutions for professionals, community banks, and fintechs. We believe that the future of digital transformation in financial services lies in communities.

We invite you to join us and our guests over the weeks and months to come.

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