The world of finance is changing. APIs, cloud technologies and open architecture are rearranging the seats around the finance table. If banking services can be integrated into third party apps and software and pushed out to customers, the definition of who’s a bank or who’s a payment company is evolving. Banking is no longer somewhere you go — it’s something you do, according to a book by that title, authored by Brett King.
Embedded Finance is becoming an increasingly important topic (Tearsheet is hosting the Embedded Conference in November). Embedded finance is expected to grow to nearly $230 billion in revenue by 2025, up from $22.5 billion this year, according to Lightyear Capital.
What is Embedded Finance?
Embedded finance is the integration of financial services into a business, app, or software, regardless of the industry they serve. When riders step out of an Uber, payment is invisibly drawn off of a credit card stored on the Uber app. This frictionless experience doesn’t happen by chance. It happens because Uber has a team of payments engineers, backed by a handful of embedded finance partnerships, designing the experience.
Apple’s launch of Apple Card with Goldman Sachs was about more than just introducing an off-the-shelf credit card to its customers. Apple Card is an important, embedded financial tool in the Apple ecosystem.
Intuit, maker of the popular accounting software QuickBooks, recently launched a bank account for small businesses. QuickBooks Cash integrates directly into a user’s accounting software and in addition to a debit card and money movement, helps SMBs more accurately forecast their cash flows.
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