Author: Don Obrien

Embedded finance set to alter financial services landscape for good

Retailers have been an integral part of the growth in embedded finance in recent years. For example, Kogan offers home loans, credit cards and superannuation funds. Coles and Woolworths have offered credit cards, and IKEA bought a 49 per cent stake in Ikano Bank; a UK-based retail finance company specialising in point-of-sale.

The deal marks IKEA’s plan to step into financial services in-store and online, which will help make IKEA more affordable and accessible to consumers.

Mastercard country head, Richard Wormald says the payment landscape has continued to evolve to support seamless payment experiences to meet the changing needs of consumers.

The global payments company has been partnering with fintech companies to create better outcomes for customers.

“We are living in an on-demand society, and as such, consumers are looking for more choice when it comes to payment options.

“People want to be able to access and use their money how and when they want, using any form of device they choose,” Wormald says.

He has witnessed the importance of embedded finance from a merchant perspective through the pandemic in particular.

“We are increasingly leading always-on, digitally-enhanced lives, and fintechs have been critical to creating end-to-end solutions that make that possible, from quickly adapting to the shift in digital commerce to securing the cyber sphere,” Wormald says.

“Merchants have been able to adopt new payment solutions to better respond to customer needs, and to create more streamlined online and in-store experiences to respond to this demand.

“But fintech is more than that – it’s about deploying technology that makes the world a better place: whether it’s helping consumers better manage their finance, boosting sustainability efforts or ensuring small businesses have what it takes to navigate a challenging economic landscape,” Wormald says.

The way forward

SaaS cloud banking platform provider, Mambu agrees that embedded finance is a real game-changer for the payments landscape in Australia.

The rapid shift into embedded finance means that all types of industries can leverage their existing customer databases and diversify their offerings to include financial services, managing director of Mambu APAC Myles Bertrand explains.

“We’re seeing everyone from retailers to telcos to car manufacturers make a play for this lucrative space, and consumers are responding positively. Why would you go to a bank for a loan when you can get financing from the same place you’re buying your big screen TV?”

And while consumer demand has been a significant factor, the other driver of the growth in embedded finance is fintech innovation; we’re seeing an enormous uptick in the use of APIs in financial services, and adoption of the ecosystem approach – where banks or other customer-facing organisations work collaboratively with fintechs – is becoming increasingly common, he says.

The roll-out of amendments to the Consumer Data Right (CDR) will also open up new activity and be a catalyst for momentous change in the industry, he predicts.

Those who choose to use CDR will have their information transferred using secure automated data technology, which has already been rolled out to banking, with the energy sector and telco sector to follow.

Bertrand adds: “I think we’re going to continue to see a huge amount of activity in the embedded finance space. Australia is a little behind the rest of the world, but as we’ve proven before, we’re quick to catch up.”

Mambu is the world’s only true SaaS cloud banking platform. Launched in 2011, Mambu fast-tracks the design and build of nearly any type of financial offering for banks of all sizes, lenders, fintechs, retailers, telcos and more. Our unique composable approach means that independent components, systems and connectors can be assembled in any configuration to meet business needs and end user demands. Mambu has 700 employees​ that support 200 customers in over 65 countries. In Australia, Mambu counts Bluestone, Lumi, Nimble, Hay and Tyro as customers.

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Oliver Bolt

Oliver Bolt

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