Embedded Banking: The Next Evolution For Fintech

airplane window

Fintech banking has evolved in new and unprecedented ways. Only a few years ago it was nearly impossible to gain access to an API for sending money; now we can tap into automated and programmatic money transfers with futuristic technology. Now we’re anticipating embedded banking to be the next evolution for fintech. This is part of the open banking revolution.

What’s embedded banking? We interact with embedded banking already, but now we are seeing the new ways that it can be used, expanding our online banking experiences. Read on to see why we’re so excited for this next evolution for fintech!

What is Embedded Banking Exactly?

Embedded banking actually refers to integrations in fintech that make sending money easier. All banking APIs and payment APIs are doing multiple things at once – they are regularly trying to make the integration of other financial services and fintech APIs easier, and they are seeking technologies for improving compliance. Embedded banking is the path that helps fintech and the fintech underbelly (the infrastructure) do this second nature. 

When we talk about embedded systems, think about pre-integration and programmatic calls. This means that certain payment infrastructure services will include an API call standard, whether this is a link to a partner service for the bank account linking API or ACH API

While this may seem like the choices are a little limited for our customers, it is actually making the decision-making process easier. Instead of having to source your own fintech stack, you can go with a reliable, industry-leading technology like Sila and have access to embedded banking features that make your fintech go farther faster and before your competitors.

Advantages of Embedded Financial Features in Financial Infrastructure Services

Embedded financial products are really geared towards those companies who don’t have quick access to the services that financial institutions offer. Think of the ability to send money to another business; as a company, you would have to hire a service that enables you to do this. However, with embedded finance, you can actually build that ability into your standard operating procedures and eliminate the middle man. 

Embedded finance makes buying products faster and easier for customers while providing opportunities to streamline back-end processes for businesses. And customers are more than willing to go through a payment stream that is easier than having to jump through hurdles to get their money to you. 

While your customers may not be stating that this is what they want, this is what they want, and added embedded payments or other financial services through an open banking API will drastically improve your customer experience.

Here are the advantages of embedded finance:

  • Invoice financing for B2B online marketplaces and transactions
  • Hiring B2B professional services online
  • Industry-specific needs, like unmatched vendor variety in the oil and gas industry, or finding specific materials in construction
  • Shopping apps and niche marketplaces
  • Financial support in the healthcare industry
  • Embedded insurance for faster claims and payment processing for insurance claims
  • Convenient digital wallets
  • Branded banking for corporate clients
  • Embedded payment programs in automotive industries
  • Payment plans
  • Paying for work in the gig economy
  • Automated banking services

These are just some examples of how embedded finance can be easily integrated into many of the services we use daily. Gain access to many features available in a normal financial institution, but as a company!

How Sila Powers Embedded Fintech

Sila is a financial infrastructure or BaaS provider that can be used to create your next payment app or embedded finance. As a bank agent of Evolve Bank and Trust, our customers can access secure pass-through FDIC insurance and core baning features easily and with powerful technology backing them. Using a mix of banking and financial infrastructure, you can use Sila to build your next fintech for embedded financial tech. 

Sometimes referred to as Payment as a service or Banking as a service, Sila is different from embedded finance. In fact, Sila is how you create embedded finance. Here’s the distinction:

Is BaaS the Same as Embedded Finance?

BaaS, or banking as a service, is not the same as embedded finance. In fact, it is the backbone that supports embedded finances as it provides the financial services, digital banks, and connections that clients need to start an embedded financial product. 

The biggest difference here is front-end versus back-end. Embedded finance is more front-end access to financial services whereas BaaS is back-end functionality. 

How Does Embedded Finance Fit With BaaS

Banking as a service (BaaS) is what powers embedded finance. With BaaS as the critical infrastructure, new fintech can emerge and create more embedded financial services across a range of industries. The two types of products work hand-in-hand to propel the fintech future into more useful and innovative ways of using financial technology.

Does Embedded Finance Come With Compliance

All financial technology needs to follow compliance standards. When you create an embedded finance app or API, then it needs to be compliant with the U.S. system. As a powerful banking infrastructure, Sila includes key compliance features so a fintech firm can start up its digital banking API quickly. We called this embedded compliance or compliance-as-a-service. While we don’t do it all, we do a lot and we are here to support you while you start your fintech. 

Your embedded financial product may or may not have compliance included, it really depends on how the infrastructure is set up. If you go with a competitor of Sila, then you might have to do your own compliance services or add in compliance-focused APIs. Luckily, with Sila, we will help you along the way. 

Starting Your Embedded Banking App With Sila

Ready to build an embedded banking app to power the next generation of financial services? Interested in being one of the embedded finance companies challenging how we send money globally and in the U.S.? Connect with Sila to learn how to build the next banking revolution app. 

With our services, fintech companies can build an app that:

  • Allows you to programmatically pay bills or save money
  • Enable faster bill pay with instant settlement
  • Streamlines transactions for businesses online or at point of sale (POS) devices
  • Industry-specific needs, like shopping apps, healthcare payments, vendor support, and more
  • Expedited payment processing
  • Embedded lending services
  • A branded digital wallet and corporate card for small businesses or clients
  • Automated payment plans, budgeting, and financial advisory services
  • And more commercial banking features

Be a part of the fintech revolution today!