Embedded Finance Helps Fintechs During Economic Downturn
According to Iana Dimitrova, CEO of OpenPayd, the game has shifted for consumer-focused fintech due to the decreased financial entry hurdles for new firms introducing products through integrated financing.
Calling a spade a spade is something CEO of Openpyd has always supported. The economic crisis we are now facing is the worst since 2008. Inflation that is skyrocketing, an energy crisis, and supply chain interruptions are issues that every firm is dealing with.
It will be simpler to discover the correct answers if we are open and truthful about the issues we are experiencing and what led us to this place. What precisely is occurring with B2C fintech firms, despite the fact that the present economic climate is having an impact on businesses everywhere?
B2C Fintech Issues:
Fintechs that cater to consumers must deal with problems related to supply and demand. In Europe, we are now seeing the greatest inflation rates since the 1970s along with a crisis in the cost of living.
As a consequence, people are reevaluating their financial situations, taking money out of savings, and reducing their exposure to risky investments. Most B2C finance firms have never dealt with a client attitude like that, which is fundamentally different.
The fundraising landscape is another factor. Investor interest in fast-growing businesses without a clear route to profitability has decreased. B2C fintech has long been a favourite among investors, and its market value has increased significantly over the previous ten years.
Due to the general lack of confidence, many investors are increasingly putting more emphasis on revenue and a start-strategy up’s for being profitable.
What’s next?
Despite the current unpredictability, B2C fintech firms may still be successful. The exact opposite. Although the present market uncertainty will pass, the industry still faces strong headwinds.
The main justification is that, as of right now in 2022, creating new financial services and products has never been simpler. Embedded finance is to blame for it.
Embedded finance enables companies to incorporate new financial services directly into their product ecosystem without developing their own infrastructure or becoming fully regulated banks, for anybody who has missed its development over the last several years.
So, how may this appear? An app that encourages saving may integrate payments via open banking so that users can quickly contribute to their balance. A loan provider could seek to integrate foreign exchange capabilities into their business to reach consumers abroad and assist them if they need to make payments in other currencies. There are many alternatives; these are only two of them.
Embedded finance gives companies the potential to improve their current financial processes, so it’s not simply about improving the service to consumers.
Businesses may avoid the pain points associated with manual reconciliation, such as pursuing payments with the wrong references, by providing virtual IBANs to their consumers.
By using global real-time payment rails, they may expedite their payments. Everyone want to pay (and get paid) more quickly. The business’s life is made simpler by the ability to make those payment journeys as seamless as possible, which also improves the user experience.
How, therefore, was this radical shift in financial capacity possible? APIs. Businesses may now use an API to plug in the financial services they need and get started.
These factors make this both a very exciting and frightening moment for fintech start-ups that cater to consumers. While we shouldn’t downplay the challenges we are experiencing, we also shouldn’t minimise the opportunities for widespread innovation that are in front of us.
B2C fintech firms will survive this storm, but it won’t happen overnight. And it will do this with a wide range of insightful, complete goods and services from which we can all benefit. The only thing embedded financing is a vehicle. The truly fascinating element is where corporations decide to drive it.
