Updated: Nov 16
Banking and payments are changing. The days of the banks’ complete dominance are over,
and we are now in a new world of interconnected service providers, each offering access to
specific tools and services, with brands able to pick and choose from different elements of
the banking ‘stack’.
This new joined-up approach relies on APIs. The use of API technology allows for the rapid
integration of banking and payments tools into existing systems. Companies can ‘plug into’
FX and other tools offered by dedicated service providers, and they can combine these tools
to build a fully-fledged stack - without having to build or maintain the technology themselves.
The continued growth of API technologies has precipitated a major revolution in banking and payments. It has allowed for a major fragmentation in the sector, with new players able to deliver customer-focused services machine-tooled for specific use cases and functions. In addition, non-financial services brands increasingly benefit from the ability to integrate financial services into their existing products. So-called ‘embedded finance’ has seen non-financial brands become fintechs in their own right, building payments and services products that allow them to better leverage their existing customer base and add additional revenue streams.
Embedded finance is also changing the landscape for almost every money transfer business. It presents an opportunity to dramatically improve customer experience, and to integrate new services at a far lower cost than would traditionally have been required. These businesses don’t have to take on the resource burden of building the tech themselves; instead, they can lease access to it, and go to market quickly through simple API integrations.
In addition, embedded finance represents a major advantage for businesses that have suffered at the hands of the traditional banks’ rapidly diminishing risk appetite. Businesses in traditionally under-served markets can gain access to the tools and services that they need, delivered by forward-thinking, tech-first partners who understand and are sympathetic to new and emerging industries.
Remittance is one of the areas in which embedded finance is making its mark. For example,
through partnerships with dedicated Banking-as-a-Service providers, remittance companies
now have access to a flexible and comprehensive new range of deposit tools. In particular,
BaaS or embedded finance is allowing for the quick integration of new facilities such as
SEPA Instant, allowing remittance companies to provide their customers with quicker and
more cost-effective deposit methods. Open Banking is also crucial here, allowing for things
like simple account aggregation for corporate clients and, as enabled by OpenPayd’s
partnership with Token, the seamless integration of payment initiation services within
businesses’ existing ecosystem, eliminating the need for consumers to leave an app. This is
driving real and measurable benefits through the funnel.
Meanwhile FX businesses are beginning to build partnerships with embedded finance providers to broaden their range of exotic payout corridors, allowing them to rapidly service new markets. In addition, forward-thinking embedded FX providers such as OpenPayd now offer exciting new tools such as automated spot market rate delivery through API. These developments demonstrate the value of working with partners that take an agile, technology-first outlook, and that are constantly building and iterating new tools.
At OpenPayd, the most recent example of that ethos is the launch of our InstantFX product. InstantFX leverages our custom technology to deliver a radically improved FX experience. And, because our API is built with developers in mind, it can be integrated with our clients’ existing systems within just a few days.
Platforms like OpenPayd offer a one-stop solution for money transfer businesses banking and payments needs. Our clients can pick and choose the services they require, and these services are delivered to them through a simple API integration. Then, as their business needs grow and change, they can plug in additional services through the same platform. OpenPayd is designed in a modular way, meaning that our clients have ready access to the tools they need in a truly scaleable fashion.
API integrations are changing the face of financial services. Easy integration, a wide range of choice in services and service providers, and massively increased flexibility for both brands and end-users, are combining to create a radically different landscape for finance. Embedded finance is a huge opportunity for money transfer businesses to drive real improvements in their offerings, increase trading volumes, and deliver the best possible customer experience.