Why Corporate America is Moving to Embedded Banking

Why Corporate America is Moving to Embedded Banking

The simple answer is to boost profitability while growing and maintaining their customer base. Let’s look at some basics and then dive into how to implement embedded banking.

What is Embedded Banking?

Embedded banking utilizes a company's existing software infrastructure and integrates traditional banking functionality offered to their end users. With embedded banking, you can offer financial services to your customer without involving your traditional brick-and-mortar bank. Today, companies of all types and levels of maturity—including retailers, telcos, big techs, software companies, car manufacturers, insurance providers, and logistics firms—are considering and preparing to launch embedded financial services to serve business and consumer segments. For customers, the appeal is ease of use: a small business can get a bank account from its accounting software, or a consumer can pay via the retailer.

Embedded banking is also closely tied to Banking as a Service (BaaS), a model where non-banking businesses offer banking capabilities through partnerships with financial institutions. This integration supports companies in delivering Digital Banking Solutions that enhance customer experiences and create new revenue streams.

Introducing Slipstream's Instant Issue Cards

Slipstream Financial has identified these pain points in the insurance industry and developed a groundbreaking solution—Instant Issue Cards. These virtual cards can be generated immediately, providing policyholders with instant access to funds for essential needs after filing a claim. Here's how Slipstream's Instant Issue Cards are transforming the way insurance companies handle claims:

The Evolution of Banking: From In-Person to Embedded Services

We’ve come to take for granted the simplicity of banking apps. It’s rare to ring your bank, and rarer still to enter one—for many, even using a computer to log in is a relic of the past. Banking progression has developed over the years:

• In-person banking: Using bank branches to make payments and manage finances.
• Telephone banking: The advent of banking via phone calls.
• Online banking: The standard for most corporates today.
• Embedded banking: A seamless, pain-free experience where a corporate’s back-end systems are connected to an embedded bank provider.

Types of Financial Products Offered Through Embedded Banking:

• Bank Accounts: These work just like traditional bank accounts, some even generating interest.
• Debit, Credit, and Charge Cards: Branded payment cards offer convenience and access to funds.
• Payments: Facilitate money movement through methods like ACH, Virtual Card payments, wires, book transfers, and checks.
• Lending and Financing: Provide access to funds through credit cards, charge cards, term loans, invoice factoring, and cash advances.

Is Embedded Banking Right for Your Company?

Answer these questions to determine if embedded banking suits your company:

• Does your platform handle a large transaction volume?
• Do your customers have unique financial needs?
• Do you have a strong brand and a devoted customer base?
• Do you want to pay your customers faster?
• Are your customers financially underserved?
• Do your customers need access to capital?

If you answered yes to any of these questions, embedded banking might be right for you. The benefits of integrating Banking as a Service (BaaS) include enhancing customer satisfaction and offering Digital Banking Solutions that can transform your business.

Market Examples of Embedded Banking:

• Gig-economy platforms: Offer instant payouts, transforming payments into a revenue generator.
• E-commerce marketplaces: Provide faster payouts and tailored financing options, keeping more funds on the platform.
• Vertical Platforms: Enable customers to manage all aspects of their company from within your platform.
• Payroll and employee benefits providers: Offer banking services to employees, especially those without traditional bank accounts.
• Business formation and management: Assist small-business owners in managing their finances.

Advantages for Your Customers:

• Faster access to funds: Provide instant payouts, enhancing customer satisfaction and loyalty.
• Better financing options: Offer the lending and financing your customers need.
• More tailored terms: Provide fewer fees, better interest rates, and targeted rewards.
• A one-stop shop: Transform into a single software tool for managing all business aspects.

How to Get Started with Embedded Banking

You can develop an in-house program, which involves significant hurdles such as education, finding a banking partner, compliance with US banking laws, and software development. This approach can take up to 2 years and $2 million to launch, requiring a dedicated banking team.

Alternatively, partnering with an embedded banking Fintech like SlipStream Financial can expedite the process. With a financial infrastructure platform, you can go live in weeks, benefiting from:

• Direct bank relationships: Partner with banks that have a track record of working with tech companies.
• Technology: Implement dedicated software for tasks like ledgering, payments, and reconciliation.
• Compliance: Navigate complex regulatory requirements with the help of experienced professionals.
• Underwriting: Simplify the process of lending to your customers.
• Capital: Access the funds needed for lending programs without leveraging your balance sheet.

As insurance companies continue to prioritize customer-centric solutions and embrace cutting-edge technology, Slipstream's Instant Issue Cards stand at the forefront of transforming the insurance claims landscape. For insurance companies seeking to revolutionize their payment processes and provide unparalleled service to their customers, Slipstream's Instant Issue Cards offer a powerful and transformative solution.