Recent innovations in financial services such as FinTech APIs, Banking-as-a-service (BaaS), and new payment infrastructures unlocked opportunities for embedded finance both in B2C and B2B sectors. Today consumers can pay for an increasing number of goods in installments by using Buy Now Pay Later (BNLP) solutions such as Affirm, Klarna, or Afterpay. B2B neobanks such as Brex or Ramp leverage BaaS providers infrastructure, Marqeta or Stripe, to offer corporate cards. Third-party sellers on Amazon can access capital directly in the Amazon UI by leveraging embedded lending by Goldman Sachs.
What is the advantage of embedding finance? Financial institutions spend a ton of money to acquire customers. If a SaaS provider embeds financial services in the product it can simply upsell its existing user base thus removing the need to spend on marketing, sales, and affiliate partners. In fact, it can even lower its overall CAC and increase stickiness as now it has more to offer. Additionally, SaaS can have advantage over financial institutions when it comes to risk management as it has direct access to proprietary business data.