The Intersection of Exceptional: Why Embedded Finance is Changing the Shape of Finance

Dermot Hamlin, UK Ambassador for UNIPaaS, John Toon, Senior Manager at Beaver & Struthers, and Maya Carmeli, VP of Product at UNIPaaS, break down the world of embedded finance. 

Small to medium enterprises (SMEs) can access a wealth of payment options. There’s PayPal cash and cheque, credit card and mobile, and multiple permutations in-between. The technology designed to smooth over SME payments has been evolving and transforming for years, each time introducing something fresh and dynamic, each time allowing for SMEs to gain richer control over their finances and for platforms to create new opportunities. However, not many SMEs know which options are the best for their business in the current climate, and platforms seek better ways of connecting their customers to solutions that meet their needs.

SMEs require better support for their businesses. They need solutions that can be customised to suit their unique operational circumstances and help them better control cash flow, expenditure, and processes. This is where open banking steps in. These solutions are designed to streamline and modernise payments, reducing the administrative burden and errors while allowing SMEs to match transactions and manage payment schedules far more efficiently than in the past.  Open banking helps SMEs become more productive because technology is doing the work.

Which is precisely what embedded finance is.

Embedded finance is an intelligent and accessible evolution of open banking that allows for smoother integration of banking capabilities but is often perceived as complicated and confusing. At its most elegant, it is about bringing financial tools to the end user at the right time and in the right context.

Embedded finance has also become far more accessible. Take the case of an accounting platform – it can now use embedded finance not just with APIs that connect it to multiple platforms but with other technical tools that make it easy to implement. There has been a technical evolution within embedded finance that is bringing more functionality to more platforms in a far more accessible way.

What is an API?

If there’s a conversation about embedded finance, then there’s a conversation about APIs. These are application programming interfaces (APIs) made up of protocols and definitions and inherently defined as the language by which two different components communicate with one another. Embedded finance APIs can, for example, be used by accounting software to enable payments within their platform. The API will likely belong to a third-party company such as UNIPaaS that ensures seamless communication throughout any embedded finance solution.

UNIPaaS builds embedded finance solutions that platforms use to serve their customers better. Platforms leverage UNIPaaS solutions to create cohesive embedded payment solutions that don’t consume extensive resources, are easy to implement and allow for the rapid delivery of payment solutions to customers.

The value of this streamlined efficiency is felt in the radical departure from how complex these solutions usually are – instead of multiple developers working on multiple components that require extensive testing, integration and troubleshooting, UNIPaaS provides an orchestration of UI components that plug-and-play with a single line of code. And from the moment they’re implemented within a platform, a payment product.

It's an ecosystem in just a few lines of code.

Instead of a login, a dashboard, a list of transaction payments and admin-intensive complexity, you have a single component implemented within your platform that provides you with comprehensive visibility across multiple touchpoints. Plus, using the UNIPaaS solution, you can integrate the functionality and create solutions for your customers that rest within your identity and platform because UNIPaaS is white-labelled.

With this flexible and branded architecture, platforms can bypass the manual and time-consuming processes they undertake today and create simple and accessible ecosystems that allow them to interact quickly with multiple companies. Using embedded finance, you double down on trust while creating further revenue opportunities by providing SMEs with fresh and innovative financial services. It’s a powerful tool for accounting platforms and one that they can leverage to suit their strategic objectives.

Do accountants need to understand the technology, though?

No, otherwise, accountants would have to be developers. Fundamentally, the only thing that accounting platforms need to understand is how embedded finance can change what they deliver to their clients and how they can better meet their client’s needs. It allows them to smooth over the integration hiccups that can happen across different sites and platforms and thereby reduce a significant admin load.

For example, if a platform is using one type of accounting software but it doesn’t integrate well with a particular website, then the thousands of transactions generated by the website have to be managed in the backend. TAnd there are many different types of technology and types of implementation and mixes and permutations used by different clients and platforms,  which means that a simple process often becomes a complicated and time-consuming problem.

Unless you use embedded finance solutions developed specifically to overcome these problems and smooth over these bumps in the background.

Embedded finance in practice

Beaver & Struthers, a chartered accountant firm specialising in audit, tax and financial planning, has around 250 employees across the UK with headquarters in Manchester and approximately 4,500 clients. Many of its clients are in the not-for-profit sector which presents interesting challenges as companies within this sector have technology limitations but need to make payments and donations as seamless as possible.

The company manages payments in multiple ways across a payroll service, payments-as-a-service, and outsourced bookkeeping and finance functions. The company’s goal is to help clients improve their financial functions as much as possible so they work more effectively, and has had immense success within the payments space. Considering the breadth and depth of its customer base, Beaver & Struthers has to juggle multiple payment products, different payment routes, and integration at scale. Embedded finance has helped the company mitigate much of this complexity while enhancing payments and its ecosystems.

In conclusion

Payments aren’t simple. There will always be challenges and complexities that platforms need to manage to ensure that their own payments are seamless and accessible. Embedded finance isn’t going to cure every ailment that plagues payments, but with the right tools and third-party solutions, it can create opportunities for platforms and change how customers engage with them.

The future will likely see embedded finance continue its radical revolution of payments and of its capabilities, and it will provide platforms with the functionality and accessibility they need to remain agile and flexible.