API banking, access to payment rails and financial licences… there's more to embedded finance than first meets the eye.
A typical embedded finance offering is like an iceberg. There is the user-facing portion that you can see and interact with - the part that is actually ‘embedded’ into a user interface. Then there’s everything that sits below the surface, comprising technology, licensing and infrastructure. All of these layers have to be in place before you can embed financial services into your existing product ecosystem.
At OpenPayd, we make it easy for you to access and utilise them, all in one place. Where you go from there is up to you. So what are these four components, and how does each part fit together?
Let’s start right at the bottom of the iceberg: licences. Licences are a key part of financial services. They are hugely important, protecting not only your customers but your business itself. Whether you want to offer card acquiring, FX, accounts, payments or any other financial service you can think of, needs an underlying licence from a regulator.
If you’re starting from scratch and becoming a licensed entity, the process will take months if not years, and will often require your business to have a physical presence in the geography you want to be licensed in. For businesses with ambitious growth plans, this puts a major strain on their resources which should be focused on their core offering and is one of the main reasons non-finance companies have avoided moving into financial services.
Thankfully, all services offered by OpenPayd are backed by our licensing infrastructure - allowing you to go further than what your current licences allow. We are fully regulated in the UK and across the EEA.
Being compliantly able to offer financial services in different geographies is a good start, but ambitious businesses don’t want to stop there. They want to access the best payment options available, allowing funds to be transferred and received as quickly as possible.
OpenPayd is connected to many global and regional payment rails, including Faster Payments, SEPA Instant, BACS, CHAPS, SWIFT and ACH. This enables your business to make real-time payments across Europe and fast, efficient payments all over the world.
For certain businesses, speed in funds being transferred is a huge part of their value proposition, such as crypto trading platforms and investment businesses. But no matter the industry, no business, or customer, has ever requested slower payment speeds. Having access to a variety of payment rails means your business is in a good position for whatever payments you are currently making and well prepared for any future developments.
Licensing established, major payment rails available - what next? Here’s where you can be more creative. OpenPayd offers Banking-as-a-Service (BaaS), giving you the ability to offer any banking and payments service directly to your customers.
This includes accounts, FX, domestic and international payments, Open Banking, card acquiring, virtual IBANs, lending and more. Your customers could hold accounts in several currencies, use branded debit cards, authorise instant bank transfers and more - you have access to a full suite of banking services. All of these features are built on a microservices infrastructure, meaning you can plug and play what you need as you need it.
In the past, offering any new service would most likely mean finding another partner and undergoing a lengthy integration, much to the annoyance of the tech team. Now, it couldn’t be easier.
The final piece of the puzzle, the top of the iceberg. With the first three layers, you are legally covered to operate in multiple geographies, have access to payment rails giving you the fastest and most secure payment options available and a full suite of banking services. Embedded finance makes all of that accessible via one easy-to-integrate API.
The embedded finance layer is what the end customer actually sees and experiences when using your service. This may be seeing money in an account in their name, which they are able to send to others. The banking services beneath this layer are doing all the actual transacting, but it will appear as if it is being provided by your business - no new screens being loaded or branding from other providers. For your users, nothing is identifiable as an OpenPayd service, but the infrastructure is available 24/7, 365 days a year, enabling you to meet the demands of today’s consumers.
So that’s it: an embedded finance offering in four layers. We’ve designed our infrastructure and products this way to ensure you have everything you need to embed financial services into your offering. We are entering a time when people will be able to access loans from their mobile phone provider, or send money overseas using social media. Frictionless financial experiences from businesses with no previous experience with finance. Our approach makes this possible.
If you want to be part of the next era of financial services, don’t hesitate to get in touch. We’d be happy to answer any questions you might have. Step by step, layer by layer.
Welcome to the first day of the rest of your (embedded finance) life.
Knowing how embedded finance projects are initiated, and why, can help you build better products and services