embedded finance

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Weavr sets up in Singapore as it aims to simplify embedded finance

Embedded finance refers, in a nutshell, to financial services offered by non-banks, which can transform the way businesses and consumers transact across virtually any industry or sector by streamlining financial processes in both consumer and business commerce and reducing entry barriers for various products and services. In recent times, the adoption of embedded finance has increased among non-financial organizations.

According to a report by Bain & Co and Bain Capital, the embedded finance market is predicted to more than double to US$51 billion by 2026. Most important is removing barriers for non-financial businesses that wish to deliver financial products to enhance customer experiences, while also offering immediate opportunities to amplify their revenue per user.

This is where companies like Weavr come in. Founded in 2018, with offices in London and Portugal, Weavr is the leading open platform for embedded finance for the digital economy and aims to eliminate the usual complexity of integrating financial services and make embedded financial services available to any business with a digital presence.

With Weavr’s radically simplified model, Plug-and-Play Finance, digital businesses can launch and monetize financial services in a fast and efficient way, and at a fraction of the cost of the current Banking-as-a-Service (BaaS) model.

Aligned with the Financial Services Industry Transformation Map (ITM) 2025 announced in September 2022 by the Monetary Authority of Singapore (MAS), Weavr’s entry into Singapore comes amid an innovation drive powered by embedded finance, which will in turn enable the redefining of business models for greater resilience. This availability of simple solutions to deploy financial services will further enable businesses in Singapore to drive innovation and create more value for all stakeholders.

Singapore is already well-positioned as a hub for digital and financial innovation in the region and a natural first stop on Weavr’s mission to help online businesses and SMEs radically innovate through the simplicity of their embedded financial solution. The move will also enable Weavr to contribute to meaningful advances in financial inclusion, green tech and more, as part of Weavr’s commitment to environmental, social, and governance (ESG) investing.

Weavr’s unique Financial Plug-ins represent a simple solution for any business to seamlessly deploy financial services within its own platform with zero heavy liftings. Key benefits include:

  • Pre-defined solutions for a range of use cases that reduce time to market to just 5 weeks and take care of compliance, data security, and regulation.
  • A low-code offering that allows brands to embed services quickly and seamlessly without compromising on quality and security.
  • Extensible solutions that enable customers to add new financial services in new markets as they grow.

To understand more about embedded finance and the changes it brings to the industry, Tech Wire Asia speaks to Alex Misfud, Co-Founder and CEO of Weavr.

How does Weavr help businesses with embedded finance?

As an embedded finance platform, we help businesses integrate financial services into their software. Now, many people will be familiar with Grab and Gojek. They’re a good B2C of embedded services and making it work seamlessly like finding a cab, buying food and such.

Embedded finance is a much broader idea. Say for example, a business using its accounting system to not only record the invoices, but also be able to pay its suppliers. And because the data is there, it can also get loans from financial institutions because they can rely on the data. It’s a really powerful idea and has a huge value story for everybody involved.

Customers get convenience and financial services they don’t otherwise have access to. The software businesses can quadruple their revenues by doing this embedded cleanness. It’s not just a little incremental lift in their revenues, it’s up to three or four, even five times. So there’s a lot to love in embedded finance.

embedded finance

Alex Misfud, Co-Founder and CEO of Weavr.

The big problem is how difficult it is to make it happen. Why? Because banks work in a certain way. You need to have permission for everything, including getting checked out and screened, as security is a big deal.

Meanwhile, for software businesses, you can just write a piece of software and publish it. You don’t have to ask anybody’s permission. The way these two sectors work is very different.

Weavr exists to bring them together. We understand the banks’ need for security, compliance, and risk management. We package it in a way that the software business doesn’t have to hire compliance people and risk managers. They just integrate the API, the style, the experience, and they’re up and running. That gap is what we fill.

Is embedded finance becoming a game changer in the industry?

I would say that some banking services will be displaced by embedded finance. In the past, you would have to go to the bank but now you can access them through a software application. A good example is car finance. Car companies realized that it’s more profitable to offer lending at the point of purchase. Not only can they make money from it, but they can also sell more cars and the customer is more satisfied as well. So that’s a displacement.

Embedded finances will also increase the size of the financial services pie. For example, most people wouldn’t insure their mobile phones if they had to go to an insurer. But if you had them tick the insurance box with your mobile phone contract, some of them will tick, right? So, it increases the amount of insurance contract that gets sold.

Banks often can’t afford to ignore it, because it is a big market trend. Customers will love it. When it works, embedded finance is like magic. Banks realize, even though it’s out of their comfort zone, they need to be there where their customers want them to be.

In the future, I think we can see a world where banks will start to think about creating embeddable financial products. Buy now pay later is a good example. It didn’t come from banks. So we see huge opportunities for banks to create these embeddable products and take advantage of massive global distribution channels, with the large corporate software vendors around the world. The economics of selling to the end customer through those channels to those embedded channels are so competitive that banks can’t and would not be able to resist.

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How can regulators regulate embedded finance?

This is going to pose a huge challenge to regulators. Regulators are only now waking up to both the potential and dangers of embedded finance. If we teach the consumer of a business to consume a financial service in another piece of software, when somebody tries to scam them, what actions can’t they take? How do they realize?

We are designing some of the foundational technology to guarantee those promises. We’re talking about security, but there’s also the compliance aspect. How do you know that somebody is not creating an application to launder money pretending to offer something which is greatly embedded, find a solution, but used to get us cover on their money?

We have to think about that as well and have started on the basis that this is a dangerous thing to do if you don’t do it well. What are the conditions for doing it well, and where technologies don’t exist, we’re creating them.

One of the things we do at Weaver is that we use biometrics when we onboard a customer. The biometric data lets us give them the confidence that the transactions are enabled by them always with their permission. And we get the confidence of the bank that we actually have a very strong authentication mechanism that is independent of the software business that’s doing the integration. So there are tools and protocols that are being developed to solve some of these problems, but not all embedded platforms are equal.

Actually, there are very different attitudes to embedded finance. In Europe, the regulators have been at the forefront of open banking, of having financial institutions that need banks and are more innovative. In the US, it has been largely the regulator who has signaled that the banks can remain banks. And it’s up to them to decide how to collaborate to do embedded finance. The nature of the business and the economics of that business is very different.

I think Southeast Asia can do a bit of both. It’s picking from the best and next best results as well as the right use of these markets. And you also have some great local case studies like Grab and Gojek, that are inspiring how to do embedded finance. Now they did it on their own as they have their stack for embedded finance. But imagine all the software businesses, all the startups that can take a toolkit and compete with them.

What is the future looking like for Weavr?

We have a very simple proposition whereby we would like to offer the operating system for embedded finance anywhere in the world. What that means is that we have to work locally to bridge the chain differences between jurisdictions and banking systems.

And that’s what we’re working on. I think with this universal operating system and a universal experience, wherever you go in the world, a digital business can plug in and offer embedded finance that automatically translates to the local flavor.