Embedded Finance: Revolutionizing Retail Conversion
Embedded finance has evolved significantly, becoming a crucial tool for boosting customer conversions in both online and offline retail environments, according to PYMNTS.
While the core technology behind embedded finance isn’t new, advancements in APIs have revolutionized its implementation. Sunil Sachdev, Senior Vice President and Head of Embedded Finance at Fiserv, highlighted in an interview with Karen Webster how APIs have enhanced data aggregation and analysis, seamlessly integrating with customers’ daily activities. This integration helps transform interactions into sales, whether online clicks or in-store engagements.
Sachdev noted that businesses now have a better understanding of their customers’ preferences and transaction habits, both in-store and online. “We see merchants that are looking for ways to increase conversions,” Sachdev said, particularly amid the recent economic challenges. “They don’t want to be financial institutions, and they don’t want to underwrite credit. But at the same time, they want to be able to help their customers buy more stuff” by offering tailored financing solutions.
The strategy for embedded finance varies across the commerce ecosystem. Fiserv is leveraging its extensive capabilities in acquiring, banking, and issuing to offer embedded financial services through various channels like software platforms, marketplaces, and merchant wallets.
“We’re seeing a convergence across embedded payments and embedded finance,” Sachdev said. Many businesses, including vertical SaaS companies and FinTechs, are embedding finance into their applications using APIs, despite the technological challenges. These companies, traditionally focused on commerce, must now navigate regulations, compliance, and data sharing to offer banking services.
Fiserv, being a regulated provider, brings compliant banking capabilities to a wide range of merchants and FinTechs. APIs simplify system connections, normalize data, and provide access to it. Artificial intelligence further enhances this by predicting the best payment methods for each transaction, allowing for personalized financial services.
“We’re seeing the desire to offer the right financing product for the right purchase at the right time,” Sachdev said. Data, along with AI and APIs, helps merchants manage risk, implement rewards programs, and offer flexible payment options. Successful brands, particularly those starting as online marketplaces, are finding embedded finance to be a rapidly growing revenue segment.
“For us, embedded finance is about surfacing capabilities within the commerce journey that provide people with the right solutions at the right time, resulting in a better customer experience and driving greater conversion rates,” Sachdev concluded.