The fintech industry is booming, with new startups emerging every day. As a fintech founder, you likely have a great idea for an innovative financial product or service. However, building all the infrastructure and integrations required to deliver that product can be time-consuming and expensive. That’s where embedded finance comes in.
Embedded finance platforms allow you to integrate financial services like payments, lending, or investing into your product quickly and easily. Rather than building everything from scratch, you can tap into an embedded finance provider’s APIs and infrastructure.
But not all embedded finance platforms are created equal. Choosing the right one is key to getting your fintech startup off the ground. In this post, we’ll explore what you need to look for when evaluating embedded finance partners.
Core Criteria for Evaluating Embedded Finance Platforms
Here are the key factors to consider when researching and comparing embedded finance providers:
1. Type of financial services offered
Embedded finance platforms offer different combinations of products – some focus on payments, others on lending, investing, or a mix. Make sure the provider has the specific financial tools you need to power your startup.
2. Developer experience
As a startup, you want an embedded finance platform that makes integration fast and easy, without requiring extensive developer resources. Look for modern APIs, detailed documentation, SDKs for popular programming languages, and sample code.
3. Compliance & security
Financial services come with strict regulations around consumer privacy, data security, KYC, AML, and more. Your chosen platform should comply with all relevant regulations in your target markets, as well as maintain rigorous security standards.
4. Geographic reach
If you’re building a global fintech, you need an embedded finance partner with global capabilities. Ensure they can provide financial services and support compliance in your target countries and regions.
5. Pricing model
Embedded platforms offer pay-as-you-go style pricing, allowing startups to scale costs alongside growth. Compare pricing models to find the most cost-efficient option.
6. Reputation & credibility
It’s wise to be cautious when evaluating embedded finance platforms, since you’re entrusting critical financial infrastructure to them. Opt for an established, reputable provider with a proven track record.
Choosing the Right Platform for Your Needs
With an abundance of strong embedded finance platforms to choose from, how do you select the right one for your specific product? Here are some best practices:
Define your core financial services
First, outline the banking, lending, payments or investing features integral to your product. This clarifies must-have capabilities in a platform partner.
Research targeted provider options
Next, research the popular embedded finance players offering those specific financial tools. Create a shortlist of 2-3 providers that seem well-aligned.
Evaluate partners in-depth
Then, dig deeper into evaluating finalists across the key criteria outlined earlier. Develop demo integrations, examine their infrastructure & security, understand their support offerings & pricing models.
Align on vision & values
Beyond technical fit, you want an embedded finance partner who shares your vision for the future of fintech, and holds similar values around transparency, trust and innovation.
The Right Platform Fuels Fintech Success
Choosing the right embedded finance platform is arguably the most strategic decision a fintech founder makes. It determines how quickly you can develop your MVP, begin acquiring users, integrate additional services over time, and ultimately scale globally.
While the evaluation process takes work upfront, embedding financial services through a third-party platform vastly accelerates your time-to-market over building from scratch. And partnering with an established, reputable provider lends credibility that helps attract investors.
By effectively leveraging embedded finance, fintech innovators can focus their efforts on creating amazing digital experiences and differentiated financial products that capture market share. The rise of embedded finance marks an exciting shift that will enable the next generation of fintech unicorns.
The time for new fintech startups to harness embedded platforms to disrupt traditional finance has arrived. Choose your embedded partner wisely and build the fintech future you envision.
