Finance in Transition — From Embedded to Contextual; Incorporating Network Tokenization –digital channel use cases; How can we transform the vision for the Finternet into reality? — Part 1;
Hi Fintech Fans, our agenda for this edition of Fintech Wrap Up below:
Insights & Reports:
1️⃣ Finance in Transition — From Embedded to Contextual
2️⃣ How can we transform the vision for the Finternet into reality? — Part 1
3️⃣ Incorporating Network Tokenization — Digital Channel Use Cases
4️⃣ Lessons From Big Bank Earnings: Q1 FY24
5️⃣ Three activities to focus on when starting the BaaS journey
Curated News:
1️⃣ Monzo’s ‘Flex’ card helps it build 20% stake in Buy Now Pay Later market
2️⃣ Revolut plans advertising sales push as it waits for banking licence
3️⃣ Ramp raises another $150M co-led by Khosla and Founders Fund at a $7.65B valuation
TL;DR:
Insights & Reports Analysis:
I am moderating a panel discussion on Open Banking and the Rise of Embedded Finance at LONDON TECH WEEK 2024! What questions should I ask and discuss with our panelists Helen Child, Founder & CEO at Open Banking Excellence (OBE), and Stefano Vaccino, CEO of Yapily?
So, let’s talk fintech now! You know, there’s this interesting shift happening from embedded to contextual finance. Picture this: embedded finance slips new features seamlessly into existing products, adding more value without shaking up the original setup too much. Then there’s contextual finance, which takes it up a notch by considering what users are really after. It’s all about aligning financial products with their big-picture goals, making the whole experience more personal and on-point.
Now, unified ledgers are like the Swiss Army knife of the financial world. They bring everything needed for transactions into one handy place, making things smoother and safer. And speaking of safety, network tokenization is like the superhero of digital payments, keeping your info locked down tight across different platforms.
But hey, it’s not all smooth sailing. Net interest income for banks has been a bit shaky lately, even with all the action in investment banking and trading. And as for Banking as a Service (BaaS), it’s all about putting customers first, finding the right solutions, and teaming up with the right partners. Even though fintech funding took a bit of a dip recently, there’s still plenty of interest bubbling under the surface. So, while there might be some bumps in the road, the finance world keeps on spinning!
News Highlights:
So, here’s what’s been going on lately: Monzo’s been making some serious waves with its ‘Flex’ card, giving customers the flexibility to spread out their purchases over three months without any interest. Turns out, it’s been a game-changer, propelling Monzo to snatch up a whopping 20% of the Buy Now Pay Later market in just one year since its launch in late 2021. Meanwhile, Revolut’s cooking up some plans of its own, eyeing advertising as a new revenue stream while it waits for that elusive UK banking license. And speaking of cash flow, Ramp, a spend management startup, just bagged another $150 million in funding, pushing its valuation up to a hefty $7.65 billion. Looks like the finance world’s heating up with all these moves!
Insights & Reports
Finance in Transition — From Embedded to Contextual
Offering Embedded Finance in practice entails integrating a new product that introduces fresh functionality within an existing product while staying within the same framework. For instance, services offering equity research and analysis can be seamlessly integrated into trading platforms.
This embedded product furnishes customers with an extra layer of information, enhancing their ability to make informed trading choices. Consequently, although it introduces added value or functionality, it remains within the original content domain. But the holy grail to creating the ultimate experience is in the intersection of embedded, personalized, and on-time. Or, in a word — contextual.
Contextual Finance can be best understood through the lens of intent. Often, purchasing a financial product is not the main objective of the customer but rather a secondary outcome that arises from another goal. For instance, someone doesn’t wake up in the morning with the desire to obtain a mortgage, but they might wake up with the desire to buy a home. This primary intent of purchasing a home drives their actions while getting a mortgage is a complementary intent that helps them achieve that goal. By considering the context and offering a financial product as part of the customer’s journey toward achieving his primary goal, Contextual Finance can deliver an embedded, personalized, and on-time experience.
How can we transform the vision for the Finternet into reality? — Part 1
Unified ledgers as a vehicle for an improved financial system
The concept of unified ledgers does not mean “one ledger to rule them all” — a single ledger that encompasses all financial assets and transactions in an economy. Depending on the needs of each jurisdiction, multiple ledgers could coexist. Application programming interfaces (APIs) could connect these ledgers to each other and other parts of the financial system that exist outside the Finternet. The functions of individual ledgers could evolve over time, and ledgers might even merge as overlaps in scope expanded. The role of unified ledgers could also vary by jurisdiction. In economies where individuals already have access to a broad range of reasonably efficient and competitive retail financial services, the main role of unified ledgers might initially be to enhance the efficiency of wholesale financial services.
Unified ledgers have two defining characteristics. The first is that they combine all the components needed to complete financial transactions — financial assets, ownership records, rules governing their use and other relevant information — in a single venue. The second is that money and other financial assets exist on the ledgers as executable objects. This means that they can be transferred electronically using pre-programmed “smart contracts”. Together, these design features allow individuals and businesses to move money and other assets safely and securely, with less need for external authentication and verification processes or reliance on external clearing, messaging or settlement systems.
Curated News
Monzo’s ‘Flex’ card helps it build 20% stake in Buy Now Pay Later market
The credit card, which allows customers to spread the cost of purchases over three months interest-free, has transformed the firm into a major provider of BNPL credit since the launch of the card in late 2021, going from almost zero to 20% of the market in one year, according to an analysis by credit technology company Render.
