The way that people bank and use financial services is changing. Technology has changed the way people order a taxi (Uber), buy a book (Amazon) or get credit (Klarna).
Weavr, an embedded finance provider, claim its plug-and-play finance model will allow digital businesses to launch and monetise financial services quicker, more efficient and cheaper than a traditional banking-as-a-service (BaaS) model.
The key offerings of its plug-ins include reducing time to market, taking care of compliance and regulation, and a range of financial services available to businesses as they expand.
London, UK-based Weavr expanded into Singapore last year and plans to launch in the US this year.
Daniel Greiller, Weavr’s chief commercial officer, spoke to FinTech Intel to discuss Weavr’s finance model, the evolution of embedded finance and how it will change the financial services sector.
Could you explain your plug-and-play finance model and how this serves businesses?
Plug-and-play is different from embedded finance or BaaS, because we have taken everything required—the banking, the card processing, card issuance, the KYC (know your customer)—all of the pieces, and we have created everything so it’s off the shelf available to give to a business. The whole point is that it’s in a plug-and-play fashion.
To think of it another way, on the provider side, there are dozens of different financial providers that are required to give a service—a card issuer, a banking provider, a wallet provider, fraud and anti-money laundering, and on and on. We have plugged all of those into a software layer and we have also done all of the product orchestration.
And on the other side, we have created all of the customer interfaces. We can give them to our customers so they can embed them inside of their applications to expose to the end customer.
We have built all of that for our customers, typically B2B, and we say you can brand it, put your logo on it and it will look like you’re providing these services. All of that has not been done before. One contract, one technical integration: it’s plug-and-play. You don’t have to do anything to build or maintain that tech stack. This can be done in weeks. It used to be a 12–18-month endeavour to build all of that.
How is this better than the traditional BaaS model?
Companies such as Revolut were built as BaaS. If we go back 20 years, all banks were monoliths, it cost tens if not hundreds of millions to build a bank. BaaS came along and said I’m just going to let you do a debit card, or just offer a bank account and do payments.
That allowed businesses to offer one financial service, but they had to build all of the financial architecture, such as compliance and tech framework. Other companies do a similar thing, but it’s not plug-and-play like we are.
To use BaaS you need to be an expert in banking. And it costs a huge amount of money. We make it faster, simpler and easier. We take away the compliance concerns. Everything is built in with us.
With price, you need to do the total cost of ownership. A transaction with Weavr will be more expensive than a transaction with a BaaS provider. But, if you layer in the transaction monitoring, the cost to maintain a data secure environment, the customer authentication system, the cost of Google Pay and Apple Pay—everything considered, we are considerably cheaper.
How will embedded finance change the supply of financial services?
What it should do and what it’s already doing is improving the access, the quality and the safety.
Most financial services are very vanilla. If you want to get an overdraft, they ask how much money do you earn, where do you live, and a bank will say whether you are worth an overdraft or not.
With embedded finance you have a wealth of information around that customer, so you can make a richer decision. It’s easier to say yes to someone or something.
How will it change expectations of financial services? For example, what will consumers and businesses demand?
If you think about where it is already well used—Amazon, Uber, Klarna—these are fantastic consumer experiences. People love these services because they are frictionless.
Consumers should get the great experiences they get with these companies across all of their software engagements.
Products will come along and disrupt pretty much every industry and service sector. In the future, pretty much everything will happen inside applications.
What does the future hold for embedded finance?
We are moving into a time with embedded finance where it is going to be really important to manage compliance. I think that is going to be the next stage.
That’s where a company like Weavr is going to thrive. Our technology effectively provides compliance as a service, which I think is going to be a big trend over the next couple of years.
Related article: Fast and frictionless: Is embedded finance here to stay?