In the rapidly evolving landscape of modern business, the concept of embedded finance has taken centre stage. Through this approach, businesses can effortlessly provide a diverse range of financial services such as payments, lending, insurance, and more, to satisfy the numerous business needs of their customers. In the B2B space, closer ties between corporate entities and their partners can leverage embedded finance to create a functioning ecosystem of manufacturers, suppliers, distributors, retailers, and others.
Throughout our extensive dealings with customers, we’ve been consistently and pleasantly surprised at the ingenious use cases they’ve built on our platform, allowing them to diversify, grow, and optimize revenue streams while improving customer loyalty, retention, and monetization. We’ve noticed that most of the successful customer teams with whom we collaborate seem to ask themselves the right questions:
- How high is our customer churn? Is it appropriate given our product or service? Do we need to put more work into new customer acquisition or focus on retaining more of the customers we have? Or both?
- When considering new revenue streams, what will be the impact on our existing ones, if any?
- What services are our competitors offering, successfully or unsuccessfully?
- What risks are we willing to take when exploring new revenue streams?
- Is our company built to handle the pivot or do I need to consider organizational change?
So, how can a company maximize its potential embedded finance profits? Here are five essential considerations to guide you on your monetization journey.
1. Maintain a user-centric focus
The cornerstone of any successful embedded finance solution lies in its ability to attract and engage users. For example, building a solution on Toqio tends to produce a magnet, drawing in a diverse audience eager to take advantage of financial solutions that make sense for THEM. That also necessarily entails having a robust customer acquisition strategy which includes digital marketing, content marketing, and targeted advertising. You need to get the word out. As businesses learn about, join, and thrive in your ecosystem, your foundation for monetization grows stronger.
Companies that build solutions on Toqio tend to transition from merely offering transactional experiences to providing immersive ones. You can embed a financial product into your existing customer journey or go extreme and launch an entirely new brand and interface, driving customers toward it. In either case, you need to captivate users because at the heart of every successful embedded finance solution lies a treasure trove of loyal customers.
2. Re-craft customer connections
In addition to a fair rate of customer acquisition, customer retention has become the focal point of embedded finance revenue. The more of a customer’s financial life you participate in, the longer they will remain with your brand. Ultimately, that will likely help you build sustainable, “recession proof” growth year after year.
The true magic of a successful build lies in nurturing existing relationships. By offering an intuitive UI and an excellent UX, providing tailored services, and holding fast to an unwavering commitment to customer input, you create the foundation for building lasting relationships.
We’ve observed that companies can elevate the user experience through timely notifications, interactive feeds, and even gamification elements. Remember, user engagement isn’t just a metric, it’s the heartbeat of your embedded finance ecosystem. However you decide to engage with your users, you need to understand them through excellent data gathering and analysis along with the ability to pivot quickly to their needs. Customer retention is the key to winning in embedded finance. Your customers are the ones who will define your value, especially given the fact that venture capital has decreased significantly.
Listen, adapt, and evolve to be what your end users need you to be.
3. Weave a tapestry of partnerships
In an ecosystem where business relationships are intricately connected, collaboration is vital for success in embedded finance. A single entity can seldom cater to everyone. Forge symbiotic partnerships, extend your reach, and broaden your scope. These alliances weave a rich tapestry of financial services, creating unparalleled value for your users.
Successful Toqio customers tend to leverage our Marketplace and the access it provides to diverse solutions offered by reputable partners. The Marketplace allows our customers to deploy new, best of breed solutions rapidly, easily meeting customer needs and driving revenue as conditions shift in the financial/regulatory market. Some even upload their own creations to our Marketplace, providing them access to a previously untapped revenue stream.
4. Navigate tumultuous regulatory waters
In a complex sea of regulations and security standards, compliance stands as a lighthouse guiding your way. Prioritize compliance measures to establish trust with users and partners. Just as Toqio has diligently created an ever-evolving and compliant platform to foster safety among our customers, your dedication to compliance ensures a safe haven for financial exploration within your ecosystem. By clearly demonstrating your company is trustworthy, your business forges unbreakable bonds with customers and partners alike.
Furthermore, since new regulations are proposed and approved more and more rapidly, the ability to make changes to technology quickly and ensure continued compliance is clearly a strong asset. Working with a platform like Toqio enables companies to change tack when required so they can stay ahead of the competition.
5. Sculpt your revenue streams
Once you’ve set the groundwork outlined in the previous points, monetization is akin to an uncarved block of revenue possibilities and it’s up to you to give your strategy shape. Our customers tend to craft a diversified revenue model meticulously.
Investment costs
As you embark on your project, the first step is to evaluate the costs associated with the build itself meticulously (take a look at this article for details). You’ll need to get a clear idea of how much you’re going to spend, how long it’s going to take your company to recover the costs, and what the real timeframe is for the project to become profitable. We’ve observed that even though it takes most companies a couple of years to recoup what they’ve invested, building on Toqio can cut that time down substantially.
Earnings and spend
Strive to get a comprehensive view of incoming and outgoing funds to pinpoint potential revenue streams. This financial symphony demands precise orchestration. Toqio, for example, is a SaaS subscription-based service, and that works well for us and our customers, since we allow them to build solutions quickly throughout lean projects that are practically the opposite of the sunk cost model.
You’ll need to bear in mind a lot of the fees associated with financial services, such as transaction fees that vary according to type, including transfers, payments, loans, overdrafts, and others.
Leverage market intersections
Take note of where your customers, end-users, and third parties intersect with regard to their goals, preferences, and values to ensure all of them are aligned as smoothly as possible. Toqio collaborates with third-party service providers to offer additional financial services. Additionally, we implement a referral program and anyone building on our platform can do exactly the same. Customers can establish their own relationships with third parties, develop solutions on the Toqio platform along with their partners, and monetize their solution on our Marketplace as a module. This creates an exciting and thriving ecosystem where everyone benefits from established relationships: the one Toqio has with its customer, the one our customer has with a third party we’ve introduced them to, the relationship Toqio has with third parties brought into the mix by our customer, and others.
Final thoughts
As you continue along your journey to monetize your embedded finance solution, remember that you’ll need to bear in mind user acquisition, engagement, and retention to do so properly. Embedded finance isn’t merely a tool, it’s a transformative journey that empowers everyone involved – your company, your customers, end users, your business partners, and others. Let these five considerations be your guide, to bring innovation, financial exploration, and sustainable growth into harmony.