The financial landscape is undergoing a dramatic transformation, and businesses that fail to adapt risk falling behind. During Toqio’s first Open House session, co-founder Mike Galvin provided an in-depth look at how "the disintermediation of financial services through embedded finance is an absolute game-changer", offering corporates a massive opportunity to drive revenue and improve financial access for merchants in their networks. This recording is a must-watch for businesses looking to future-proof their financial strategies as well as for financial institutions and banks looking to expand their reach through new channels.
The paradigm shift in finance
For decades, banks were the first point of call for SMEs seeking financial services, from payments to loans. But this dynamic is changing rapidly. Increasingly, small businesses are turning to their corporate partners (rather than banks) for financial solutions. According to Visa data cited in the session, the majority of payment transactions are now "happening outside of traditional banks".
This trend extends beyond payments. Some of the world’s biggest companies, such as Amazon, Meta, and Shopify, have built financial ecosystems that integrate banking services into their platforms. Mike emphasized that embedded finance is no longer an innovation project, it is a "core business driver", with a market "projected to reach USD 7.2 trillion" in transaction volume.
Embedded finance revenue opportunities
One of the biggest takeaways from the session was that embedded finance doesn’t just generate new revenue streams, it also drives growth in core product sales. As Mike put it, “A new revenue stream that kicks off USD 5-10 million is great, but if a business is doing USD 5 billion in sales and gets a 12% uplift, the impact is far greater.”
For corporates, embedding financial services into their merchant networks can provide:
- New revenue streams from lending, payments, and financial products.
- Higher retention rates, as merchants who rely on these services are less likely to switch providers.
- Increased core product sales, as financial incentives can be tied directly to product purchases.
Unlocking liquidity and solving cash flow challenges
Small businesses often struggle with trapped liquidity, relying on multiple financial providers and experiencing delays in accessing funds. Mike cited a surprising statistic: "72% of UK SMEs still use their personal bank accounts for business transactions", creating a fragmented and inefficient system.
Embedded finance presents a massive opportunity to solve liquidity challenges by allowing corporates to facilitate lending and cash flow management for their merchant networks. Mike highlighted examples where Toqio clients are offering tailored financial solutions:
Upfront cash incentives
One FMCG client replaced traditional volume-based discounts with upfront cash advances to merchants, ensuring greater loyalty and locking in long-term commitments.
Storefront modernization loans
A corporate client offered 0% interest loans to help merchants upgrade their stores, requiring a higher minimum purchase commitment in return. The result? A revenue boost that far outweighed the cost of the loan.
Real-time lending decisions
By leveraging business and transactional data, corporates can provide instant lending approvals, addressing cash flow gaps much faster than banks.
The future: Controlling payment flows and networks
Corporates are increasingly taking control of how funds move within their ecosystems. Instead of relying on third-party payment processors or external banks, businesses are setting up their own financial rails to reduce costs associated with transaction fees, gain real-time insights into merchant sales and inventory levels, and offer tailored financial products, increasing merchant engagement.
One of the biggest opportunities in this space is cross-border payments. Many corporates currently rely on what Mike described as "high-fee, multi-step bank transfers", but embedded finance allows businesses to facilitate foreign exchange transactions at lower rates, while capturing additional margin.
Why this matters now
As Mike pointed out, embedded finance is no longer a niche strategy, it's a "critical business driver that enhances revenue, strengthens customer relationships, and improves financial access for merchants". Businesses that embrace this shift right now will be best positioned to capitalize on the growing market, while those that hesitate risk losing ground to more forward-thinking competitors.
If you’re looking to understand how embedded finance can transform your business, watch the full recording of Toqio’s Open House session. The insights shared are invaluable for any company aiming to integrate financial services and stay ahead of the curve.