• Michael Treacy, Head of Marketing at OpenPayd


• 24.06.2024 01:00 pm
#SaaS #EmbeddedFinance

The opportunities embedded finance provides are broader than many first anticipated. When discussing the potential of embedding financial services into products, the conversation can sometimes focus on a narrow range of use cases: Buy-Now-Pay-Later, or faster payouts for gig workers.

Perhaps that’s because these examples are the easiest to grasp, but it inevitably means other embedded finance examples come up less often - especially segment-specific ones. For SaaS providers, embedding financial services within their offerings can mean payments are simpler, but there’s far more to it than that. 

SaaS providers’ desire for embedded finance

In 2023, we surveyed businesses and their attitudes to embedded finance. Every SaaS provider we spoke to wanted to embed financial services within their products. That’s up from three-quarters we saw in our 2021 research.

This desire hasn’t yet translated into concrete plans. Only around 11% have actually embedded financial services. Of the rest, many were still in the very early stages, with two-thirds saying they want embedded financial services but have no plans in place. They are, right now, only thinking about it.

So what is stopping SaaS providers from making definite plans on implementing embedded finance, when the desire is so strong?

What do SaaS providers want from embedded finance?

When we dug under the surface, it was clear that SaaS providers know what they want from embedded finance. Increasing the number of customer touch points was by far the most appealing benefit of embedded finance according to SaaS providers, with 84% net approval. It’s clear that SaaS providers want to improve the service they offer and encourage their customers to use their products more. It is not about adding features for the sake of it—it’s about creating a better overall experience.

But they don’t just see more customer touch points as something intangible, they predict immediate benefits to their bottom line. In the next five years, SaaS providers expect revenue growth of 24% from embedded finance, this is higher than almost any other type of business we spoke to. 

SaaS providers want embedded finance to make their products easier to work with, providing their customers with better services and seeing this lead to more revenue. The current gap between their desire and implementation is not because of a lack of perceived benefits—if anything, this sector understands the benefits better than most.

Bridging the gap

So why does this gap exist? For many businesses, the barriers are internal—a lack of expertise in fintech is seen as the main reason to delay implementation. But SaaS providers are different: 61% stated they’re struggling to find the right provider to implement what they need.

SaaS firms also value speed to market and industry expertise in their potential providers more than other sectors. In other words, they want to implement embedded finance quickly and they want to partner with providers who know their business.

Changing the conversation

We are entering a new phase of embedded finance, where concrete projects addressing specific pain points are winning out over flashy well-known examples. Behind the scenes, resolving payment reconciliation issues and managing multiple currencies are just some of the processes embedded services can address. Webhooks make it possible to share information, such as confirming payments or flagging failed transactions, between an embedded finance platform and other pieces of software.

SaaS providers are at a point where they understand what embedded finance can do for them and want it to be part of their products, they just need to make that leap. For all types of businesses, but SaaS providers particularly, it’s time to move from the ‘why’ of embedded finance, to the ‘how’.