It’s safe to say that the 21st Century has been and continues to be a revolutionary and game-changing time period of financial and tech innovations; thus birthing a new legacy-making term: Fintech. With the reality of Fintech, rises the fresh opportunity for an even more monumental innovation: Embedded Finance. Embedded Finance explores the reality of how non-financial companies value proposition’s have the potential of being remarkably amplified or even transmuted by the associated financial products and services embedded within them.
With society and the modern market being constantly remoulded and shaped to cater to Millennials and Gen Z’ers; comes trendy new ways of how individuals today connect and exchange engaging content and their respective relationship of how they give and receive funds. By definition: the Creator Economy is shaped by businesses centred around independent content creators, social media influencers, bloggers, and videographers. A few examples of businesses or organisations that fit the Creator Economy model include yoga instructors offering online classes with admissions priced at $1, or a minister hosting an online video streaming ceremony that is reliant on donations given by the community for as little as $0.20.
When one views small-value payments individually – it may not seem significant. However, when combined with a global reach and seamlessly embedded within a live stream, it quickly adds up to a substantial amount. Apps like Kuaishou (480m MAUs) and Bigo (20m MAUs) are just two out of many online-streaming apps in China where virtual gift-giving is big business. You can send your favourite live performer anything from a rose for 5 Yuan (80 cents) to a space rocket for 500 Yuan. Embedded small-value user-to-user payments are a game-changer; it adds and makes certain content “exclusive” and rewards those that put in that effort with more than just likes. Twitch, Patreon, Substack and others have already shown that this is also big business outside of China. Recently even Twitter announced that it will enable users to receive tips from followers. While these are all examples around user-to-user payments, it is the entry point for much more: embedded finance is a giant untapped market worth over US$7 trillion – projected by 2030 (source: Embedded Finance projected market value).
Given the fact that it takes an estimate of $200-$300 for a digital bank to acquire a single new user, while simultaneously numerous apps already sit on a nest-egg of millions of users, there is significant untapped value within existing apps. Embedded in-app wallets are key to unlocking this potential, especially for apps with a cross-border user base. Seamlessly embedded wallets provide the foundation for contextual user-to-user payments, micro-finance, in-app economies, and everything in between. And in addition to new revenue streams from financial features, it increases retention and user stickiness too.
Taking the ‘Rocks, Pebbles, and Sand’ Analogy; the empty jar represents the vast modern-day economy, the Rocks and Pebbles filling up the jar represent the traditional brick-and-mortar ways of finance, and the Sand – which fills every nook and cranny the Rocks and Pebbles fail to fill while successfully completing the whole jar; represents the rocket fuel boosting the Creator Economy through small-value user-to-user payments.
