How Embedded Finance is Changing Bank Reconciliation
This article is written by Embat Embedded finance is revolutionising the way businesses and banks interact with each other, as well as with consumers and users. Advances in new technologies and the support of APIs have completely changed the current financial paradigm, altering many of the business processes we encounter daily. But how exactly is such a fundamental process like bank reconciliation changing? What advantages does this new reality bring? Discover more below. What is embedded finance? The term embedded finance refers to the integration of financial services into platforms or applications that traditionally do not belong to the financial sector. In other words, it is the merging of banking and financial services within non-banking applications, allowing these applications to offer services such as payments, loans and insurance more directly to their users. The idea behind embedded finance is not entirely new. For years, companies have sought ways to simplify the user experience by reducing friction in their payment processes. However, with technological evolution and the emergence of fintech, this integration has become deeper and more diverse. Now, we are not just talking about payments but a complete range of financial services that can be integrated into e-commerce platforms, mobility applications, social networks, and more. Technology has been the catalyst in the rise of embedded finance. Open Banking in general and APIs in particular have allowed non-financial platforms to connect securely with financial service providers. This has democratised access to financial services, enabling companies of all sizes and sectors to offer their customers embedded financial solutions. Advantages of embedded finance for a business The advantages of adopting embedded finance are multiple and can significantly impact a company’s growth and profitability. Below, we explore all these benefits in detail: Advantages for banks Embedded finance is not just an attractive option for businesses. Banks can also benefit from its full potential: APIs & UX Embedded finance could not have reached its peak without the power provided by APIs. Application Programming Interfaces (APIs) are essential within embedded finance, allowing different software to communicate with each other. In the financial context, APIs enable platforms to integrate banking services securely and efficiently. In this regard, UX is also important. A smooth and simple user experience can be the difference between the success and failure of financial service integration. It is essential that transactions are intuitive and that the user feels confident when using these services. Exemplary cases of embedded finance in the world Embedded finance has enabled numerous companies, both within and outside the financial sector, to innovate and offer solutions that were previously unthinkable. These exemplary cases demonstrate the power and potential of integrating financial services into non-traditional platforms: How to implement embedded finance Implementing embedded finance in a company or platform may seem like a complex task, but with proper planning and the right tools, the process can be smooth and effective. Below are the key steps and considerations for successful implementation: Tools for implementing embedded finance A successful implementation of embedded finance requires specialised tools and platforms that facilitate the integration of financial services into non-financial applications and platforms. Some of the most notable tools in this area are: Banking API platforms: Integrated payment solutions Loan-as-a-Service (LaaS) Platforms: At Embat, we have a flexible and customisable automatic reconciliation system. With this solution, you can automate bank reconciliation using criteria tailored to your business’s specific needs. With an agile and intuitive interface and verification and approval processes that ensure traceability and compliance with requirements at all times. Conclusion In conclusion, embedded finance is transforming bank reconciliation and the way businesses and banks interact. With benefits for both businesses and banks, this trend is here to stay and continue revolutionising the financial world. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
Franklin
CBDC vs Stable Coin for Treasurers
The rise of Central Bank Digital Currencies (CBDCs) and stablecoins is a hot topic in the world of treasury and payments, particularly with the push toward faster, more efficient international transactions. Here’s a comparison of CBDCs and stablecoins, focusing on control and their potential usefulness for corporate treasurers: 1. CBDCs (Central Bank Digital Currencies) CBDCs are digital versions of a country’s fiat currency, issued and regulated by central banks. They’re essentially a government-backed digital asset, often with the same legal status as physical cash. Key Aspects: Usefulness for Corporate Treasurers: Challenges for Treasurers: 2. Stablecoins Stablecoins are digital currencies designed to maintain a stable value by being pegged to an underlying asset (like a US dollar, gold, or a basket of assets). They’re typically issued by private companies rather than central banks. Key Aspects: Usefulness for Corporate Treasurers: Challenges for Treasurers: Comparison of CBDCs vs Stablecoins for Corporate Treasurers Feature CBDCs Stablecoins Control High (centralized control by govts) Low (private issuers or decentralized) Stability Very high (tied to national currency) High (tied to fiat currency, gold, or basket of assets) Regulation Strong government oversight Varied (some issuers may be subject to regulations, but not by central governments) Use for Cross-Border Payments Potentially faster and cheaper than traditional banking, but may face issues of interoperability Faster, cheaper, and decentralized cross-border payments with fewer intermediaries Liquidity Management Allows treasury to manage cash within a highly stable framework Allows treasury to manage liquidity with some flexibility, especially if there’s a stable backing asset Risk Management Limited risk exposure (depends on gov’t policy) Potentially higher risk exposure (issuer solvency, regulatory risks) Conclusion: For corporate treasurers, both options hold potential, but each comes with its own set of risks and challenges. The key will be closely monitoring the regulatory landscape and adoption trends as these technologies continue to evolve. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.