It was a lively discussion for day two of New York City’s 2023 Fintech Nexus USA conference. The session was titled “Embedded Finance: Changing the Innovation Roadmap,” where Synapse CEO Sankaet Pathak was joined in conversation with Alecia Chen from Climb Credit, Simran Sing from Green Dot, Luvleen Sidhu from BMTX, and Denada Ramnishta from Klyme.
The discussion ranged from “what is embedded finance?” to “what will make true embedded finance a reality?” Sankaet Pathak highlighted that the vision will become a reality when launching an application with embedded financial features is as simple as plugging in a module of code. In addition, not only will financial features be enabled, but also the platform delivering the application won’t need to consider risk, fraud, regulatory compliance, and other operational layers that aren’t built into platforms calling themselves embedded finance today.
The panel continued to discuss the four essential layers of embedded finance applications, which are:
- The Licensing Layer, which includes the core banking for financial institution products and their providers that are licensed and regulated by policy makers and regulators. This is a foundational layer for embedded financial features, and it includes:
• DDA accounts
• FDIC insurance
• Investment accounts
• Debit and credit cards
• Loans
• Access to bank transfer, payment, and clearing services
- The Technology Layer, which includes the infrastructure and services software platform that provides integrations with core services licensees (typically banks), and orchestrates and delivers those services through APIs to applications, enabling embedded financial products and features.
- The Operations Layer, which includes fraud detection and mitigation, AML and OFAC checks, KYC, reconciliations, auditing, and end-user support.
- And finally, the User Interface (UI) Layer, which drives the full functionality and experience of an end user, within which the financial features and services are embedded.
Today, embedded finance platform providers address and deliver varying elements of some layers, yet none execute on all of them. The platforms delivering the highest value, such as Synapse, are advancing the frontier of innovation across all 4 layers.
Contact Synapse to learn more.
