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1、Navigating the World of Embedded Finance:A guide for Singaporean companies to explore the potential of embedded financeJanuary,2024an Atlas Technologies Group CompanyContentsExecutive Summary 3Introduction 5Empowering Non-Financial Companies 6The Singaporean Embedded Finance Landscape 10Embedded Fin

2、ance Use Cases 11Opportunities And Key Considerations 21Conclusion 24MethodologyFor this report,Kapronasia conducted both primary and secondary research on the embedded finance market in Asia-Pacific to obtain the most relevant insights from the industry.Secondary research included,but was not limit

3、ed to,market intelligence reports and studies by industry experts and professional services networks,white papers,educational materials,media articles,and marketing collateral.Primary research included interviews with relevant players across the ecosystem,including financial institutions,fintechs,an

4、d industry experts.Navigating The World of Embedded Finance3Embedded finance is revolutionizing industries by seamlessly integrating financial services into non-financial platforms and applications.Singapore,recognized for its robust fintech ecosystem and supportive regulatory framework,is poised at

5、 the forefront of this transformation.It is estimated that the global embedded finance market across the entire value chain will rise substantially from$264 billion in 2021 to$606 billion by 2025,representing remarkable CAGR growth of 23%.Even more notable is the projection that Asia Pacific will ac

6、count for$305 billion,approximately 50%of the 2025 global market value.Asia Pacific,especially Southeast Asia,holds tremendous promise for embedded finance development given the regions young and aspirational population,advanced digital maturity,vibrant fintech ecosystem,and receptivity of consumers

7、 to digital disruption and new financial services consumption models.Companies in the region have a valuable opportunity to capitalize on this potential by strategically adopting embedded finance solutions.solutions to enhance customer loyalty,streamline processes,reduce costs,and tap into new reven

8、ue streams.As an example,a Singaporean construction firm utilizing an embedded finance solution from DOXA,reduced staffing requirements by 30%in its payments group.Executive Summary Ernst&Young,“How will embedded finance revolutionize industries in Southeast Asia?,”25 September 2023,https:/ robo-adv

9、isors based on the users savings and financial profile on banking appsRound-up features that invest spare change from purchases Direct investment opportunities in properties or real estate funds.Embedded options to adjust 401(k)or IRA contributions and allocationsIntegrated payment solutions within

10、shopping platforms.Automatic charges post-ride(e.g.,Uber,Lyft).Auto-renewal and billing within apps(e.g.,Netflix,Spotify).In-app purchases and peer-to-peer payments(e.g.,Facebook Pay).Offer travel insurance at checkout for flights,hotels,or packages.Product insurance or extended warranties for elect

11、ronics and appliances.In-app accident or trip insurance for riders and drivers(e.g.,Uber,Lyft).Health insurance or telemedicine coverage options when booking appointments.Buy Now,Pay Later options at checkout.Instant car loan approvals within car shopping apps or websites.Embedded student loan or co

12、urse financing options within a university or e-learning portals.In-app credit lines or financing for high-ticket items.INVESTINGINSURANCEPAYMENTSLENDINGOverview of Embedded Finance Use CasesFigure 1Navigating The World of Embedded Finance4This is all happening in the context of a digital economy th

13、at has reshaped consumer expectations.Todays consumers demand a seamless experience from their financial institutions,akin to their favorite entertainment or social media apps.The rise of open banking,coupled with digital advancements,has paved the way for embedded finance,allowing financial service

14、s to be integrated into diverse industries,from e-commerce platforms to ride-hailing services.As these opportunities grow,non-financial firms must stay up to date to capitalize on them and meet these changing consumer expectations.However,despite the potential benefits,companies venturing into embed

15、ded finance must address challenges like regulatory compliance,cybersecurity,and data protection.This paper serves as a guide for Singaporean companies to understand and explore the potential of embedded finance in their respective industries.It delves into the intricacies of embedded finance throug

16、h the examination of four compelling case studies,each representing distinct use cases in lending,investing,payment,and insurance.These case studies feature notable companies such as DOXA Connex for payments,Goldbell/Polaris for lending,bolttech for insurance,and DriveWealth for investing.By explori

17、ng these real-world examples,the paper aims to demonstrate the tangible advantages of embedded finance for these companies,offering a compelling narrative that showcases its potential.Furthermore,it discusses the strategic actions that Singaporean non-financial companies should take to navigate the

18、implementation of embedded finance successfully,including selecting the right partners,investing in agile and scalable infrastructure,obtaining buy-in from senior management,complying with local regulations,and addressing cybersecurity risks.Through this holistic approach,we aim to help companies un

19、derstand not only the opportunities but also the challenges that come with embracing embedded finance.By shedding light on the potential and challenges of embedded finance,this paper offers insights into the growing impact of fintech innovation in Singapores financial landscape.Navigating The World

20、of Embedded Finance5Introduction In todays increasingly digital economy,the concept of embedded finance has emerged as a powerful tool for non-financial companies to enhance their offerings and tap into new revenue streams.Embedded finance refers to the integration of financial services into non-fin

21、ancial platforms,products,or services,enabling seamless financial transactions and creating added value for customers.As Bill Gates aptly stated in 1994,Banking is necessary,but banks themselves are not.Embedded finance guarantees a smoother banking experience,eliminating the necessity for customers

22、 to directly interact with traditional banks.In short,embedded finance happens when a financial product or access to financial services is provided through the platform of a non-bank/financial institution.Edmund Ng,Co-Founder of DOXA International,a payments-focused Fintech based in Singapore aptly

23、describes this as“the process where financial services can be pushed from a financial institution to exactly where the client needs the service at point of transaction.”This represents a paradigm shift in the way financial services are delivered.Traditionally,financial services were the domain of ba

24、nks and financial institutions as standalone products or services.With the rise of technology and digital platforms,companies from various sectors such as e-commerce,transportation,healthcare,and retail have waded into this space and are placing financial services directly into their offerings.This

25、integration allows customers to access financial services conveniently and seamlessly without the need for traditional banking intermediaries.Moreover,embedded finance solutions are transcending the mere addition of products to existing value propositions.They now encompass innovative payments and f

26、unding solutions that boost sales and harness enhanced data sources to streamline internal processes.From refining processes to more effectively managing cash flow,embedded finance can potentially reshape business operations by deploying various financial solutions to their existing operating models

27、.*Software Enabler is the fintech in most casesBankCreates own productsBankEnables distribution of its productsBankDistributes through branch,app or agentsCustomerBank-branded products offeredRegulated Entity/BankCreates products for embeddingSoftware Enabler*Supports delivery of products to the pla

28、tform Platform/ChannelHosts and distributes the productsCustomerVisits the platform and transacts via embedded finance productsThe Traditional Banking Value Chain vs.The Embedded Finance Value ChainFigure 2Navigating The World of Embedded Finance6Empowering Non-Financial Companies:The Versatility Of

29、 Embedded Finance Solutions In Asia-Pacific In Todays Digital AgeIndividuals expectations are undergoing a profound transformation,in particular,customers are demanding seamless and personalized experiences across their digital interactions not dissimilar to what they get from social media or entert

30、ainment platforms like TikTok and Instagram.This shift in consumer behavior is converging with advancements in digital offerings from financial institutions and the rise of open banking a system that allows financial institutions to securely share customer financial data with third-party providers u

31、sing APIs.Open banking has become a catalyst for innovation,fostering collaboration between financial institutions and non-financial companies in many countries such as the UK,Singapore,Australia,and enabling the widespread deployment of embedded finance solutions.The marriage of consumer expectatio

32、ns,digital offerings,and open banking has changed how people interact with money and has given birth to a new era of financial services,where finance is seamlessly embedded into the everyday digital experiences of consumers,catering precisely to their preferences and needs while paving the way for a

33、 frictionless and integrated financial journey.From e-commerce platforms offering instant point-of-sale financing options to ride-hailing apps seamlessly integrating mobile payments and insurance services,consumers can now access financial products and services without the need to navigate to or thr

34、ough a standalone banking app.A great example of embedded finance in action can be seen with insurance on ride-sharing platforms such as Grab in Singapore.In this case,Grab can embed insurance coverage that protects both drivers and passengers during trips and this is clearly displayed on the app wh

35、en making a booking,eliminating the need for customers to purchase insurance separately from an insurance provider.The insurance coverage activates automatically during the ride and deactivates once the trip ends,ensuring comprehensive protection for all parties involved.An example of embedded insur

36、ance offering on Grab AppFigure 3Navigating The World of Embedded Finance7Embedded finance has witnessed something of a surge in recent years,driven by its ability to leverage digital platforms and data to deliver personalized and contextually relevant financial services directly to customers.The fo

37、recasted embedded finance revenues for 2025 in APAC region is around US$305 billion,47%of which is from payments-related products and services.Businesses are increasingly leveraging embedded finance to enhance customer experiences,drive customer loyalty,and create new revenue streams.The deployment

38、of embedded finance solutions can bring numerous benefits to non-financial companies and is being seen in a few ways.Ernst&Young,“How will embedded finance revolutionize industries in Southeast Asia?,”25 September 2023,https:/ Embedded Finance Revenues for 2025 in APACLending26%$78 bnPayments47%$144

39、 bnInsurance27%$83 bnAPAC:US$305 billionWealth0.30%$0.9 bnSource:EY Knowledge AnalysisFigure 4Navigating The World of Embedded Finance8Primarily,embedded finance empowers enterprises to elevate their core offerings through a harmonious financial journey.To illustrate,an e-commerce platform can seaml

40、essly incorporate point-of-sale financing alternatives,enabling customers to finalize purchases without exiting the platform.Firms can use embedded finance to monetize their existing customer base by offering complementary financial services.By leveraging customer data and insights,companies can ide

41、ntify specific financial needs and tailor their offerings,accordingly,thereby driving additional revenue streams.AirAsia,a non-financial company,has ventured into this world with its innovative product,BigPay.BigPay is the digital financial platform by AirAsia and operates as a user-friendly mobile

42、app designed to provide travelers with convenient and efficient financial services.Through BigPay,AirAsia passengers can not only book flights but also purchase insurance and enjoy various financial features,including instant international money transfers at competitive exchange rates,multi-currency

43、 wallets for convenient spending abroad,and real-time transaction tracking.This not only empowers AirAsia travelers with greater control over their finances,making their journey more convenient and cost-effective,but also provides AirAsia with a new stream of revenue.Companies such as Tokopedia in I

44、ndonesia harness the vast amounts of data generated from their main business operations,providing insights into customer behavior,preferences,and purchasing patterns.By analyzing this data,Tokopedia can identify the financial needs of its customers.For instance,if a customer frequently browses high-

45、value items but doesnt make a purchase,it could indicate a financial constraint.Recognizing such patterns allows Tokopedia to tailor financial solutions that cater to these specific needs,thereby enhancing their overall value proposition to the customer.Total to pay:$75Pay with:Credit/Debit CardBuy

46、Now,Pay LaterDigital WalletApproved for buy now,pay later$25 payment due tomorrowComplete purchasePay in 3$25 installmentsNote:This productRepayments completeSource:Bain&CompanySource:AirAsia WebsiteCustomer shops online on an E-commerce platform Customer goes to the checkout page having alternative

47、 payment options,including cash/card/Buy Now Pay Later(BNPL)options Customer chooses BNPL which is approved based on background credit scoring Customer is shown terms of purchase,and agrees to payment planCustomer is prompted to make repayments before each dueRepayments made until full product price

48、 is paid High-level Embedded finance customer journey on an e-commerce platformFigure 5Embedded Payment on AirAsia SuperApp using BigPayFigure 6Navigating The World of Embedded Finance9By becoming a one-stop-shop for both their core product and services offerings as well as financial services,compan

49、ies can increase customer stickiness and reduce the likelihood of customers switching to competitors.When a company offers a wide range of services,including financial solutions,on a single platform without the need to switch,it simplifies the user experience.For instance,if a business owner can pur

50、chase products,manage their inventory,and secure supply chain financing all within the same platform,it saves them time and effort,fostering customer loyalty.Perhaps more observably,companies such as Xero and DOXA are providing embedded finance solutions that offer opportunities for significant cost

51、 reduction in both operations and funding.By analyzing transaction patterns and creditworthiness,firms furnish more accessible and affordable financing options,effectively curtailing funding costs.In addition to cost optimization,embedded finance has the capacity to enhance internal operations by in

52、tegrating payments into internal accounting systems.This automation has the potential to eliminate manual tasks,such as data entry,reconciliation,and paperwork,that are inherent to traditional accounting methods.Furthermore,embedded finance augments cash flow management and forecasting.Direct connec

53、tions between payment systems and internal accounting offer real-time insights into cash inflows and outflows.This equips companies with enhanced financial insights,precise cash flow projections,and proactive working capital management capabilities,thus fortifying operational processes.Navigating Th

54、e World of Embedded Finance10The Singaporean Embedded Finance LandscapeSingapore boasts a vibrant fintech ecosystem and this,coupled with a robust regulatory framework supports the growth of embedded finance,ensuring a secure and conducive environment for non-financial companies to offer financial s

55、ervices.The Monetary Authority of Singapore(MAS),the countrys central bank and financial regulator,has actively encouraged innovation and collaboration between traditional financial institutions and non-financial companies through various initiatives.With the Asia Pacifics embedded finance industry

56、projected to grow at a compounded annual growth rate of approximately 24%for the next 5 years,Singapore is poised to capture a significant share of this growth.The MAS has been particularly proactive in setting up necessary frameworks that encourage experimentation and in driving API development suc

57、h as supporting regulatory sandbox,with the intention of creating an infrastructure conducive to building new embedded finance solutions.The Payment Services Act,enacted in 2019,provides a comprehensive regulatory framework that covers a wide range of payment activities,including digital payments an

58、d e-money issuance.This regulatory clarity and support from MAS,in collaboration with industry associations and leaders,offer a solid foundation for Singaporean non-financial companies to explore and implement embedded finance solutions.Within this regulatory landscape,data privacy and security are

59、of paramount importance.The Personal Data Protection Act(PDPA)ensures that personal data collected during financial transactions is treated with utmost confidentiality and used responsibly.Compliance with PDPA guidelines fosters trust and confidence among consumers,enabling them to embrace embedded

60、finance solutions with relative peace of mind.Another driving force behind the growth of embedded finance in Singapore is the collaboration between fintech startups and traditional financial institutions.While fintech brings in technological expertise and innovative solutions,traditional banks have

61、customer trust and regulatory know-how.This synergy is leading to the rapid development and deployment of embedded finance solutions that are both cutting-edge and reliable.The development of embedded finance is of particular significance for non-financial corporates in Singapore given the countrys

62、strong emphasis on digitalization and innovation.Singapore has thus positioned itself as a leading global financial hub and a center for technological advancement.With its robust digital infrastructure,supportive regulatory environment,and highly skilled workforce,Singapore provides an ideal ecosyst

63、em for companies to explore and leverage the potential of embedded finance.KPMG,“Embedded Finance:Partnering Platforms for Success,”November 2022,https:/ The World of Embedded Finance11There are several financial products that can be deployed via embedded solutions.These can be categorized in many w

64、ays,but fundamentally fall into one of four groups:Payments,Lending,Insurance and Investing.PaymentsEmbedded payments have become relatively ubiquitous,offering a seamless way to make transactions.Take,for instance,an e-commerce website,where items are added to a purchase cart.When it comes to the t

65、ime to pay,the process is smooth and hassle-free as the platform integrates multiple payment options,from traditional credit cards to modern cryptocurrencies,allowing customer choice and making the transaction seamless.Historically,these transactions often would have been done off-platform with shop

66、pers either being redirected to an external application or being forced to make the payment manually.Beyond using Singapore dollar-based payments,some platforms are also integrating loyalty programs,letting users either spend the platforms loyalty points,or those of a separate platform to offset the

67、 cost of a purchase.Digital wallets can be integrated into popular apps and enable customers to use hard-earned points right where customers earned them.For example,SingTel,a large telecommunications company in Singapore has embedded finance into its app such that when customers engage in various ac

68、tivities,such as making digital payments for telco services or participating in partner promotions,they earn loyalty points as an incentive.These loyalty points can then be accumulated and subsequently redeemed to offset the cost of future purchases,such as paying for mobile plans,broadband services

69、,or mobile devices.This effectively reduces their out-of-pocket expenses and often increasing attachment and engagement with the platform.Perhaps one of the most visible forms of embedded finance lies in Point-of-Sale financing or Buy Now,Pay Later(BNPL).For example,Atome,a Singaporean Fintech,provi

70、des funding to allow a customer to split the cost of a large purchase such as a TV or designer shoes into multiple affordable installments.The retailer offers instant financing options at the checkout counter and the loan is effectively completed in-store,and on the spot.The popularity of BNPL among

71、 merchants stems from the idea that it has been shown to increase transaction volumes.Embedded Finance Use CasesNavigating The World of Embedded Finance12The traditional approach to B2B payments and supply chain financing is a rather disjointed and manual process whereby anchor clients,buyers,suppli

72、ers,and subcontractors need to align invoicing and payment workflows.These methods often result in inefficiencies,delays,and a lack of transparency,causing a degree of administrative overhead.The absence of a digital ecosystem meant that businesses could not holistically integrate payment and invoic

73、ing workflows with their operating systems,impeding their capacity for real-time insights and informed financial decisions.Understanding DOXA ConnexDOXA,a Singapore-based fintech company,serves as a noteworthy exemplar of how embedded finance can solve business issues such as this.DOXA has establish

74、ed an integrated ecosystem for supply chain financing.Their primary objective is to simplify and optimize the payment and financing processes that transpire between buyers,suppliers,and subcontractors.Their platform,DOXA Connex,is meticulously designed to enhance collaboration,workflow automation,an

75、d overall productivity.Through DOXA Connex the company streamlines operations by linking payment and invoicing workflows to clients operating systems,via the use of APIs.Doxa Connexs Procure-to-Pay system digitalizes the entire procurement journey,starting with collaborating with suppliers and sendi

76、ng out centralized requests for quotations.Once a quote is accepted,a digital purchase order is generated and confirmed by the supplier.Upon delivery or service completion,the system verifies the order against the suppliers invoice and the goods receipt note.Any discrepancies are flagged,ensuring ac

77、curate invoicing.Payments are then made directly through a secure system,with options for direct financing if needed.Integrated logistics features allow for seamless delivery tracking,and the platform provides analytics for users to monitor and optimize their procurement activities.Case Study:Revolu

78、tionizing B2B Payments through DOXA ConnexNavigating The World of Embedded Finance13Who can embed DOXAs solution?DOXA Connex has carved a niche for itself by offering tailored solutions that cater to a diverse range of sectors,including construction contractors,real estate developers,and suppliers o

79、f various goods and services.How will Doxas client benefit from embedding their product?The digital integration with DOXAs solution streamlines operations and improves efficiency,as exemplified by Singaporean construction firm Kimly,which after starting using DOXAs automated payments solutions has s

80、een a reduction of 30%in man-hours spent on payment operations.Beyond efficiency gains,DOXA Connexs capabilities extend to capturing and analyzing essential spending and sales data,empowering businesses with valuable insights for informed decision-making.This additional data analysis can help lower

81、the cost of funds for companies as it can demonstrate a companys creditworthiness.By embracing collaborative B2B payments made possible through embedded finance,DOXA demonstrates the viability and benefits of embedding finance via a more streamlined and productive payment process.However,a few consi

82、derations for potential clients would be digital readiness and willingness to collaborate with third-party providers,ability to manage and provide necessary data for optimal platform functionality,and openness to automation.BuyerClientSupplierVendorCreate RFQRespond to RFQCreate POAcknowledge POPerf

83、orm GRCreate DOAllow GR with Exception handlingInvoice matchingCreate paymentBanks sgtradexFinancial InstitutionsExceptional POCreate Invoice Create Financing Source:DOXA ConnexDOXA Connexs Procure-to-Pay Value ChainFigure 7Navigating The World of Embedded Finance14Embedded lending has become omnipr

84、esent in Singapores fintech landscape,as non-financial companies integrate lending services into their platforms,providing accessible and personalized credit solutions for consumers and businesses and ultimately,a more seamless lending experience.Via digital lending,companies can access funding thro

85、ugh alternative credit assessment methods,such as analyzing transaction data from e-commerce platforms or assessing the performance of their digital business,thereby expanding access to finance for a broader segment of the population.Digital lending platforms also facilitate faster loan approvals an

86、d disbursements where embedded lending can streamline the application process reducing paperwork and decision-making timeframes,making it more accessible and user-friendly.Another application of embedded finance is payroll financing which can help address financial challenges faced by employees.Many

87、 individuals encounter unexpected expenses between paychecks,such as medical emergencies or urgent home repairs.With embedded finance,companies such as GetPaid,a Singapore based Fintech,can integrate payroll financing options into their HR systems,making it easy for employees to request early access

88、 to their earnings while at the same time increasing employee satisfaction and financial well-being,resulting in increased productivity and reduced turnover rates.Embedded finance has also made significant strides in enhancing supply chain financing,a critical aspect of modern commerce.Eddie Lee fro

89、m Pilon,a leading Singaporean fintech,elaborated on this using his company as an example,“we facilitate a dynamic scenario where suppliers shipments are verified and quality assured by the buyer,enabling suppliers to request early payments.”Lending“We facilitate a dynamic scenario where suppliers sh

90、ipments are verified and quality assured by the buyer,enabling suppliers to request early payments.”Eddie Lee PilonThis approach empowers companies to strategically optimize their cash flow,benefiting both suppliers and buyers alike.Suppliers have the flexibility to receive immediate payment,bolster

91、ing their financial position,while buyers can extend payment terms via Pilons financing,enhancing their liquidity management.As a result,Pilon becomes the catalyst for companies to become buyers of choice,fostering stronger business relationships.Navigating The World of Embedded Finance15Understandi

92、ng Goldbell/PolarisGoldbell/Polaris,a Singapore-based Fintech,has introduced a unique Revenue Based Financing program that provides loans to local F&B merchants using embedded finance in collaboration with Oddle,a Food and Beverage(F&B)aggregator.Unlike lending methods which often rely on traditiona

93、l credit scoring models,these loans are underwritten using revenue data sourced directly from Oddles merchant portal,offering a more data-driven and accurate assessment of each merchants financial health.For lenders like Goldbell/Polaris,this embedded finance solution significantly reduces client ac

94、quisition costs,as they gain access to a vast pool of F&B companies through Oddles extensive network.Who has embedded Goldbell/Polaris solution and what are the benefits?For Oddle,which is the embedder of the solution,this collaboration ensures a frictionless lending experience,where data analytics

95、play a pivotal role in expediting loan approvals,granting merchants quicker financial access.With Oddles comprehensive datasets,Goldbell/Polaris can address the challenge of scattered data in Singapores F&B sector.Tan Chun Hao,GM at Goldbell Financial Services emphasized this saying“lenders have muc

96、h more confidence when they can see hard data sourced directly from a sales platform.We can then quickly provide preapproved in-principal loans more rapidly than traditional means.”Case Study:Empowering F&B Merchants:A Dive into Embedded Lending with Goldbell/Polaris and OddleHow does this benefit O

97、ddles customers?Oddles customers,who are smaller F&B merchants,benefit from enhanced access to finance that would have otherwise been difficult to obtain through traditional channels.Moreover,the integration with Stripe automates repayments,simplifying the financing process for merchants.By harnessi

98、ng the power of embedded finance,Goldbell/Polaris and Oddle have created an innovative and efficient way to empower F&B merchants,unlocking growth opportunities and driving financial inclusion in the vibrant F&B ecosystem.LenderBorrower(F&B outlets)Embedder(e.g Oddle)Lending Enabler(e.g Polaris)3124

99、2Loan origination1.Borrower is offered the opportunity to take a loan can be from a choice of providers.2.Borrower interacts with the app with embedded lending3.Lending enabler initiates and provides data to bank/lender for credit approval(noting that in some cases Polaris can act as both enabler an

100、d lender).4.Borrowers bank and/or data provider relay the data back to the enabler who processes the information and relays it back to the TPP provider.Loan disbursement/servicing1.Lender sends cash to Borrower2.Borrower instructs their bank to make repayment to the lender.(Note that the repayment c

101、an also be directly via the payment processer or the Embedder e.g Stripe)Embedded Lending Goldbell/Polaris Value ChainFigure 8“Lenders have much more confidence when they can see hard data sourced directly from a sales platform.We can then quickly provide preapproved in-principal loans more rapidly

102、than traditional means.”Mr Tan Chun Hao GM,Goldbell Financial ServicesLoan repayment is seamlessly linked to the ecosystem,with Stripe,the payment processing platform used by Oddle,automating repayments directly.This operational control over repayments,coupled with traditional security measures like

103、 director guarantees,instills confidence in lenders while simplifying the entire financing process for merchants.Navigating The World of Embedded Finance16Embedded insurance represents another development of the financial sector,reshaping the landscape of policy sales and management.When it comes to

104、 insurance coverage,insurance providers or insurtech companies offer two options:off-the-shelf products and customized products.Off-the-shelf products are pre-made insurance packages that can be easily integrated into other platforms,allowing insurance providers to expand their market reach.On the o

105、ther hand,by utilizing digital platforms and data analytics,insurers have the ability to create tailor-made microinsurance products that specifically cater to the distinct requirements of a particular target audience.One common use case is microinsurance,which often caters to the underserved and eco

106、nomically vulnerable segments of the population,offering them accessible and affordable coverage for specific risks through low-cost premium payments and simplified claims processes.Insurance companies can leverage data from various integrated platforms to expedite the claims process,reducing manual

107、 intervention and the risk of errors.Imagine a street vendor who relies on their daily earnings to support his/her family.In the past,this vendor might have considered insurance unaffordable.However,with microinsurance embedded into mobile payment platforms,this vendor can now purchase coverage agai

108、nst risks that threaten his/her livelihood,such as accidents or theft.Travel booking platforms offer a further illustration.As customers plan their vacations,they can opt for embedded travel insurance while booking flights or accommodations,offering travelers peace of mind without the need to naviga

109、te multiple websites or paperwork.This level of convenience not only drives insurance uptake but also enhances customer loyalty and trust in the platform.Finally,embedded finance allows insurers to monitor claims data in real-time,enabling them to identify patterns and trends that inform product imp

110、rovements and risk assessments.This data-driven approach enhances insurers ability to respond proactively to emerging risks,ensuring they stay ahead in an ever-evolving insurance landscape.InsuranceNavigating The World of Embedded Finance17Understanding bolttechbolttech is a global insurtech provide

111、r serving many different segments of the industry.One of their more interesting use-cases involves collaborating with a prominent Asian telecommunications company to offer comprehensive device protection plans.By embedding their insurance services seamlessly within the telcos digital platform,boltte

112、ch enables customers to purchase device protection plans effortlessly at the point of purchase.Case Study:Seamless Protection:How bolttech and Singtel Revolutionized Device Insurance Who is the embedder and how do they benefit?By partnering with bolttech,Singtel benefits from increased customer sati

113、sfaction and reduced churn rates,establishing a competitive edge in the market by offering a value-added service seamlessly integrated into their existing product offerings.How does this solution benefit the end-customer?With bolttechs embedded finance solution,customers can enjoy a frictionless exp

114、erience,conveniently selecting and activating insurance coverage for their newly acquired devices within the telcos ecosystem.The integration not only simplifies the insurance purchasing process but also enhances customer loyalty as it provides an added layer of security and peace of mind for device

115、 owners.Yen Yen Koh,General Manager for Singapore at bolttech,underscored the flexibility of insurtech by highlighting the capacity to offer bite-sized insurance solutions,“even when an array of offerings is available,an automated embedded system can intuitively provide clients with exactly the subs

116、et of coverage they require.”End customerEmbedder(e.g SingTel)Insurance Provider1Enabler(e.g,Bolttech)324Embedded insurance flow1.User is offered the insurance product via the non-financial,customer-facing interface(Eg:SingTel)2.The enabler,bolttech,interacts with the insurance provider to request t

117、he relevant coverage,eliminating the need for customers interaction with the insurance provider.3.The insurance provider uses the data(obtained from a combination of internal data,customer-provided information,third-party data providers,and other relevant sources)for underwriting and actuarial purpo

118、ses and is responsible for manufacturing and issuing the insurance policy,as well as claims management,regulatory filings,regulatory risks,and compliance risks.Note,this can also be bolttech in some instancesEmbedded Insurance bolttech Value Chain Figure 9“Even when an array of offerings is availabl

119、e,an automated embedded system can intuitively provide clients with exactly the subset of coverage they require.”Yen Yen Koh General Manager for Singapore bolttechNavigating The World of Embedded Finance18Singapore is seeing a multi-faceted change in the approach to investments and the advent of emb

120、edded finance is one element of this change.From the rise of robo-advisory platforms that offer automated and personalized investment advice to the accessibility of micro-investments,enabling even modest contributions to grow wealth,and the democratization of early-stage venture funding through equi

121、ty crowdfunding,Singapore is embracing technology to make investments more inclusive,efficient,and empowering.Although not strictly considered embedded finance solutions directly,robo-advisors such as Stashaway and Endowus have democratized wealth management,making it accessible to investors with va

122、rying levels of financial literacy and capital.With lower fees and minimum investment requirements compared to traditional wealth management services,robo-advisors open doors to a wider range of individuals,empowering them to take control of their financial future.Individuals can simply input their

123、financial goals,risk tolerance,and investment horizon into a digital platform.The robo-advisor then crafts a diversified portfolio tailored to their unique needs and automatically rebalances it as market conditions change.This hands-off approach not only saves time but also ensures that investments

124、are aligned with the investors objectives and risk appetite.Although robo-advisors are typically a B2C value proposition,providers are starting to provide B2B solutions,either white-labeled and integrated into corporate employee portals,or through a linked service.This integration can help employees

125、 invest their salary immediately as well as provide other options for retirement savings.Embedded finance has paved the way for micro-investments,where individuals can invest small amounts of money,often as little as a few dollars,into a diversified portfolio of stocks or exchange-traded funds(ETFs)

126、.This approach allows even those with modest incomes to start building their investment portfolios.For instance,an individual who skips their daily coffee purchase and decides to invest the equivalent amount through a micro-investing app,often automatically.Over time,these small contributions accumu

127、late,providing an opportunity for wealth creation and financial growth.Micro-investments not only instill a savings habit but also introduce new generations to the world of investing,fostering a culture of financial responsibility and independence.Embedded finance has also brought new ways into how

128、businesses can raise capital and how investors participate in early-stage ventures.Equity crowdfunding platforms enable startups and small businesses to access funding from a diverse pool of investors,while also offering individuals an opportunity to invest in promising ventures that align with thei

129、r interests.InvestmentNavigating The World of Embedded Finance19Understanding DriveWealthDriveWealth,a leading global fintech company,is making strides in the realm of micro investing in Singapore by helping individuals buy fractional shares,enabling investors to start building diversified portfolio

130、s with very small amounts of capital.This democratization of investing allows individuals in Singapore,regardless of their financial background,to participate in financial markets and access a broad range of investment options.Case Study:Investing for All:DriveWealths Embedded Approach in Democratiz

131、ing FinanceWho can embed DriveWealths solution and how will they benefit?By leveraging its robust API infrastructure,DriveWealth partners with banks,financial apps,wealth management platforms,and other institutions in Singapore to integrate its micro-investing capabilities seamlessly into their serv

132、ices to enhance their offerings and cater to a broader audience.Offering such micro-investing capabilities can lead to higher customer engagement and retention,as users find more value in a platform that caters to both their spending and investment needs.Additionally,DriveWealths robust API infrastr

133、ucture facilitates seamless integration,enabling embedders to leverage the platform without heavy technical investments.However,when contemplating such collaborations,SMEs should be clear of their digital strategy and have a deep understanding of their customer bases investment preferences.Beyond th

134、e technical aspects such as the necessary IT infrastructure to effectively integrate DriveWealths API,SMEs must also be cognizant of potential regulatory requirements tied to investment services.End customerEmbedder(e.g Revolut)Financial Markets1Enabler(e.g,DriveWealth)324Embedded invesment flow 1.U

135、ser is offered a digital sleeve via the customer-facing interface2.Entity who is undertaking the embedding into their app provides an additional feature to their app including an investment sleeve.3.The enabler,in this case DriveWealth,enables the end customer to allocate some funds to financial inv

136、estments.This can range from very small amounts,a few cents,to large denominations of hundreds of thousands of dollars.4.The enabler then acts as a securities broker and buys financial securities for the end customer and sends the shares to the digital wallet of the end customer.Embedded Investment

137、DriveWealth Value Chain Figure 10Navigating The World of Embedded Finance20How will embedded investment help the ultimate customer?Customers,regardless of their financial standing,can participate in the financial markets,breaking down traditional barriers to investing.With the ability to buy fractio

138、nal shares,customers can build diversified portfolios without needing large amounts of capital.Vic Tham,Head of APAC at DriveWealth underscored the value of this type of collaboration approach stating that,“the ability for customers to allocate small amounts of daily spending into investments democr

139、atizes the securities market,fostering access for previously non-investors.”Additionally,the seamless integration of DriveWealths platform into familiar apps and services means customers can invest without having to navigate multiple platforms.Example of a personal finance app offering a seamless cu

140、stomer interface to embedded investing,providing risk disclosure,customer verification and product information through its app interfaceAn example of seamless customer interface for investment on RevolutFigure 11“The ability for customers to allocate small amounts of daily spending into investments

141、democratizes the securities market,fostering access for previously non-investors.”Vic Tham Head of APAC DriveWealthNavigating The World of Embedded Finance21Opportunities And Key Considerations Food For Thought For Singaporean Companies As we are seeing,embedded finance is an emerging force for non-

142、financial corporates in Singapore,offering a range of opportunities to enhance their operations and customer engagement.By streamlining processes and workflows,enhancing data analytics,and improving customer experiences with seamless and integrated financial services,embedded finance can boost effic

143、iency,productivity,and loyalty.It also widens access to bite-sized and affordable financial services to underserved segments,accelerates processes using integrated data,lowers costs by utilizing existing networks,enables better risk management through real-time monitoring,and democratizes investing.

144、As the landscape of finance continues to evolve,Singaporean companies would do well to take note of developments in the embedded finance space as activity is well underway in this sphere.There exist numerous opportunities for non-financial companies to proactively deploy embedded solutions and exper

145、ts across the sector highlight the need to look for integration and the seamless alignment of operations.Mr Ng from DOXA summed up the future of embedded finance by stating that,“every company operating in the B2B space needs to have embedded finance in the future.”However,non-financial corporates m

146、ust carefully consider several key challenges that make operationalizing embedded finance solutions challenging for SMEs,including limitations around financial and technical resources,capabilities and change in management,uncertainty of benefits,regulatory gray areas,data privacy when adopting to cl

147、oud solutions,security concerns,and customer adoption.A phased approach can help mitigate some of these risks accordinglyChallenges of operationalizing embedded finance solutionsFigure 12Limitations in financial&technical resourceCapabilities&change in managementUncertainty of benefitsRegulatory gra

148、y areasData privacy&security concernsCustomer adoption“Every company operating in the B2B space needs to have embedded finance in the future.”Mr Ng DOXAThis is because companies will no longer be supplier/buyer of choice without the more seamless operating processes offered by embedded solutions.Pap

149、er invoices simply no longer cut the mustard.Navigating The World of Embedded Finance22Non-financial companies should have their infrastructure at least at an enterprise-grade so that they are able to effectively integrate into various ecosystems.Non-financial corporates must invest in agile and sca

150、lable infrastructure to harmonize diverse technologies and data sources for seamless interactions between the non-financial and financial components.This also allows non-financial companies to benefit more fully from the interaction with the APIs of their partners.For the smaller operator,perhaps wi

151、thout extensive IT budgets,one option might be to use a platform such as Xero which will help to integrate them into the wider embedded ecosystem.Mr Tham from DriveWealth talked about this seamless integration in the context of saving/investing observing that,“clients want processes to be easy and s

152、eamless,so when transactions are conducted,the transfer of funds is immediate and completed without leaving the source app or website.“Clients want processes to be easy and seamless,so when transactions are conducted,the transfer of funds is immediate and completed without leaving the source app or

153、website.Mr Tham,DriveWealthA common theme across the industry is the importance of selecting the right partners for collaboration.As embedded finance involves integrating financial services into existing platforms,Partnering with established financial institutions and fintech companies can provide a

154、ccess to the necessary expertise and regulatory knowledge.By forging strong partnerships,non-financial companies can tap into the experience and resources of their chosen partners,accelerating the development and deployment of embedded finance solutions.Mr Tan,from Goldbell/Polaris went a step furth

155、er noting the importance of reliable partners with an example in lending,“if a partner wants to embed lending into a platform,it is crucial that when the rubber hits the road,they have the risk appetite they said they had and provide loans reliably.”“If a partner wants to embed lending into a platfo

156、rm,it is crucial that when the rubber hits the road,they have the risk appetite they said they had and provide loans reliably.”Mr Tan Goldbell/Polaris Navigating The World of Embedded Finance23Not only does this make the implementation more efficient,but the analytics also going forward can ensure m

157、anagement have appropriate information to decide on the success or failure of a program.Stuart Watson,Head of Insurance Exchange,at bolttech,provider articulated the importance of adjacency and relevance with respect to product offerings,“It is critical that the embedded product should be linked to

158、the core offering,to give it meaning to customers.”This principle holds substantial weight,as customers often become fatigued by a barrage of supplementary products that may hold little significance for them.Ms Koh,of bolttech,delved into the operational aspects,stressing the essential role of obtai

159、ning senior managements buy-in throughout the organization when incorporating products into a broader offering.She emphasized that viewing embedded products solely as an additional product line is insufficient,“all facets of the organization,including user experience,technology,and analytics functio

160、ns,need to be seamlessly aligned to ensure successful implementation.”“All facets of the organization,including user experience,technology,and analytics functions,need to be seamlessly aligned to ensure successful implementation.”Ms Koh bolttechWith increased integration and data exchange,embedded f

161、inance introduces new cybersecurity risks.Non-financial corporates must prioritize robust cybersecurity measures,such as encryption,multi-factor authentication,and regular security audits,to safeguard customer data and financial transactions.By proactively addressing cybersecurity,corporates protect

162、 their reputation and maintain customer trust in the face of evolving cyber threats.Compliance with financial regulations,such as anti-money laundering(AML),data protection regulations and know-your-customer(KYC)requirements is essential to maintain integrity and protect customers interests.Robust c

163、ompliance frameworks not only mitigate legal risks but also instill trust and confidence in customers.Mr Lee,from Pilon,addressed this regulatory topic saying“We operate in several countries in Asia,each with its own regime,we need to be mindful of all the rulebooks to ensure we do not fall foul of

164、local lending requirements.”“We operate in several countries in Asia,each with its own regime,we need to be mindful of all the rulebooks to ensure we do not fall foul of local lending requirements.”Mr Lee PilonTransparent data policies,explicit consent mechanisms,and data breach response plans are e

165、ssential components of a robust data protection strategy.Respecting customer privacy reinforces trust and loyalty,building lasting relationships with the customer base.Navigating The World of Embedded Finance24Conclusion The advent of embedded finance is reshaping the financial landscape and changin

166、g how non-financial companies engage with their customers.As consumer expectations continue to evolve towards frictionless and personalized experiences,embedded finance emerges as a powerful tool to meet these demands.The fusion of cutting-edge technology,open banking,and innovative regulatory frame

167、works,as exemplified by Singapores progressive approach,has paved the way for a new era of financial services integration.Singapores vibrant fintech ecosystem,bolstered by the efforts from industry participants,positions the nation at the forefront of the embedded finance movement.4 The successful i

168、ntegration of financial services into various industries,from e-commerce to ride-hailing,illustrates the transformative potential of embedded finance to enhance customer experiences,drive loyalty,and unlock new revenue streams.Notwithstanding the opportunities that abound,as companies embark on thei

169、r embedded finance journey,it is imperative they address challenges ranging from regulatory compliance and data security to effective partnerships and seamless integration.Successful implementation requires a strategic approach,with alignment across all facets of the organization,from technology to

170、user experience.The future of embedded finance holds immense promise.It is work in progress,but is looking to redefine traditional business models,empower consumers with greater financial access and flexibility,and foster innovative collaborations between financial and non-financial entities.By embr

171、acing the principles of embedded finance,companies can position themselves as pioneers in a digital economy characterized by personalized,convenient,and integrated financial experiences,ultimately driving sustainable growth and success.As this journey unfolds,it is becoming clear that embedded finan

172、ce is not just a trend,but a fundamental shift that will shape the future of finance and business for years to come.4 KPMG,“Revolutionise your customer journey:Explore new opportunities with embedded finance,”October 2022,https:/ Atlas Technologies Group company,is a leading provider of market resea

173、rch covering fintech,banking,payments,and capital markets.From our offices and representation in Hong Kong,Seoul,Tokyo,and Singapore,we provide clients across the region the insight they need to understand and take advantage of their highest-value opportunities in Asia and help them to achieve and s

174、ustain a competitive advantage in the market.To know more about our work,please visit https:/an Atlas Technologies Group CompanyThe SFA is a cross-industry non-profit organisation.Its purpose is to support the development of the FinTech industry in Singapore and facilitate collaboration among the pa

175、rticipants and stakeholders.The SFA is a member-based organisation with over 800+members.It represents the full range of stakeholders in the FinTech industry,from early-stage innovative companies to large financial players and service providers.To further its purpose,the SFA also partners with insti

176、tutions and associations from Singapore and globally to cooperate on initiatives relating to the FinTech industry.Well-connected globally,the SFA has signed over 70 international Memorandum of Understanding(MoU)to lay the network for its members and ecosystem.For further information,visit https:/singaporefintech.org/