Last October, in a blog post titled The Three A’s of Embedded Finance, we described how the “three A’s” (apps, APIs, and AI) are the tools with which companies are building phenomenal success in embedded finance. Going a little deeper reveals that a fourth A (“as a service” or “aaS”) is key to bringing all of these factors together in a framework that allows this potent mixture of technologies to supercharge results. Simply put, aaS is a key to understanding how to scale technology, spur innovation, and deliver previously unimaginable results. Furthermore, aaS is upending the commonly held belief that incumbent financial services institutions are at the mercy of fintech innovators. With aaS, incumbents can have the upper hand.

The Fundamentals of Embedded Finance
At its core, embedded finance breaks down traditional distinctions between financial and non-financial companies to deliver products and services directly to consumers. Some examples include:
- Google search queries presenting end-users the opportunity to directly purchase a relevant good or service
- airlines providing travelers the chance to purchase an insurance product along with their flight
- online retailers including a buy-now-pay-later (BNPL) service at the point of sale of a large purchase
All of these (and more) are forms of embedded finance that offer financial products through simple and seamless buying experiences, making them an attractive feature for the consumer.
It’s easy to see why embedded finance aaS was born out of the emergence of new technologies and how it meets the needs and desires of the modern consumer — who delights in experiences that reduce friction and inconvenience. From a business perspective, research has shown that a successful aaS offering can increase revenue by 2x – 5x. That’s because it not only increases customer “stickiness” but also grows the total addressable market. Embedded finance aaS is the ultimate manifestation of current and future trends, and it has quickly evolved from “nice to have” to “need to have”.
6 Dynamic Elements of aaS for Embedded Finance
You can see the strength and power of aaS for embedded finance in the positive attributes it delivers for the enterprise:
- Scalability: A common attribute that describes the cloud era, scalability is all the more important in the case of aaS. These capabilities put every partner on a level playing field.
- Reliability: In a complex offering that includes multiple partners and moving parts, reliability is crucial. A unified aaS brings management into one function.
- Resilience: In addition to up-time, flexibility and usability are necessary ingredients for embedded finance, and an aaS avoids the brittleness that can arise from disaggregated technologies.
- Security: Cooperation has its benefits but also its challenges. High on any list is security, and multi-partner efforts increase these risks. By setting and enforcing security standards, aaS provides the necessary bulwark against threats.
- Data protection: Data is both the lifeblood and potential Achilles heel for financial services, and the data standards that are compiled in an embedded finance aaS set a high bar and ensure universal standards are met.
- Sandboxes: Cooperation and partnership are requirements of embedded finance aaS, which also make development sandboxes a prerequisite. With an emphasis on innovation and adaptation, sandboxes provide the necessary proving ground for new ideas.
How Embedded Finance aaS is Changing The Technology Balance
Up until this point, the lion’s share of embedded finance opportunities has fallen to those on the technology side of the equation, including fintechs and other large technology firms. That opportunity is changing, however, because the broadly inclusive nature of an aaS offering helps financial services incumbents bring more of their experience, breadth of services, and brand power to bear. With aaS, incumbents now have the opportunity to lead rather than follow.
To do so, these banks, insurance companies, and other financial institutions need to change and incorporate new technology, business and development processes, modes of work, and incentives — as well as their mindset when it comes to partnerships. In simple terms, they must abandon the longstanding DIY, “we don’t like it if we didn’t build it” way of doing things. If they do, these financial institutions can take the lead in owning aaS efforts.
In the Google Cloud white paper Embedded Finance: The key to survival and growth for financial institutions, readers receive insight on how banks, insurers, payments companies, and other financial institutions can make the most of the embedded finance wave. In addition to detailing the challenges and trends that drive embedded finance, the white paper reveals a future where these institutions meet customers where they are (at their convenience and on their own terms) to capture growth opportunities. Download the white paper now to learn more.
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