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Embedded investments – An industry view (Kuldeep Shrimali)



The financial services industry has seen significant growth in the embedded finance space for the past decade. The growth areas are mostly in the embed payments, insurance, and credit but are there opportunities to reimage other financial services offerings like investments and advisory services being embedded directly into the customer ecosystem? This article seeks to provide a response to this key question from an investment and advisory services perspective. The article starts by providing a view of embedded finance across the financial services industry, subsequently focuses on current players offering embedded investment and advisory services, and finally concludes with the implications and recommendations for investment and advisory firms.


With the proliferation of digital technologies and millennials becoming the largest adult cohort worldwide, the industry is witnessing a gradual shift in the way clients would prefer to consume the financial services. The clients are demanding for more holistic banking and financial services seamlessly integrated into their existing digital ecosystem such as ecommerce, social, travel, entertainment apps, etc.  This change in the market dynamics has forced financial services firms to adopt embedded finance strategies aggressively in the past decade especially in the payment, credit, and insurance products. As the market is witnessing early movers exploring embedded investment and advisory services, this article provides a view of this industry and its implications for traditional investment and advisory service firms.

Embedded finance – A paradigm shift in product distribution

In the simplest terms, embedded finance refers to ability of non-financial firms to seamlessly integrate financial products into their existing business model in partnership with a financial services firm. Alternatively, embed finance can be viewed as the ability of financial firms to seamlessly offer their products / services leveraging non-financial services entities within the customer ecosystem. Few examples from the industry leveraging embed finance strategy include WeChat social network platform embedding payments services, Expedia travel embedding insurance from AIG, Amazon co-branded credit card with JPMC and so on.   

The benefits from embedded finance span the customer,
financial services firm
, and the ecosystem partner. From a customer perspective, it provides an ability to access financial services in a seamless manner without leaving the platform of customer’ choice. From a financial services firm and partner perspective, it generates a new revenue stream. Additionally, for financial services firm, it allows access to the partner customer base to sell existing services or to launch new services. It also provides financial services firms to evaluate the option of offering banking as a service depending on the partnership model being enabled. Apart from the benefits, this market change has also introduced new threats from non-traditional players like the big tech companies who bring in a strong customer brand positioning with access to a large customer base.

Embedded Investment and Advisory services – current state

The investment and advisory services players comprise of retail brokerage firms, wealth management firms, investment management firms, pension firms, broker-dealer firms, independent financial advisor, and fintech firms. These players are offering services directly or through a financial services intermediary to the end client. In the recent years, we have seen few early movers disrupting the distribution model leveraging embedded finance as part of their business strategy. These early movers are offering goal-based investing services leveraging existing automated or micro-investing service capabilities, full-fledged brokerage services, and potentially wealth management in partnership with big tech, super app providers, retailers, social network platform provider and other non-financial services firms. 

With the rise of the super apps globally, we see financial services offering being seamless integrated into the super apps. Few examples include Alipay (CN) offering goal-based fund recommendations in partnership with Vanguard, Paypal (US) offering crypto trading and potentially offering a stock trading platform in future, Grab Invest (SG) offering micro-investing offering through partnership with Fullerton and UOB asset management firm, and Paytm (IN) offering retail brokerage services. These super apps provide a frictionless digital client journey and superior customer experience at affordable cost to its users with an objective to minimize the client’s need to switch to a different platform.

Few other interesting investment industry use cases include WeChat (CN), a social media platform, partnering with Blackrock to offer fund execution services, AirBnB (US), homestay rentals, partnering with Acorns to invest $50 on the first booking, Amazon (IN) and Walmart (IN) acquiring wealth management platforms and potentially offering some sort of investment or wealth management services in the future.

With embedded investment and advisory offerings, these firms are primarily targeting a directly mass-market clients by offering an affordable investment advisory service. The immediate benefit for the financial services firm is in terms of opening a new market beyond traditional channels for selling their existing or an enhanced product. This new channel enables the firm to open a new revenue stream and more importantly as the client relationship matures, the firm can explore opportunities to cross sell and up sell other investment product and services directly or through the partnership.

Implications for investment and advisory firms

The current trend of players and the offerings in the embedded investment advisory space indicates a higher degree of support for financial services firms offering robo advisory, micro-investing, retail brokerage or asset management services. The target market is primarily mass market and potentially lower segment of mass affluent clients depending on the partnership value proposition.

As firms currently offerings some of the above investment advisory services explore the implications of embracing an embedded investment and advisory strategy, it is important to first define the business strategy and the implications to the existing business model. From firms exploring this new business strategy, a design thinking lead approach towards defining the strategy and business model implications might be a prudent approach.

We would like to highlight few considerations within two key impacted areas in the business model – Key partners and Key resources (restricted to technology or platform capabilities).

For a firm to be successful in the embedded finance journey, selecting the right partner will be a highly critical. Firms needs to embrace a partner ecosystem model that enable identification, incubation and expansion into a long-term relationship. As part of the partner identification, a due diligence broadly covering the partner profile (financials, brand, etc.), customer base (size, segment, growth, etc.), business  model (products, channels, etc.), operating model (locations, data privacy, etc.) platform (integration, security, resiliency, etc.) and finally the strategic fitment (integrated product value, channel, etc.) needs to be carried out.

One of the other key resources or capabilities financial firms need to possess is related to the technology platform. The platform should be able to offer investment advisory services in modular way based on partner’s specific needs. For example, partner A will interface with the firm for providing the stock trading capabilities while partner B will integrate with the firm to consume the robo advisory.  Also, an agile, secure and resilient technology platform with strong API capabilities is key for enabling a successful integration with partner ecosystem.


The embedded finance industry is estimated to grow in double digits for the next decade in the payments, insurance, and credit area. With few early players exploring embedded investment and advisory services, there definitely exists a space for innovative companies. As more and more super apps are being launched, there is a lot of untapped potential in this space for investment and advisory firms. Firms need to immediately evaluate opportunities / threats such a non-traditional ecosystem brings into the traditional financial services ecosystem and develop strategies to embrace or address this trend. Firms willing to embrace this change and capitalize on these opportunities now will potentially realize significant upside in terms of increasing its market penetration especially within the mass market customer segment leading finally to improved business growth.


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