Embedded finance is having a moment.
In the past few years, the finance sector is seeing an influx of non-financial businesses turning towards fintech solutions. Digital transformation has become essential to even the most established companies, and embedded finance is at the forefront of change.
A report commissioned by Alviere and conducted by Sapio Research in 2021 found a significant uptrend in embedded financial services.
Of the 205 U.S. business leaders interviewed, 29% reported they offered embedded financial services, while 51% were considering offering financial services in the next 12 months. Of those who had implemented the new technology, 90% said that it had positively affected revenue per customer, while 85% reported increased customer retention.
It seems the future is bright for the sector. According to the Sapio report, the embedded finance market is estimated to be at $7 trillion in global annual revenue, including lending and insurance. This amount is expected to rise through the decade at a CAGR of 23.9%, with some predicting a nine-fold increase in the payments sector between 2020 and 2025.
Alviere, one of the leading providers of embedded finance, announced a new partnership with Coinbase prime on March 24, 2022. The alliance between the two companies brings the integration of crypto services to Alviere’s embedded finance platform, The HIVE.
Alviere extending product offering
Since its inception in 2017, Alviere has raised $90 million and entered into partnerships with companies such as Currencycloud and AutoPayPlus to diversify their product offering further.
Alviere enables any brand to provide financial services to its customers and employees.
“The idea is that whether you’re a retailer or an airline, or a telephone company, you can start easily providing financial services to your customers,” said Yuval Brisker, CEO, and Co-founder of Alviere.
“It’s a different approach than the rest of the embedded finance market, but our focus is to really go where the customers already are. We help enhance the existing business for existing customers, helping our partner clients increase revenue and visibility into customer behavior.”
The company offers a variety of embedded finance options aimed at helping businesses that work with them retain a loyal customer base.
The products offered range from branded bank accounts and cards to global payments and payment processing options. The most recent addition provides integration of crypto services.
Alviere’s HIVE is their software platform that makes easy integration of financial products possible. Protected by AI fraud detection software and an identity management engine, the HIVE is powered by a high-velocity ledger, making access to branded financial products easy to implement and manage.
“It’s a very flexible, future-ready, easily accessible platform with robust APIs that are publically available that allow any company we partner with to launch any kind of financial service,” said Brisker.
Embedded Finance rather than Banking as a Service
The company has chosen to focus more on providing the integrated collaboration involved in embedded finance rather than just the technological framework associated with Banking-as-a-Service (BaaS).
“We become a partner in day-to-day evolution,” he continued. “Our vision is that we are not just solely a technology provider but that we are a solutions partner. That’s why I like to say embedded; for me, embedded means much more than just technology; it means how to plot out the relationship between you and the business.”
“We are there for the long term; we are not just something you switch on and switch off and can easily replace from flipping from one API to another. Alviere really helps you build your business, increase revenue, acquire new customers if that’s what you want to do, and deliver services to existing customers.”
This new development, integrating Crypto-as-a-Service (CaaS) into the HIVE platform with the partnership of Coinbase, spells a new horizon for Alviere.
Coinbase is one of the world’s most recognized cryptocurrency exchange platforms. Founded in 2012, they now have over 89 million users. In the final quarter of last year, they were reported to have generated $2.5 billion of net revenue. The Bank of America has noted they expected the diversification of the company’s revenue streams to accelerate into 2022 and beyond.
“Our partnership with Coinbase is about going to the best, most compliant, most regulatory focused company in the world that is the leader in providing the ability to buy, hold and sell cryptocurrencies,” said Brisker.
“It’s really about extending our reach, extending our capabilities but doing that in a trustworthy way and will be seen by both our clients and their customers as the safest, most robust way of providing crypto services to the market.”
Crypto as a Service
In 2021, total crypto market capitalization reached $3 trillion and was set to grow even further going into 2022. Media attention on digital assets has skyrocketed, and the topic is now firmly placed in the public eye. CaaS enables any business to offer cryptocurrency services to its users.
“There’s been a demand for crypto services,” said Brisker. “Despite the ups and downs in the market, the general trend has been to want to include some kind of crypto capabilities, its high demand and highly possible.”
“We live in a world where everything moves at breakneck speed, and everything is always about the latest and the greatest, and that’s across cultures and geographies. Technology has made that hunger to stay ahead of the curve a priority for people and businesses who serve people.”
“I think when it comes to cryptocurrency, our clients, businesses who want to improve customer relationships and diversify their revenue streams, look at it as a possible way to say that they are staying relevant and not falling behind. That they are thinking about the future as well as the present.”
Using CaaS, companies can provide customers with a platform where they can buy, trade, and store cryptocurrency. Brisker explained that as the most fundamental aspect of digital asset ownership, this is where Alviere sees the most demand for the service. It provides a platform for companies to offer services to customers interested in investing in digital assets without looking elsewhere for the facility.
“To me, it’s all about choice and the desire to maintain long-term customer relationships and enhance what you do for your customers. Every business we talk to about this is really focused on that.”
Cryptocurrencies too volatile for mainstream payments?
Although Alviere’s new product currently stops at cryptocurrency ownership, they have plans to extend this in the future.
“It’s more about ownership than trading and moving the currency around. It’s an early phase focused on letting people buy the currency, hold it, and sell it. Ultimately we will expand the services beyond that,” said Brisker.
Countries are investigating Central Bank Digital Currencies, while retailers are starting to offer crypto payments as an option for customers.
Earlier this year, accommodation platform Airbnb announced its investigation into the service, while other brands such as Starbucks have explored various ways of providing that option. Brisker, however, feels it will be some time before the payment method becomes mainstream.
“The danger of crypto payments is the volatility. Everyone wants to avoid inflation because no one wants something to cost them one thing one day and then something completely different the next.”
“I think as long as cryptocurrencies are more volatile assets, people will be investing into them as more of an asset class rather than a stable exchange of value. As long as that’s the case, it will be more challenging to use it as a form of tender to buy and sell things.”
