Embedded finance that changes business models

Mateusz Sieleki, global head of embedded finance solutions at Deutsche Bank, told PYMNTS that embedded finance is transforming a wide range of verticals, including retail and logistics.

Now, as business models evolve, payments are also being actively integrated into business models, and the role of the chief financial officer (CFO) or treasurer is evolving as transactions become a point of strategic focus and innovation. doing.

“The key question is: How can we enhance customer retention and the customer experience by providing bank-like services at the point where the customer needs to decide whether to buy a product or pay for a service? That is,” Sieleki said.

This conversation is part of PYMNTS’ “Shaking It Up” series, which focuses on areas where business model innovation is impacting entire industries, markets and even C-suites.

Transition to a platform model

Broadly speaking, the ongoing digital transformation, driven by changing customer demands and accelerated by the pandemic, has gone beyond payments as an instrument. Sielecki said many companies are moving to a direct-to-consumer (D2C) sales model and reaching end markets through digital channels.

“And as the market becomes a marketplace, the model is changing to an open platform,” he told PYMNTS. This is changing the way we deliver value and generate revenue.

Banks (including Deutsche Bank) are naturally helping to integrate payments into these platforms and online interactions, with enablement occurring through application programming interfaces (APIs). For bank customers, providers, treasurers and CFOs, “banking services are at their fingertips” and available within the back office, he said. He said banks in particular now have a seat at the proverbial table discussing new product design and innovation, being strategic but keeping risk and compliance top of mind.

Regardless of your industry or whether your business model incorporates payments functionality, Sieleki emphasized the importance of partnering with banks and providers with robust and resilient compliance and risk management systems. Deutsche Bank transformed its systems into an API-accessible orchestration layer, turning products into services that can be aggregated and modularized.

“If we do this correctly, our experience with our clients is that project efficiency is greatly increased and project execution schedules are significantly reduced,” he said.

Where innovation changes the game

When asked by PYMNTS where he sees the biggest changes, Sielecki said that as small business owners seek an e-commerce-like experience when browsing and selecting the products and services they need. , said B2B payments are being transformed and modernized.

Small business owners’ “expectations” are much the same as in their personal lives, he said, and they expect a streamlined user experience. Among those expectations is that Commerce will have installment payments, a payment option that has proven to be very popular with consumers.

He said that behind the scenes, digitizing manual processes is helping to improve everything from invoicing to paying business partners. He is also moving towards a B2B future where businesses with regular commercial customers can retain customers with financing offers they can’t get anywhere else.

“Doing all of this will allow us to further integrate strategically with our customers and the partners we work with,” he told PYMNTS about embedded finance.