How to Add Financial Services to Your Product
Why embed financial tools? In short: For greater revenue, and better relationships with customers. And why do it by Demo Day? Because if you get embedded banking or finance features live before you present your product, you will be able to report revenue growth. That’s attractive to investors.
I’ve been there. Treasury Prime was a member of YC’s Winter 2018 batch. And I’m here to walk you through how you can embed financial tools in your app in time for Demo Day.
Here’s a short overview of what you need to know about embedding banking and finance tools in your app.
For a more in-depth exploration of how you can launch on a fast timeline, watch the full webinar.
Why companies embed financial services
There are three main reasons companies embed financial services in their apps: To add revenue, to attract and retain customers, and for greater access to customer data that helps you tailor your product.
- Revenue: When you embed bank accounts or other financial services, you can charge fees for your service or earn interest on accounts. When you issue cards, you can earn interchange revenue, which comes from a fee that card networks charge merchants to process a transaction.
- Attract customers: Offering speed and convenience can differentiate you. Embed tools to offer customers faster payouts, or give them cash advances. Embed bank accounts so customers don’t have to use a separate app to manage their finances.
- Get that data: If you can see how customers are spending, you can do a lot with that data. If the customer is a business or freelancer, you can automate expense tracking. If the customer is a consumer, you can help them save money. You can use data to inform reward programs. There are a lot of options here.
We worked with YC company Fractional (W2021 batch) to open bank accounts for users virtually so they can handle complex transactions on their platform. Read the case study to get an idea of how these services can work on a fintech app.
How companies embed these services
There are three main ways you can go about embedding bank accounts or financial services. You can partner directly with a chartered bank, without an intermediary; you can partner with a banking as a service (BaaS) provider, without building a direct relationship with a bank; or you can partner with both.
When you only partner with a bank or with a BaaS provider, you limit yourself. With just a bank partner, it’s going to be a lot more work from a tech perspective, with your company having to do the heavy lifting. With just a BaaS provider and no direct bank relationship, you can expose yourself to greater compliance risk. That’s a big deal, and in serious situations can result in your company getting shut down.
Our advice is to partner directly with a BaaS partner that works closely with banks because it is important to find a pair of partners that already work well together. You want a BaaS platform that is deeply integrated with banks’ systems so that you don’t have to worry about any sort of disconnect resulting in a broken experience for your end-user. You also want the opportunity for a direct relationship with the bank, so you can troubleshoot problems quickly. At the same time, you don’t want to limit yourself to just one bank, which is why you want a BaaS provider who can shift your app over to another bank quickly if you ever need to do that. (If you haven’t already guessed, this is how Treasury Prime works with our eight bank partners.)
Launching by Demo Day
Long story short, there are a lot of different ways to embed banking into your app. Fortunately, once we identify which tools work for your app, Treasury Prime can help you get that up and running pretty quickly — within a matter of weeks, depending on your pace. We start by matching you with a bank, then we move into contracts and implementation kickoff, production, and launch.
Watch the full webinar with Chris to learn more about how different banking products make money, and what embedded banking and finance options are available to you, and how to launch them quickly.
We also welcome you to explore our offerings by visiting our Sandbox. To learn more about how Treasury Prime can help your bank or fintech grow through collaboration, get in touch with our team.