For SaaS businesses trying to get an upper hand there a powerful tool many overlook: embedded finance. This growing financial technology trend is offering seamless payment solutions, lending options, and more—directly on their platforms. Imagine gaining a competitive edge, boosting customer loyalty, and driving significant revenue growth, all through embedded finance. Ready to discover how you can outpace your competition with this game-changing approach?
In this article, we’ll cover:
SaaS Industry: Winning in a Crowded Market
How Embedded Finance Fuels SaaS Growth
Why Your Clients Will Love Embedded Finance in SaaS
Outpace All Your SaaS Competition
Ready to Add Embedded Finance to Your Company?
The SaaS Race: Winning in a Crowded Market
The global SaaS market is projected to reach $317.55 billion by the end of 2024, with an annual growth rate of 18%. As demand rises, more people are seeking opportunities in the field, leading to increased competition, making it harder to run a SaaS company. Currently, there are more than 30,000 SaaS companies worldwide, with over 90% of startups failing and around 20% not surviving beyond their first year. The biggest challenges for SaaS companies are:
Market Saturation: The SaaS landscape is crowded, with numerous players offering a wide range of solutions. In the next few years, the number of SaaS companies could surpass 70,000.
Rapid Technological Advancements: SaaS companies must stay ahead of emerging technologies like artificial intelligence, blockchain, and embedded finance to remain competitive.
Customer Expectations: Customers now expect seamless integration, user-friendly interfaces, and continuous updates.
Scalability Issues: Attracting and retaining clients is becoming harder due to constant innovation and competition, making it more challenging to offer enough value to earn client loyalty.
However, there’s always a way to outpace the competition. As mentioned before, one of the fastest-growing financial services for businesses, including SaaS, is embedded finance. This enables SaaS companies to offer financial services like loans, payment processing, and insurance directly on their platform, providing the utmost convenience for their clients. We delve deeper into embedded finance here.
How Embedded Finance Fuels Your SaaS Growth
The global embedded finance market is expected to generate $164 billion in revenue in 2024, with projections reaching between $385 billion and $533.96 billion by 2029, growing at an annual rate of 30%. While not all of that revenue comes from SaaS companies, combining the embedded finance market with the SaaS industry opens up a whole new world of opportunities.
A prime example of this is Shopify. Embedded finance services accounted for over 73% of Shopify's total revenue in 2023.
However, the significant growth of embedded finance is not only driven by its potential for revenue growth like paying for a service at a subscription level. With embedded finance, you become a central part of your customers' day-to-day financial lives, allowing SaaS platforms to significantly increase stickiness, satisfaction, and loyalty.
Embedded Finance Benefits
Enhancing User Experience With Embedded Payments
When a user decides to purchase a product or service, they want to complete the process as quickly as possible. Implementing a simplified checkout process can lead to a 35.26% increase in conversion rates.
New revenue streams
With an embedded finance solution, a business can offer finance solutions to customers, such as loans with interest rates or payment processing with a percentage fee. Some even provide payment links on invoices for subscription-based billing.
Increase Conversion Rate
Clients often search for more convenient, full-service solutions. Therefore, even if they are looking for an accounting API or a white-label application provider, they are more likely to choose the platform that offers embedded payments like invoicing with payment links and payment processing in the check out section.
Access new customer data
A key benefit is access to advanced systems and the data they provide. With customers using your embedded finance services, you can better understand their spending habits and needs, allowing you to innovate and add new services, ultimately increasing revenue.
Increasing Customer Lifetime Value (Loyalty)
Loyalty programs and discounts are great initial hooks, but once the discount expires, competitors often step in. Embedded finance provides a more effective solution. It not only enhances convenience but also provides valuable data on customer behavior, enabling businesses to personalize offerings and anticipate client needs. This results in deeper relationships, higher satisfaction, and a cycle of retention and growth for SaaS providers.
Build a Stronger Brand
With users staying longer on your platform and deriving daily value from it, they are more likely to recommend your service. Your brand becomes more recognized and sought after than your competitors, strengthening your market position.
Why Your Clients Will Love Embedded Finance in SaaS
The benefits of using embedded finance for your SaaS are clear, but you might wonder if the market is already too saturated and why the customers would pay for your services. BCG’s analysis reveals that less than 20% of the potential market has been addressed, so you're not too late to join the party. Here are several reasons why customers will pay for your services:
Already Using or Thinking About Using Your Main Services
Better Pricing
Enhanced Convenience and Efficiency
Greater Wealth of Options
Access Anywhere
Loyalty Rewards
Outpace All Your SaaS Competition
When would you say you've outpaced your competition? Is it a larger revenue? More brand awareness? Faster yearly growth? To achieve this, you typically need to focus on:
Customer-Centric Approach: Build strong relationships with your customers through exceptional service and support.
Innovative Features: Introduce unique features that distinguish your product from competitors.
Transparent Pricing Models: Offer clear and flexible pricing to build trust and make your services more accessible.
Scalability Planning: Design your product and infrastructure to scale effectively as you grow without sacrificing performance.
Leverage Data Analytics: Access insights from data analytics to make informed decisions and offer personalized user experiences.
Market Positioning: Develop a tailored service roadmap to position yourself as the top choice in your market.
Financial Resources: Ensure you have the financial backing to invest in growth—whether it’s through hiring, marketing, or product development.
By combining these strategies with embedded finance, all of this can be achieved.
How Embedded Finance Helps You Gained a Lead on Your Competitors
Brand Authority and Trust: By becoming a leader in your niche, you build trust and authority. This is reinforced by clients who use your service daily and share word-of-mouth recommendations.
Bigger Budget for Growth: Higher conversion rates, new revenue streams, and longer client lifetime value give you the financial resources to invest in marketing, expand into new markets, and improve services for even faster growth.
Clear Roadmap: Gaining a lead over competitors forces them to work harder to match your pace, potentially draining their resources and focus while you continue to gain momentum.
Client Insights: By tracking customer purchases and needs, you gain a better understanding of shifting market trends, helping you stay ahead of competitors.
Mobile Application/Go-To Platform: Companies with embedded finance often build mobile apps for higher engagement, ensuring users stay connected with your brand, increasing usage and brand visibility.
Ready to Add Embedded Finance to Your Company?
Embedded finance is no longer exclusive to big tech or financial services providers. E-commerce, SaaS, fintech, retail, hospitality, media, and automotive firms are increasingly adopting it to gain a competitive edge. The decision to implement embedded finance depends on the business problems and customer needs you’re addressing, the markets you’re entering, and your business model. Consider the following guidelines:
How close is embedded finance to your product or service?
With the rise of APIs, integrating embedded finance is easier than ever, allowing businesses to implement solutions quickly, often within a week. One such API is Space Invoices, which supports integrated payment links in your invoices and payment processing. If you’d like to learn more about how we can assist you, please contact us.
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