Can you tell us about Weavr? What’s the story behind it?
Weavr is a financial technology company that provides innovators with everything they need to easily integrate financial services into their products. Our software is industry-neutral and can be used across all verticals, enabling small and large businesses to issue financial accounts and payment cards, without the associated risk management and compliance responsibilities to financial services.
When my co-founder, Adrian Mizzi, and I came up with the idea for Weavr, we wanted to create a solution that would allow innovators to build and operate those solutions as easily as possible for themselves. We’ve helped innovators across multiple industries, including healthcare, B2B software, education, and benefits, improve their end-to-end user experience using Weavr technology.
You said that Weavr is not here to “eat the lunch of the banking crowd as a service”, but to increase the size of the pie – to make the concept of integrated finance accessible to many other industries. Could you tell us a bit more about the next steps you have in mind?
The Weavr proposition is different from most current Banking-as-a-Service (BaaS) offerings on the market today. Our technology is not intended to enable fintechs, but rather an enabler for other software companies. By using our technology, these software companies become more profitable and, at the same time, more valuable to their customers.
For example, imagine accounting software that previously could only tell you which bills you need to pay. What if it could suddenly pay those bills automatically for you? What if it also told you when the invoices you issued were paid? The software has now removed the need for business owners to stay home on a Sunday to calculate their cash flow and what it could be in 12 months, as it has already been calculated automatically. At the same time, the accounting software provider can now also earn money from the additional financial services it offers in its app. Overall, it’s a win-win situation, as the customer gets a smooth user experience, the software business gets higher monetization, and the financial institutions in the background also get the benefit of processing more transactions.
Ultimately, Weavr will move some banking services, but it will add a lot more than it moves. We’re not trying to replace the bank as we know it, we’re just presenting it in a bigger, more accessible form. So to answer the question, the size of the pie is increased by including a financial service in the service you currently provide, and there are so many opportunities to do that across multiple markets and verticals.
As integrated finance changes the financial world, how will banks shape the future?
Banks shape integrated finance, but integrated finance will also begin to shape banks. Indeed, integrated finance is a radically new form of delivering financial services, while banks have grown accustomed to having full control over how their services are delivered, whether online or through a mobile app.
With integrated finance, they have much less control over how the customer discovers, chooses and consumes the financial service offered, which makes this form of distribution extremely uncomfortable for banks. However, as uncomfortable as it may seem at first, banks will need to evolve to meet consumer demand, and if those consumers choose to transact through integrated financial services, it is likely that banks will need to facilitate ways to do it.
While this is sometimes a touchy subject for banks, many are very vocal in their support for technology that enables businesses to operate using integrated funding models. A significant number of US banks are launching BaaS initiatives because they have found it to be a major revenue generator. Yet, unfortunately, many of these institutions will find that they don’t have the right kit to know exactly what the client is actually doing to generate the activity they only see through their APIs. This could then lead to regulators auditing the bank and issuing fines if they have put in place inadequate risk measures and compliance monitoring.
In the next 18 to 24 months, I predict many of these BaaS projects will unfortunately be shut down. Adopting integrated finance will not be a linear path for banks. Some may support it but not enforce it. Some may be more adventurous and try it, and some will fail. But hopefully those who fail will dust themselves off and update their tech to make it work.
Can you tell us what are the main differences between Plug-and-Play finance and embedded finance? Do you think Plug-and-Play Finance represents the future of a digital financial world?
Integrated finance – or the integration of financial services into non-financial applications – is a result that can be achieved in several ways. One of them is Banking-as-a-Service (BaaS), and another simpler approach is Plug-and-Play Finance. There is a real binary difference between BaaS and Plug-and-Play Finance. If a software or technology company wanted to add financial services to expand their capabilities using Banking-as-a-Service, that software company would have to do a lot of new things to meet the standards the bank would expect. , such as customer onboarding. , performing risk assessments, authenticating identification documents and a plethora of customer service measures. By doing all these things, the company is no longer a software provider, but a fintech, which is a huge responsibility due to the management of other people’s money.
Alternatively, the company could opt for Plug-and-Play finance software, like Weavr, which does all the banking work in a way that suits each application and business model. By using Plug-and-Play Finance, businesses can focus on producing a high-quality product or service, with added financial services. Plus, it avoids the complexity of building bank-grade solutions: a plug-and-play financing solution is simply integrated like any other software. So the answer is yes, Plug-and-Play Finance truly represents the future of a digital financial world.
What do you see as the key emerging trends in integrated finance and Banking-as-a-Service?
One of the biggest emerging trends right now is having the ability to equip innovators with the tools to improve their compliance performance. Although Weavr was the first to offer and run these compliance tools, many BaaS vendors have noted that would-be innovators simply don’t want to build their own compliance stack. Some BaaS vendors offer compliance tools, but, unlike Weavr, still expect innovators to leverage these tools to meet their compliance responsibilities.
Another recent trend is the emergence of widgets to speed up UI integration processes. These widgets are designed to improve the user experience and speed up the solution at the same time, while giving banks more control over how components are displayed and used by the end user.
Will the growth of integrated finance be one of the keys to financial inclusion and how?
Yes, I think integrated finance is really going to be a game changer for financial inclusion and there are two main reasons for that. The first is that, economically, banks may be less inclined to provide their financial services to less wealthy or low-wage people, as they are unlikely to see a return on the investment they have made. to integrate the customer. Second, many people don’t understand financial services because of their complexity. Many people don’t buy insurance policies or save for retirement because they don’t understand or know how to do it properly.
Integrated finance addresses these root causes and is attributed to an overwhelming lack of financial inclusion. By adding financial services to an already widely adopted and profitable software application, banks no longer have to invest in acquiring a potentially unprofitable customer, since the software company has already acquired and onboarded them themselves.
Moving on to the issue of complexity, customers are more likely to use a financial service if it is offered to them in the appropriate context that they understand, whether planning their wedding or preparing to reduce their workforces as they age. It could really make a difference in the lives of many people in the long run.
About Alex Mifsud
Alex Mifsud is co-founder and CEO of Weavr. Previously, he founded Entropay, the world’s first open-loop virtual prepaid card company, and Ixaris in 2012, a multi-billion dollar merchant payments platform for large corporations worldwide. Today, Alex tackles the current banking-as-a-service (BaaS) model by introducing plug-and-play finance that enables innovation for digital businesses by providing a fast, accessible and cost-effective method to integrate financial services.