Real-Time Payments And Embedded Finance: Bridging Gaps In Modern Banking

Embedded finance is reshaping how people interact with financial services, offering solutions integrated into everyday applications. During a panel discussion on embedded finance at the Benzinga Fintech Deal Day & Awards event, Rob Nardelli of DailyPay shared an example of how real-time earned wage access redefines financial accessibility.

Challenges with Traditional Banking Systems

Nardelli explained the concept: “Earned wage access simply means giving workers the ability to access their wages as they earn them in real-time without waiting until their regularly scheduled payday.” He highlighted how DailyPay uses tools such as real-time payments and Visa Direct for instant transactions, providing financial flexibility to users.

One illustrative story involved a DailyPay user who needed funds for gas during a first date. He accessed his earned wages instantly through the app with no other options. “There is a happy ending to this story,” Nardelli added. “That couple… are now married happily.”

Diksha Gera, a senior analyst at Bloomberg Intelligence, provided a contrasting perspective by recounting her experience with traditional banking. After moving to the U.S., she found opening a bank account cumbersome, especially when faced with unfamiliar systems like paper checks. “Nobody wants to go and make banking another task in the day,” she remarked.

This frustration highlights the significance of integrating banking services into non-financial platforms, enabling users to access solutions without the inefficiencies of legacy systems.

The Role of Real-Time Payments

Real-time payments are a critical driver of embedded finance, offering immediate transactions and reducing delays associated with traditional banking. According to Gera, countries like India and Brazil are leading the charge, with widespread adoption of real-time payment systems accelerating financial inclusion.

However, the adoption rate in the U.S. remains slower. Gera pointed out that the country’s entrenched reliance on credit cards challenges faster integration. Despite these hurdles, advancements such as the FedNow system and private partnerships indicate progress.

Nardelli echoed these sentiments, noting that real-time payments are central to DailyPay’s success. He highlighted their role in reducing financial stress for users and emphasized the importance of robust pre-payment due diligence to mitigate risks such as fraud.

FinTech and Banking Partnerships Are Crucial

Collaboration between fintech firms and traditional banks emerged as another focal point of the discussion. Sarah Biller, co-founder of FinTech Sandbox, described these partnerships as vital for scaling embedded finance solutions. “We have to treat [fintech partners] like a digital branch,” she said, underscoring the need for collaboration while adhering to rigorous compliance standards.

The panelists agreed that regulatory clarity and robust infrastructure are essential to fostering effective collaborations. As banks and fintechs continue to align, the evolution of embedded finance is poised to address longstanding gaps in accessibility and convenience.

This growing integration, bolstered by technology and strategic partnerships, is paving the way for a more inclusive and efficient financial future.

Photo by Corynn Egreczky