The winner of the super app race remains to be seen, she noted, pointing to a list of the top 20 brands in the U.S. including Amazon, Apple and Google.
Many nonfinancial firms have already started embedding finance solutions in their apps and websites or plan to, she said, pointing to data showing 73% of brands plan to launch embedded financial services, which stands to generate $844 billion in additional revenue by 2026, she said.
The application programming interface revolution that happened over the last couple of years has provided this capability, she told attendees.
Envestnet is looking to be a major player in the coming battle by offering embedded financing solutions to advisory firms and other companies.
‘Good News for Advisors’
The investments that Envestnet has been making in embedded finance stand to help not only the company and investors, but advisors as well, Fava said during last year’s Envestnet Advisor Summit, which was held virtually for the second-straight year in 2021 due to the pandemic.
Amazon, Apple and Facebook could “finally get into our space and really disrupt it” through embedded financing, she said at the time.
“But this is not bad news for advisors. I believe it’s good news for advisors,” she said at the time. That is because “all of these experiences” that embedded finance stands to create by merging the retail ecosystem, gaming, fintechs/payment platforms, and small and medium banks “will incubate future advisor clients,” who she said “will be growing their wealth in different places which are more convenient for them” as a result of this new financial services category.
“Then companies like Envestnet will power the embedded finance ecosystem [and] create the funnel of tomorrow’s advisor clients,” she added.
Envestnet’s Embedded Investments
Ahead of the 2021 summit, Envestnet announced several embedded finance-related initiatives.
For example, Envestnet | Yodlee launched an enhanced developer portal that it said provides an “enriched developer experience” and “builds off” Yodlee’s platform to “advance the embedded finance ecosystem by accelerating the ability for developers to create hyper-personalized and actionable financial wellness experiences.”
Also, while announcing its acquisition of fintech firm Harvest Savings & Wealth Technologies last year, Envestnet said the transaction optimized its API-based financial wellness ecosystem and helped “strengthen our foothold to enable embedded finance, which we see as a key driver of the future of financial services.”
Envestnet was already well-positioned to power embedded finance, according to Fava. “We’re already there,” she said last year. “We’ve got so many capabilities that are being used by advisors and other financial institutions today that really put us at the very end of this path toward embedded finance.”
That is because Envestnet’s API network includes MyBlocks modules for financial planning and budgeting; data aggregation and insights; automated savings; thematic data-driven investing; thematic and value-based reporting; conversational artificial intelligence for customer support; access to experienced professionals with its advisor network; and module marketplace exchanges, according to Fava.
Envestnet’s APIs can potentially be used to create apps taking advantage of embedded finance capabilities. The company’s goal is to be able to provide one central view of an investor’s “financial life,” create financial wellness for those investors and “incubate” them until they’re ready to speak with advisors, and then share that central view with advisors, Fava explained.
(Pictured: Dani Fava of Envestnet; Photo by Jeff Berman)