Why embedded finance is opening the door to new investors

An interview between Currencycloud and financial brokerage firm DriveWealth has detailed how embedded finance is changing the investment space in wealth management. 

According to Currencycloud, wealth management has suffered from a common problem that had hamstrung the financial services market prior to the FinTech boom, which was that companies that wanted to add specialist services – such as investment features to their products had to contend with technical, security, legal and regulatory barriers.

However, the company claims FinTech’s ability to use embedded finance has enabled customers to grow their wealth by easily investing the money they hold in current accounts, which also creates a new way for challengers to engage with their customers.

The cross-border payments firm spoke to DriveWealth president Julie Coin to get a better understanding of how embedded finance providers like DriveWealth are opening the door to wealth management for a much wider range of businesses and changing the legacy systems offered by traditional financial institutions.

DriveWealth markets a cloud-based, API-driven brokerage infrastructure platform that provides an alternative to the legacy platforms that many brokerage companies still rely on. The company states it is ultimately ‘democratising’ investments through technology by enabling investors to invest with as little as $1.

Coin said, “We believe that the future of retail investing is mobile, transactional and fractional. Our technology is designed to support millions of microshare transactions so we can power any embedded investing experience our partners design—from roundups to rewards or other passive ‘set it and forget it’ type experiences.

“The ability to penny-cost average into the markets through many microshare transactions, provides an entry point for people who do not view themselves as a typical investor.”

Currencycloud highlighted that this trend is facilitated by the wide-scale adoption of digital wallets, an innovation that makes opening and funding investing accounts fast and frictionless.

Coin believes the democratisation of investing through embedded finance is enabling DriveWealth to improve financial literacy.

She said, “Getting people started is key—especially with amounts that are not meaningful to them financially. As they invest more, our partners are using artificial intelligence and machine learning to improve financial literacy through engagement and help novice investors become more disciplined and sophisticated in their approach to investing—and their financial life in general.”

As an example of its technology in action, DriveWealth is currently working with Revolut to help power commission-free stock trading on the Revolut app, which helps FinTech customers in the UK and Europe invest in US stock markets.

Coin believes two key trends she sees as important are the ability for consumers to tap into the ‘buy what you know’ philosophy that allows users to invest in stocks of brands they consumer regularly at the point of sale. The second trend is the ability to leverage AI to create customised recommendations and provide personalised information to give users more tools and responsibility to make more informed decisions on their financial futures.

Currencycloud recently partnered with DriveWealth. The former’s multi-currency account infrastructure is supported with DriveWealth’s platform which helps provide users with the ability to rapidly collect, pay, convert and manage currencies simultaneously wherever they are in the world.

Coin said, “This alignment of forward-thinking technologies creates a well-balanced investment ecosystem in which users can access stock conveniently and pay for it seamlessly.”

You can read the full blogpost here.

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