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Fintech-as-a-Service bridges the gap between traditional finance and modern digital needs, paving the way for a future where financial services are seamlessly integrated into every business platform.
In this interview, CEO and Founder of VoPay, Hamed Arbabi, discusses the core concepts behind Fintech-as-a-Service and provides practical insights on how companies can leverage financial technology to stay ahead in a competitive market.
Learn what the future holds for embedded financial solutions.
HA: Fintech-as-a-Service (FaaS) refers to the provision of financial technology solutions as a service, allowing businesses to leverage sophisticated financial products without having to build them from scratch. Developing financial products is inherently complex—it involves navigating a maze of regulatory requirements, ensuring security and compliance, and managing intricate integrations with banking systems. Moreover, maintaining and scaling these products as your business grows adds another layer of difficulty.
This is where Fintech-as-a-Service platforms come into play. They provide the infrastructure and tools necessary for companies to build, deploy, and scale financial products much faster, enabling them to focus on their core business rather than getting bogged down by the technicalities of financial systems.
At VoPay, we are a platform-first company focused on enabling businesses to develop financial solutions at ten times the speed. Our multi-tenancy architecture and light ledger system are designed to simplify and accelerate the development process. These are further enhanced by powerful process automation tools that reduce manual effort and operational overhead.
In addition to our core platform, we offer a range of auxiliary services that our customers can easily integrate into their operations. These include Payments-as-a-Service, Open Banking Data, Treasury Management, Compliance-as-a-Service, Accounting Software Integrations and more. We are constantly developing our product stack to be the most competitive and relevant on the market. All of our products can be white-labelled, giving our customers complete brand control.
By outsourcing these services through VoPay, our clients can reduce their time to market and focus on what they do best—growing their business.
HA: The integration of financial technology plays a crucial role in an organization’s long-term strategy, and this impact can be seen in two key ways: first, when the organization itself directly benefits from the technology, and second, when the organization aims to offer these financial technologies to its own customers.
In today’s rapidly evolving digital landscape, every business must leverage technology to enhance its operations. Financial technology, in particular, allows organizations to eliminate manual processes and introduce scalable automation, essential for driving efficiency and growth. By automating financial operations, businesses can reduce errors, save time, and scale more effectively—all critical factors in staying competitive.
For software providers that serve as the backbone or operating system for other companies, integrating financial technology into their core solutions becomes even more critical. If these providers enable financial operations within their platforms, they can significantly enhance their customers’ operational efficiency. This not only improves the customer experience but also positions the software provider as a vital component of their customers’ success. Without this integration, these software companies risk falling behind in a competitive market where efficiency and comprehensive service offerings are key to retaining and attracting clients.
In essence, whether a business is directly benefiting from financial technology or offering it as part of its service, integrating fintech into its long-term strategy is indispensable. It’s not just about keeping up with the competition; it’s about ensuring the business can thrive and grow in a technology-driven future.
HA: The shift towards financial technology is driven by several key forces that are deeply interconnected. First, it is driven by changing consumer expectations. Whether in B2B or B2C environments, today’s consumers demand seamless, integrated experiences across all aspects of their financial interactions. They expect to manage everything from payments to loans and insurance within a single, unified platform. This expectation for convenience and efficiency has become the new standard, and businesses must adapt to meet it if they want to remain competitive.
Behind these evolving consumer demands is the rapid advancement of technology, disrupting industries across the board. New technologies are enabling businesses to rethink how they deliver value to their customers, often by integrating services that were traditionally siloed or complex. The ability to embed financial services into broader product ecosystems has transformed not just the financial sector but virtually every industry that interacts with money in some form.
These technological advancements are the driving force behind digital transformation. As businesses seek to stay ahead in a fast-paced, competitive market, they are increasingly turning to these new technologies to simplify operations, reduce costs, and open up new revenue streams. Digital transformation is no longer just an option; it’s a necessity for companies that want to thrive in the modern economy.
In essence, the convergence of rising consumer expectations and groundbreaking technological advancements is fuelling the shift toward financial technology. As industries continue to evolve, adopting these technologies becomes crucial for any organization looking to future-proof its business and deliver the integrated experiences that today’s consumers expect.
HA: VoPay’s customers have leveraged embedded financial technology to drive significant innovation in their respective industries, which has had a transformative impact on both their businesses and their customers’ businesses. The strategies they’ve employed can be understood in two key contexts: enhancing their own operations and providing advanced solutions to their clients.
For customers who integrate VoPay’s technology directly into their operations, the primary focus has been optimizing and staying on top of their financial processes. By embedding our financial technology into their platforms, they’ve been able to automate and scale financial operations, resulting in greater efficiency, accuracy, and control. This not only helps them reduce costs and improve decision-making but also ensures they remain agile in a rapidly changing market. These improvements have positioned them as leaders in their industries, allowing them to set new standards for operational excellence.
On the other hand, customers who build solutions using VoPay’s technology for their own clients have established a strong differentiator in the market. By offering integrated financial services as part of their product offerings, they’ve not only enhanced the value they provide to their clients but also opened up new revenue streams. This approach has enabled them to stay competitive by offering a more comprehensive and seamless experience, something that’s increasingly demanded by today’s end users. In many cases, these innovations have allowed them to redefine industry norms, setting new benchmarks for what’s possible with embedded financial technology.
In both scenarios, the adoption of embedded financial technology has been a key driver of innovation. Whether it’s enhancing their own operations or providing cutting-edge solutions to their customers, VoPay’s clients are using these strategies to elevate their offerings and lead the way in their industries.
HA: Before diving into the technical aspects of building a modular and scalable system, I believe the starting point should be a strategic focus on how you differentiate within your industry.
The key question is: How can you make your services more advanced than your competition? Understanding this will guide your approach to system architecture.
As we look to the future, I envision a world where everything is embedded—services are seamlessly integrated into broader platforms, and the boundaries between different service providers blur. This trend will likely lead to fewer service providers overall because software companies will adopt a more consolidated approach to the services they offer.
For example, an HR tool might not just handle payroll processing; it could evolve to offer a fully managed payroll service, including employee benefits and insurance, all within the same platform.
This level of integration and service consolidation is where the industry is headed. Companies that anticipate this shift and build modular, scalable systems will be best positioned to adapt and thrive. Their systems will need to be flexible enough to incorporate new features, comply with emerging regulations, and meet evolving customer expectations—all without causing major disruptions.
In summary, while it’s crucial to build a system that is modular and scalable, the foundation of that system should be a clear strategy for differentiation and innovation within your industry. As the market moves towards more embedded and integrated services, those who have laid this groundwork will be the ones leading the way.
HA: A business can use VoPay as a strategic partner by leveraging VoPay as an extended arm of their operations, finance, and technology teams. This partnership allows the business to focus on its core competencies while VoPay manages the complexities of financial operations, such as payment processing and compliance. By handling these critical but resource-intensive tasks, VoPay enables the business to scale efficiently and maintain agility, driving innovation and growth without being bogged down by financial operations.
HA: When software companies are thinking about integrating financial technology, there are a few key things to keep in mind to make sure it’s a smooth process. First, scalability is a big deal. You want a solution that can grow with your company, handling more transactions and a bigger user base without needing a major overhaul. A modular system is often a smart choice because it can adapt to new features, markets, and changing customer needs as your business evolves.
Next, security is crucial because we’re dealing with sensitive financial data here. The solution should have strong security measures in place, like data encryption, secure access controls, and real-time fraud monitoring, to keep both your business and customers safe. Alongside this, you need to think about regulatory compliance. The technology should meet all the necessary legal requirements—like PCI DSS, GDPR, KYC/AML regulations, and FINTRAC—and be flexible enough to adjust as regulations change.
Integration is another important factor. You want the technology to easily connect with your existing systems, such as CRM and accounting software, to ensure a smooth transition with minimal disruption. It’s also vital to consider how this integration will affect your customers. Will it speed up transactions? Can you build out new services? These are the kinds of questions you should be asking to make sure the technology enhances the customer experience.
Finally, think about the level of support and maintenance the vendor provides. You want to ensure there’s solid technical support, regular updates, and a commitment to keeping the technology in line with industry advancements. By keeping these considerations in mind, you’ll be well-equipped to choose a financial technology solution that fits your company’s needs and helps it grow.
HA: As platforms look to the future, there are several key developments they should be prepared for. First and foremost, staying tuned to new trends in their industry and the rapid pace of digital transformation is crucial. The technology landscape is evolving quickly, and platforms that can anticipate and adapt to these changes will be better positioned to stay competitive.
Beyond just keeping up with trends, it’s important for platforms to consider how they can offer value-added services that unlock additional revenue streams from their existing customer base. In our experience, one of the most impactful areas for this is in money movement and payments. Integrating these services can add significant customer value, helping them reduce operational inefficiencies and streamline their financial processes. This not only enhances customer satisfaction but also creates stickiness, making customers more likely to stay with the platform over time.
Moreover, by offering integrated payment solutions, platforms can tap into new revenue opportunities and differentiate themselves in the market. However, it’s important to recognize that building and maintaining these capabilities in-house can be resource-intensive and costly. Outsourcing these services to specialized providers can make them more affordable and scalable, allowing platforms to focus on their core competencies while still reaping the benefits of these additional offerings.
VoPay’s Hamed Arbabi on Transforming Finance with Fintech-as-a-Service was originally published on Fintech.ca on September 3rd, 2024.
