What You Need to Know
- Embedded finance may finally lead to Amazon, Apple and Facebook fully entering the financial services arena.
- But it is still good news for advisors because the experiences created will allow them to incubate future clients.
- Clients will be able to connect with advisors via the new client portal Envestnet is launching later this year.
The investments that Envestnet has been making in embedded finance — the offering of financial services through nonfinancial providers like Apple — stand to help not only it and investors, but advisors as well, according to Dani Fava, the company’s head of strategic development.
Amazon, Apple and Facebook could “finally get into our space and really disrupt it” through embedded financing, she said Wednesday during the second day of the Envestnet Advisor Summit, held virtually for the second-straight year.
“But this is not bad news for advisors. I believe it’s good news for advisors,” she said during a session on “Embedded Finance: The Next Digital Disruption.”
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 Summit, Envestnet announced several embedded finance-related initiatives. For example, Envestnet | Yodlee launched an enhanced developer portal that it said last week 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 in April, Envestnet said the transaction “optimizes” its application programming interface (API)-based financial wellness ecosystem, and “also helps strengthen our foothold to enable embedded finance, which we see as a key driver of the future of financial services.”