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PayGatePlus: Fidelity makes big bets on embedded finance

PayGatePlus: Fidelity makes big bets on embedded finance

Between 2014 and 2017, it was rare to see a bank initiating collaboration with a fintech company that most bank operators assumed was here to disrupt the market and take over. Today banks like Fidelity count fintech companies such as Interswitch, eTranzact, AppZone, and many others as collaborators.

It is an indication of the changing times driven by the growing adoption of digital banking. The COVID-19 pandemic also made companies and individuals more aware of the importance of online transactions and also meant that financial institutions deepened innovation around payment systems and embraced new distribution channels.

For Fidelity Bank, the future of banking lies in embedded finance, the seamless integration of financial services adopted by non-financial companies. For instance, a local airline can choose to offer point-of-service accommodation and road transportation for passengers heading to a destination, or customers can make cashless payments within a ride-hailing app. Embedded finance is meant to streamline financial processes for consumers, making it easier for them to access the services they need when they need them.

It is not just Fidelity Bank that sees it, investors are also staking big money on embedded finance. According to Juniper Research, the embedded finance market will exceed $138 billion in 2026, from just $43 billion in 2021 demonstrating the rapid adoption of the trend.

According to McKinsey, companies of all types and levels of maturity – including retailers, telcos, big techs and software companies, car manufacturers, insurance providers, and logistics firms – are considering and preparing to launch embedded financial services to serve business and consumer segments.

To meet the rising demand for embedded finance, financial institutions are increasingly offering as a service (BaaS) – bundled offerings, often white-labeled or co-branded services, that nonbanks can use to serve their customers. For consumers, embedded finance means access to multiple services on one platform. They no longer need to use multiple apps or web platforms to make purchases or transfer funds, leading to greater brand loyalty.

Read also: Fidelity Bank, OnePipe partner to enhance online payments

For businesses, the convenience and ease of service increase the likelihood that consumers would make repeated purchases ensuring that businesses have the opportunity to cross-sell more products and make healthy profits. Embedded finance can also enable businesses to gain a more detailed understanding of customer behaviours and be able to predict what their needs are for future strategies.

Also, with embedded finance, new and existing organisations can invent out-of-the-box ways to generate profits and attract customers, ways that have not been possible before the open banking revolution.

The launch of the PayGatePlus positions Fidelity as one of the frontrunners in the embedded finance market race in Nigeria. To be sure, banks providing embedded finance come with some advantages which include the ability to offer financial services as well as manage regulatory, compliance, and credit. Fidelity Bank, for example, can use its network and manpower to manage and service loan requests from the embedded finance ecosystem.

PayGatePlus is an upgrade of the legacy PayGate which was used by businesses and merchants to collect payments online. PayGatePlus comes with upgraded features including virtual accounts, web payments, online collections via NIBSS Instant Payment (NIP), funds transfer, direct debit, balance enquiry, statement, BVN validation, direct credit, and Buy Now, Pay Later.

“Everything we do as a financial organization including the design of our products and services has the customer as our main focus,” said Onyeali-Ikpe. “It is on this basis that we have worked very hard over the last few months, together with our technical partners to innovate a solution that enables businesses across different sectors to easily integrate financial services with their product offerings.”

PayGatePlus puts Fidelity in a prime position to leverage the advantage of collaborating with different providers. First of all, PayGatePlus is a collaborative effort with OnePipe, a fintech API company that raised a $3.5 million seed round in 2021 to grow its embedded finance service.

By running API infrastructure on behalf of banks like Fidelity Bank and helping it monetise it, OnePipe is like a bridge between the bank and non-financial institutions which helps to launch and cross-sell an array of financial services such as credit, accounts, and payments within their offerings. By implication, OnePipe makes it possible for non-financial institutions, or businesses in general, to offer banking services to their customers.

“The caveat goes like this, the moment you make a positioning play for banking as a service, all you really need is one partner bank that lets you go deep because the embedded finance (offering) is about the depth and not breadth,” Ope Adeoye, founder and CEO of OnePipe said in an interview.

As a result of PayGatePlus, Fidelity says it is now in talks with non-financial operators such as Air Peace, Marriott Hotel, and about 15 to 20 merchants waiting to be onboarded onto the platform.

“Our mission is to make financial services easier and accessible. We see this as a collaboration,” said Nwaja Onyekwe, Head of Fintech and Telecom Division, Fidelity.