How is Vertical SaaS Reshaping the FinTech Landscape in 2024? 

When you buy a new smartphone and get a screen-cleaning cloth to clean your mobile screen for free, it feels nice, isn’t it? Though it looks small, it shows the mobile company cares about your overall experience. 

The cloth will come in handy, and there is no need to make an extra effort to find how and with what you can clean your screen.

If your business provides industry-specific and vertical market SaaS, your clients likely have responsibilities that might be comparable to wiping a smartphone screen. However, these actions are more annoying. 

Financial operations and payments are among the most difficult, significant, and frequently agonizing jobs that B2B SaaS users must do. Integrated finance solutions are already provided to B2B customers by Shopify, Toast, Silo, and other B2B SaaS giants. 

The integrated financial services sector is anticipated to be worth $3.6 trillion in 2030. Large SaaS firms quietly integrate economic goods into their ecosystems, and clients are unsurprised because they already see embedded financial services as necessary.

Why Embedded Finance is a benefit to vertical SaaS heads?

Vertical SaaS enterprises share one common problem: growth becomes slow due to a SaaS company’s narrow sector specialization. Subscription revenue becomes insufficient to enable further scaling. 

In the late growth stages, acquiring new clients and upselling products become increasingly expensive. SaaS sectors typically work with small and medium-sized businesses (SMBs). However, these organizations would not  pay higher prices and churn as smoothly as B2C users. 

And this is a watershed moment when embedded finance appears as a boon to vertical SaaS platforms that are delayed in the growth process. 

In addition to upselling additional software functionality, SaaS verticals can offer their consumers financial services that they undoubtedly require in some form. 

SMBs account for 50% of GDP in high-income countries, implying that money moves back and forth among these businesses. However, payment processing is frequently frustratingly inadequate. You may assist SMBs in breaking the barrier and ensuring frictionless money flow. 

The FinTech blessing goes beyond simply increasing SaaS income. Let’s go over them in detail. 

1. Enhanced customer experience and operations

SaaS is extensively relied on by small and medium-sized businesses to automate, speed up, and reduce costs. 

Providing your clients with out-of-the-box payments and other financial services allows them to make payments, take out loans, and pay taxes without leaving your SaaS environment. Integrating financial products into SaaS allows you to provide more complex customer experiences. 

When all of your clients’ solutions are bundled into one platform, they feel more at ease because they don’t have to make additional attempts to complete their daily activities and may avoid the chronic worry of making another payment transfer. 

2. New Data Acquisition and Transparency

The ability to aggregate and exploit consumer data for their benefit is the perfect icing on the integrated finance cake. 

Because your clients are tightly integrated with your SaaS platform, you have adequate data to provide them with personalized financial solutions such as credit checks, loans, and payrolls. 

3. Deflated burn rate and account charges

When you incorporate financial goods into your SaaS environment, you provide multiple alternatives for your clients at a low cost. 

You do not need to invest additional money in user acquisition for your embedded financial solutions because your target audience already uses your platform. 

4. Higher customer lifetime value

As embedded finance reduces client acquisition expenses, customer lifetime value (LTV) increases proportionally. You already have a massive client base and offer integrated financial services to them, so you earn more per customer. 

Integrated FinTech solutions in SaaS

Integrated financial solutions for vertical SaaS are a key trend, and more innovations are on the way. However, we can already see many examples of what and how you can include in your B2B SaaS platform.

1. Payments

Payment processing is the most basic but critical FinTech product that all SMBs require. You can use the payments system as a starting point for your FinTech case, and then progress to more advanced solutions. 

Your platform will earn additional money by charging a set transaction charge plus a percentage of all payments received through your system. 

By integrating your bespoke payment gateway, you may cut transaction costs for your clients while maintaining complete control over payment security because no external parties can interfere with your platform. Of course, you do not have to share your transaction fee revenues with anyone. 

2. Credit

This method is likewise relatively simple. You can create your own embedded lending product if you have the resources or integrate a third-party loan provider. 

If you have sufficient customer data, you may do quick and easy credit eligibility checks, which would increase the amount of money you get from the interest your customers pay. 

3. Cards

In addition to employing people, your clients might also use subcontractors and contractors daily. In any event, you can provide your software company’s clients’ employees with real and virtual banking cards.

While your clients enjoy easy and quick money transfers for a sort of uses, including buying inventory, making investments, paying for employee perks, and so on, you provide them with banking cards and profit from referrals and interchange fees. 

4. Insurance

It’s conceivable that your consumers require basic employee plans and general business insurance. Once more, by working with insurance companies, you can incorporate these services into your SaaS platform and charge the insurance company for each new user you attract to your SaaS platform. 

5. Bank Accounts

Offering virtual bank accounts integrated into your SaaS service makes sense if your clients are frequent payers and money transfers. The complexity of this financial product will surpass that of a simple payment processor once the foundation for the entire core banking service infrastructure is designated. 

6. Rules and adherence

You can assist your clients in getting rid of antiquated procedures for reporting and adhering to different regulatory requirements. 

Although this kind of financial product is still relatively new, AI and ML technologies have made smart background checks, KYC verification, and policy compliance automation quick and easy.

For such a solution, be prepared to shell out a substantial sum of money. However, the talk about using AI, such as ChatGPT, is becoming so loud these days that you can actively upsell your SaaS offering with a solution that uses AI to comply with regulations.

Require a premium for utilizing these services, or consider adding a higher membership tier for clients who frequently use policy compliance automation tools. 

What’s Next?

The FinTech software development industry is evolving towards an “Embedded” state, driven by technological advancements and financial institutions’ readiness to collaborate with FinTech companies.

Adding a package of banking services to support financial-related duties is a perfect fit for an SMB that already manages most operations through a single platform.  

In addition to the ability to transmit value (payments), enterprises will also be able to hold and store value (deposits) and obtain other advantages.  Fees for transactions or platform subscriptions waived in return for more activity? A WIN-WIN situation results.