Earlier this year, Square made waves across the music industry with its acquisition of TIDAL, Jay-Z’s global entertainment platform and streaming music service. The unlikely pairing of Twitter co-founder Jack Dorsey’s payment processing service and one of the biggest producers in music is a portent of the many ways embedded finance is going to influence and reshape the future of music – and many other industries – for years to come.
Embedded finance creates new customer journeys that solve real-world problems. It allows for seamless experiences that reduce friction and provide customers with more options to pay for goods and services from their favorite retailers.
There’s reciprocity here as well. The improved customer experience helps merchants grow customer loyalty and deepen the customer relationship. They can also potentially use this data at a later date to personalize customer experiences.
In the music industry, for example, embedded finance gives content creators and musicians the tools to better manage their brands and their finances. For some, there’s dissatisfaction with the current system, which can at times be opaque. Getting paid by concert promoters can take a long time and sometimes even seeing what you’re owed is difficult. The lack of transparency means artists can’t budget and their banks can’t rate them for credit.
Rise, created by Barclays is a global community of the world’s top innovators working together to create the future of financial services. Rise released an insights report on embedded finance that features Kobalt and DICE, two FinTech startups that are using embedded finance in the music industry to improve user experiences and help artists become more profitable.
Kobalt simplifies a complex system for independent musicians who rely on royalties that are not predictable. It has created a centralized platform that allows artists and creators to access their payments, royalties and data through APIs linking directly into global music hubs such as Spotify, Apple and YouTube. By building a system where artists can forecast earnings faster and increase their cash flow, Kobalt helps artists define a basic financial framework to make it easier to predict their financial unknowns.
DICE uses embedded finance to simplify and streamline the promotional and performative process — putting more money in the pockets of artists and bypassing the middleman. DICE gives music fans access to a quick, seamless purchase system and helps fans discover gigs and artists, improving the sale of merchandise and tickets to live streams while powering personalized experiences for fans and insights for artists.
The change that DICE, Kobalt and others are making is to ‘embed’ new customer journeys and new data into the fabric of the music industry. Embedded finance can speed up the payment process, simplify an exchange and provide artists with customer data, giving them greater insight into how much money they can expect for ticket, merchandise, and streaming sales. This makes payments and associated interactions with banks and other financial services organizations (to get credit and loans) much simpler.
Embedded finance is just getting started. It offers the opportunity for a true win-win-win scenario for banks, startups and consumers alike. Through increased innovation, embedded finance has the power to not only disrupt, but transform industries across the globe. The combined forces of disruptive technology, new customer journeys and banks’ abilities to add value will usher in a new era of rapid evolution and shape how brands are experienced by customers and clients across a wide variety of sectors.
