Commercial Magazine

Creating a New Landscape

The use of embedded finance could help speed the commercial mortgage process

By David Brooks

In a world of accelerating change, it is more important than ever to be able to adapt quickly. That’s why the next major technology move for commercial real estate may involve embedded finance and industry specialization technology.

Embedded finance refers to financial services provided seamlessly in people’s everyday lives using nonfinancial goods and services. This financial technology streamlines processes by allowing consumers to buy products and get credit for their purchases entirely at the point of sale.
There are many different examples of embedded finance, ranging from Uber’s smartphone app to Apple’s insurance and financing plan sold as part of the purchase of a new Macbook. These services are “embedded” in a purchasing experience. The consumer-embedded experiences take place at the product level. For a long time, built-in payment systems for vehicle purchases and other transactions have been common practice.
But this technology is not currently being used in commercial real estate. In many cases, funding for commercial projects has relied on slow, outdated financial methods that are opaque to the borrower and rely on limited or private data. In many cases, this makes it harder for entrepreneurs to move quickly.
While commercial real estate finance is a laggard, other industries are already embracing the technology. Since the onset of the COVID-19 pandemic, embedded finance has been on the rise as people have become more comfortable with the idea of using technology as part of their everyday transactions.

Basic concepts

One of the crucial aspects of embedded finance is that the consumer can access banking services through a service provider’s website or app rather than having to go through the time-consuming manual process of entering bank data. This smooth process is made possible by application programming interfaces (APIs), which allow the provider to access the customer’s financial data (with their permission).
For example, when you book a hotel room online, you’re given the option to pay for it with a credit card or through a service such as PayPal. If you choose to pay with your credit card, the hotel uses an API to access your financial data and process the transaction. This is an example of how embedded finance works. It makes your life easier by allowing you to pay for things without having to go through the hassle of entering your financial information each time.
For customers, the primary benefit of the system is convenience. Rather than having to manage multiple financial products from different providers, consumers can access all the services they need through a single provider. This saves time and makes it easier to keep track of their finances.
A great example of this is Apple Pay, in which you can use your iPhone to pay for things with a single touch. There’s no longer a need to carry around a wallet full of cash or cards. You also can use it to make purchases online.
With traditional financial products, customers often have to rely on banks or other intermediaries to manage their money. This can be costly and time-consuming. With embedded finance, however, customers can manage their finances directly through the service provider’s website or app. This gives them more control over their money and allows them to make better decisions about how to use it.

Embraced by businesses

Similar to consumers, businesses also benefit from the convenience and simplicity of having access to financial services through the platforms and products that they use. In addition, businesses can take advantage of the data collected by these platforms to better understand their customers as well as to tailor their products and services.
Embedded finance can help businesses save money while reducing risk. For example, by using invoicing and payment platforms that offer financing options, businesses can save on interest costs and late fees. In addition, these platforms can help businesses manage their cash flow more effectively and reduce the risk of default.
The trend of industry specialization also is beneficial for businesses, as it allows them to focus on their core competencies and outsource noncore functions. This allows businesses to be more efficient and effective, and they’re able to free up resources that can be invested in other areas. The two trends of embedded finance and industry specialization are thus complementary — and businesses can benefit from both.
The strengths of embedded finance provide a glimpse into a more seamless future for commercial real estate. The technology could help streamline the customer experience for property developers. Potential buyers could use it to see a unified visualization of the zoning, entitlements and financial characteristics of a property. And it could potentially speed up the acquisition process by making financial information easily available. But the industry remains slow to act. How or when commercial real estate will realize such a future remains to be seen.

Industries benefiting

In 2022, there are expected to be nearly 29 billion connected devices worldwide, and many of them will be embedded with some form of financial technology. This trend is already benefiting several industries, including residential real estate, banks, transportation and health care, to name a few.
The residential mortgage industry, for example, is undergoing a technological revolution with innovations seemingly happening every day. With embedded finance and insurance, the mortgage process can be integrated into a seamless homebuying experiences.
For landlords and tenants, the ability to make rent payments, submit maintenance requests and access other services through a single platform is highly convenient. In addition, the use of data collected by these platforms can help landlords better understand their tenants and tailor offerings to meet their needs. In Canada, for example, renters pay higher premiums (often 40%, 50% or more) to live in Toronto than in Montreal.
This is partially due to the use of embedded-finance technology in the Toronto market, which allows landlords to more efficiently collect and analyze data about their tenants. Without this data, landlords would have to rely on more traditional methods, such as surveys, to gather information on the local market. As this relates to mortgage lending, borrowers need every advantage they can get. This type of technology can make the refinancing process as simple as possible.
The airline industry — one of the earliest adopters — has been using embedded finance to streamline their customer experience. For example, many airlines allow customers to use loyalty points to pay for upgrades or other services.

Slow movement

Although many industries are being aided by embedded finance, there are other areas ripe for growth. This includes commercial real estate, which has been slow to adopt financial technology due to the complexity of transactions and related idiosyncratic data.
Many commercial real estate players are hesitant to adopt new technologies because of security reasons as all sides deal with sensitive financial information. There also is the fear that their relationship-based business models might be disrupted. This stands in contrast to residential real estate, which has been much quicker to adopt new tech tools.
A number of large commercial brokerages approximate embedded finance by offering financial advisory services, such as appraisal and loan placement, in line with market listings. But this is typically delivered in a low-tech way, via spreadsheets, phone calls and emails. Whether the dominant data providers will extend their current offerings beyond ancillary software subscriptions to offer this new technology remains to be seen.
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The trends of embedded finance and industry specialization are working together to create a new landscape for the financial world. Overall, these trends have the potential to change the way we think about finance and how it works within the economy.
The associated technology raises the competitive bar and compels marketers to offer their services more thoughtfully and efficiently. Not only will this help to meet customer experience expectations, it will win business at the crucial time of opportunity. Embedded finance will soon make it easier for commercial mortgage borrowers to pay for what they are buying, accelerating the deal process to help lenders and brokers win the day. ●


  • David Brooks

    David Brooks is founder and CEO of Cirrus, a fintech provider of cloud-based document management software. With 20 years of broad financial-services industry experience, Brooks has held various positions with BB&T, Deloitte, Citigroup Global Markets, Merrill Lynch and Volvo Commercial Finance, both in the U.S. and abroad. He has led numerous IT-related projects during this time, including workflow redesign, adoption of customer relationship management systems and the creation of BB&T’s federally assisted bank-merger model. Brooks graduated from Wake Forest University with a dual degree in business and German, and he holds a master’s degree from Oxford University. For more information about Cirrus, visit

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