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Financial institutions have traditionally been comfortable in maintaining the ownership of customer relationships. The digital disruption in last 3-4 years has pushed them to adopt newer ways of banking, especially due to advent of plethora of fintech companies and neo-banks. That phase is gradually settling down with banks adapting to the tsunami of changes. Banks have either come up with their own fintech arms or collaborate with fintechs to offer their products and services.
Is this the end of the story? Well, may not be. The core business of banks and financial instituions s are still going to encounter the next level challenge. Can banking be controlled only by banks? The challenge is that customers are demanding banking services to be available integrated with different points of sale, devices, service providers etc. In short, banking services are expected to be embedded into virtually anything and everything. The end state is that banks no more own thae banking relationship with customers alone.
Why Embedded Banking:
This leads to the discussion on banking service being offered in SaaS (Software-as-a-Service) way. Pay-per-usage, subscriptions, renewals – these terms were never traditionally associated with banking services. However gradually there is growing customer demand for such flexible approach to payments for banking services. Let’s analyze a bit deeper, as to why such model is going to be the future of banking:
Getting ready for Embedded Banking:
The disruption and hence demand for innovation in banking is endless. The next set of challenges for banks are going to come from embedded banking adoption and roll out. Let’s look at how can banks be ready in overcoming them successfully:
While we discuss about embedded banking, it is not so easy for banking and financial services companies. The banking offerings, technology stack in bank and market pull – all should be synchronized well to handle the customer smoothly. At the same time, it should be profitable for banks. Therefore, there are different balls to juggle with and still strike a balance to maintain profitability and customer retention.
The Embedded Banking advantage:
Conclusion:
Customers are ever demanding because they experience new challenges in their daily activities and lifestyle. Banks need to realize the pulse of customer and be ready to meet those challenges. Embedded banking can take banking experience to a different level for bank’s customer. A better prepared financial instituion will emerge as a game-changer in recent future for its customers.
The views expressed are personal views of the author.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Dirk Emminger Managing Director at knowing finance
02 October
Sireesh Patnaik Chief Product and Technology Officer (CPTO) at Pennant Technologies
Jelle Van Schaick Head of Marketing at Intergiro
01 October
Ruchi Rathor Founder at Payomatix Technologies
30 September
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