Embedding popular FinTech products into their suite of solutions, is the way forward for banks that are looking to hop on board the innovations train. Find out why it’s time for banks to double down on Embedded FinTech.
In an effort to keep up with radically changing customer expectations, banks today are leaving nothing to chance!
While digitization has been around long before the pandemic took the world by surprise – banks have further accelerated their digitization efforts with global lockdowns in play.
To put things in perspective, since the lockdown, the usage of FinTech apps and mobile banking services witnessed an all-time high of 72% in Europe. For my friends in the financial services industry, this meant only one thing – can they ride this digital wave?
To say the least, the transformation has been nothing short of phenomenal, and courtesy of this pandemic-infused digital explosion – banks have taken nearly most of their customer interactions online.
With the entire banking landscape undergoing an existential shift, will this be enough to stay in the game?
If you ask me, this digital revolution is here for the long run. If banks and other financial institutions want to keep up, they need to create a new core competency… I’m thinking more along the lines of Embedded FinTech.
Should banks double down on Embedded FinTech?
As the US economy continues to recover, #banks have reported spectacular profits in 2021. The results, however, mask a deeper problem for banks: a “revenue recession.”
— Ron Shevlin (@rshevlin) August 3, 2021
Embedded FinTech, a term coined by Ron recently, is redefining the financial services industry as we know it. Now there is a stark difference between ‘Embedded FinTech’ and ‘Embedded Finance’.
While Embedded Finance refers to the native integration of banking services or financial technology into a traditionally non-financial services company, Embedded FinTech, in the words of Ron Shevlin is:
“The integration of FinTech products and services into financial institutions’ product sets, websites, mobile applications, and business processes.”
If banks are looking to battle out the revenue recession and hop on board the innovations train, embedding popular FinTech products into their suite of digital banking solutions, is the way forward.
What does Embedded FinTech mean for the financial services industry?
With new competitors seizing the market every day, if you’re looking to master digital disruption, you need to be agile enough to speed up your time-to-market.
Embedding existing FinTech products that your customers are already fans of, is a step in the right direction.
Finding your niche in offering complementary FinTech services and targeting specific segments is critical, to achieve a more rewarding position in the market.
Furthermore, financial institutions need to strengthen their innovation efforts by establishing a digital platform and taking a ‘plug-and-play’ approach. This will enable them to fast-track the rollout of new products and services, and tap into new revenue streams.
Planning to make the Embedded FinTech opportunity a reality? Here are two things that will set you up for success:
- API-centric architecture – This provides agility that accelerates the time-to-market
- Cloud-first approach – Cloud computing will offer the flexibility that you need to adopt the latest technologies on the block
I will wrap this up with a quote from Jim Marous (Co-publisher of Financial Brand) that pretty much sums up the need for this trend:
“Financial institutions must be able to deliver an easy to navigate, a seamless digital platform that goes far beyond a miniaturized online banking offering.”
From cryptocurrency investing to wealth management and data breach, banks have a multitude of options to look into when it comes to Embedded FinTech products. How Embedded FinTech will shape the financial services industry, will be an exciting space to watch out for in the coming days.
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