Embedded Banking : The next level of offering for financial institutions

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:

 

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