Developing Meaningful Embedded Finance Partnerships in Today’s Marketplace
The market for embedded
finance solutions is slated for explosive growth with some forecasts predicting
its value will aggressively reach $7.2 trillion by 2030. Such unprecedented
expansion presents a wealth of opportunities for banks and credit unions to
unlock new revenue streams and expand customer and client bases.
For fintechs and other vendors, seeking licensing and regulatory compliance is both complex and even prohibitively expensive. Given this, traditional financial institutions are uniquely positioned to propose embedded finance partnerships by leveraging their existing licensing and compliance frameworks. These third-party collaborations will expand banks and credit unions’ reach into new markets, broaden their offerings, and deliver integrated experiences for customers without shouldering the full burden of technology development. As this trend continues, there are certain considerations that financial institutions should explore when developing these valuable partnerships.
Identify Niche Areas
The traditional one-size-fits-all approach by banks and credit unions to products and services is no longer sustainable for long-term growth, so it is essential to identify niche opportunities in the embedded finance space. Financial institutions should always start by focusing on solutions that directly align with the needs and habits of their customers. Banks and credit unions have the advantage of regional knowledge and rich customer data, giving them the ability to identify opportunities in their own communities. A core decision when rolling out a new product or solution is whether the financial institution can create something far better (e.g., 10x better) than what is already available from another fintech or vendor. For example, smaller retail banks that lack wealth management services can benefit by partnering with fintech wealth platforms to extend to their customers direct access to integrated investment and wealth advisory services.
Focus on Brand and User Experience
Fintechs are showing
real strength with innovative designs and user experi...