Embedded Banking: How Does it Work?

By Danielle Eriksson, Director of Product Management at Apiture 

Although many financial institutions are interested in embedded banking, many are still unsure about the mechanics, who is responsible for what, and how to get started. To explain how embedded banking works, here is a blueprint that can help maximize the benefits of this strategy for your institution.

  1. Create a Strategy: A financial institution must first establish goals for the program as well as answer the question of “how” connectivity to banking services will be provided. Connectivity is often through a technology enabler; for example, Apiture offers this service through our Embedded Banking solution.
  2. Identify Partners: The financial institution must identify and establish strategic partnerships with companies and brands that are interested in offering financial services within their website or app.
  3. Establish Connectivity: Once a partnership or two has been established, the technology enabler will provide the connectivity that allows the partner to access the institution’s banking services. For best results, financial institutions should partner with technology enablers who can simplify the implementation of embedded banking for their partners. For example, Apiture’s offering provides partners with a range of development options. The lightest effort and fastest go-to-market technology is enabled by pre-built components that partners can configure to meet their specific needs. In the end, the partners drop a few lines of code into their application, adding banking services to existing user journeys quickly and easily.
  4. Empower Partners with Choices: Without ceding control over their user experience, non-financial partners can leverage the enabler’s technology to offer relevant financial services to customers, from access to account data, to making transfers, to handling account and loan origination. The partner chooses which embedded financial services make sense for their experience, as well as where and how to present them.

Without forcing users to jump across interfaces, embedded banking ensures delivery of financial services by the partner company, right at the point of customer need. Once an embedded banking strategy is active, all parties benefit from the results:

Non-financial partners remain in control of their user experience, leveraging the enabler’s technology to offer financial services to their users.  The partners get to choose which embedded financial services make sense for their experience and their customers as well as where and how to present them.

End users are no longer forced to jump across interfaces to manage their finances. At the same time, they can maintain the safety and security of a regulated bank relationship and FDIC insurance where relevant. 

And finally, financial institutions can engage and retain existing customers while exposing their brand and services to prospective new customers as users begin to participate through this new channel. Institutions also see benefits with increased deposits and loans, lower costs of new customer acquisition and new ways to cross sell existing products and services.

To learn more about embedded banking, follow along with our series of embedded banking blogs in the coming weeks. Also, if you’re headed to FinovateFall in New York City on September 12-14, check out our embedded banking demo to see this technology in action.


Subscribe To Our Newsletter