By Danielle Eriksson, Director of Product Management
At a time when the largest financial institutions with the biggest budgets have completely embraced digital channels, many smaller banks and credit unions struggle to compete. Additionally, a growing number of non-banks are integrating financial service offerings to create seamless, holistic customer journeys with the goal of identifying new sources of revenue and growth. This is especially true as they work to attract a younger demographic with the digital-first experiences they demand.
How can smaller institutions take advantage of digital opportunities that exist today to deliver their products and services via the technology that users expect, while still competing with larger banks that have more financial and technical resources?
One solution for small and mid-size banks and credit unions is to identify strategic partners with which they can establish embedded banking partnerships. Financial institutions already have the financial services consumers and businesses want, and embedded banking technology gives these institutions the means to expand and distribute their services to new user bases.
Embedded banking enables non-bank partners to provide their users with innovative financial experiences outside the traditional confines of banking. For example, a business owner using a business management SaaS platform that helps manage day-to-day operations could view the company’s account balances and transactions as well as originate new deposit accounts, all from the software platform where they already are, without needing to switch to a digital banking solution or go into a branch.
Despite this opportunity, many of today’s financial institutions feel ill-prepared to execute on an embedded banking strategy. According to a new report by Economist Impact, a unit of The Economist, only 27% of survey respondents say their institution has the necessary technological tools “to a great extent” or “to a large extent” to create new digital products or services. However, this type of partnership doesn’t need to require development or IT investment by the financial institution. Rather, partners can work with technology enablers like Apiture to provide the tools for embedded banking connectivity between the financial institution and its partners.
With a populace increasingly demanding intuitive, integrated user journeys, if forging partnerships is low on your financial institution’s priority list, you may want to reconsider. Immense opportunity exists to engage with partners who can provide new services for your customers — in addition to your existing services — helping both companies to engage existing clients and win new business.
Embedded banking and other digital technologies that drive toward seamless, integrated user experiences are here to stay. Now is the time to position your business for the future, to stay relevant and grow market share. To learn more, download our white paper Embedded Banking: Debunking the Myths in which we examine five common misconceptions around embedded banking.