An in-demand service for customers
Embedded banking is a rapidly growing opportunity for the banking sector, responding to the sweeping digitalization of the sector in recent years. These embedded services allow customers to take care of their financial needs in real-time by connecting the banking services that they need with the platforms and services that they are already using, reducing unnecessary disruptions to everyday life.
Beyond the value that embedded banking brings to digital sectors like ecommerce, the appeal of these services to end users is clear, offering customers instant gratification and easy access to key resources to enable everyday actions. Analysis by KPMG and EY show that as many as 50% of banking customers ask for these kinds of products tailored to their personal needs.
The challenge for banks – and the opportunity
Nevertheless, it remains a challenge for many banks to establish concrete offerings to meet customer demand on this topic, as they face the accelerating rise of fintech challengers stepping in to provide these services. Dedicated banking applications have already put access to banking services at customer fingertips, with top use cases like account balance checking, payment transfers, and bill payment – but these applications can present disruptions to the flows of everyday activities, requiring customers to use a separate platform to carry out their needed activities rather than seamlessly taking care of their financial needs in their existing interactions.
Third-party fintech solutions have been developed to capture this customer demand for a more seamless, embedded process, consequently shifting customer interactions away from banks themselves. In fact, recent analysis suggests that the fintech market is expected to reach an estimated value of USD$11.2 trillion in transaction value by 2024.
Collaborations enable successful embedded banking solutions
Scaleups have an important role to play in restoring the role of banks in these services, providing quick access to dedicated solutions that can strengthen the connections between banks and their customers. Rather than “working against” new solutions, banks have a significant opportunity to harness the innovation of scaleups to make embedded banking a reality for their customers without losing their place in the market, as discussed by Match-Maker Rudi Falat in a recent interview. With the popularity of embedded banking increasing every day and new solutions appearing to harness this growing market, banks cannot afford to wait to build their solutions in-house and risk a potentially years-long go-to-market timeline. The time is now to embrace the potential value of collaboration with scaleups to launch these services.
To learn more about Match-Maker Ventures and our solutions for the banking industry, check out the rest of our portfolio here.