Embedded finance is typically used by non-finance companies to offer value to their customers observed Bahaa Abdul Hussein. Apart from non-finance companies, even traditional banks can embrace embedded finance. In fact, traditional banks need to innovate else they may die. With digital banks and challenger banks growing, traditional banks must stay ahead of the game. This is where embedded finance can be of help.
Traditional banks and embedded finance
Most banks went digital over the past decade or two. This process was accelerated during the global pandemic when digital became a necessity. Almost all banks are offering some kind of digital services. However, in today’s competitive world it is essential that banks should be one stop ahead of their competitors. Traditional banks, in particular, are in dire need of innovating. Offering embedded finance services is a great way for them to innovative.
Embedded finance refers to financial services that are embedded or integrated by an organization to offers its customers. Customers of banks will definitely be in need of financial services. Banks are in fact the best persons to offer such services. Since customers trust them, they will be happy to avail various financial services through their own bank.
It must be understood that embedded finance is today a hard reality in the world of finance. With a market value of nearly 83 billion dollars it offers opportunities that traditional banks cannot miss. Embedded finance is going to grow leaps and bounds. Traditional banks have to make use of this opportunity by offering embedded finance services.
Embedded finance services by traditional banks
Traditional banks can offer additional financial services to their customers. Those who are already doing it can even look at new areas. The banks can be the providers offering embedded financial services to smaller firms. They can work with retail firms, insurance companies, automobile firms, etc. These firms can then use the services offered by the bank to their customers.
Here are a few things traditional banks can do to capitalize on this trend:
- Invest on technology and come out with API offerings.
- Look for acquisitions or collaborations to broaden their offerings.
- Focus on enhancing customer experience through the embedded services.
- Adopt open banking to create new streams of revenue.
- Look at niche markets with personalized service offerings.
- Improve the efficiency of their operations by using the power of Information technology.
It is a golden opportunity for traditional banks to grow, and they can do this by embracing embedded finance today. Thank you for your interest in Bahaa Abdul Hussein blogs. For more information, please visit www.bahaaabdulhussein.com.