The advent of embedded finance offers a chance to improve, reevaluate, and create the value proposition provided to customers. But in this environment of upheaval and change, conventional banks have an obvious choice: either adapt or face becoming obsolete.
Fremont, CA: The world of embedded finance is changing quickly, posing several problems for traditional banks as the financial services industry transforms. The emergence of digital transactions and the pursuit of seamless, cross-border payment solutions have brought about revolutionary developments in the payments industry during the last 20 years. While established banks have always had a strong position, emerging competitors like IT behemoths and payment service providers are changing the game's rules.
The rise of international Payment Service Providers (PSPs) in the payments industry threatens established banks. Disregarding traditional banks in terms of innovation, these PSPs go beyond simple payment integration into transactions to include data analysis, reconciliations, and interaction with enterprise resource planning (ERP) systems.
With the ability to leverage extensive digital ecosystems, new players in the embedded finance space are changing how customers interact with financial services. These ecosystems go beyond traditional banking models by smoothly integrating a wide range of financial services into customers' regular digital experiences.
The newcomers provide banking, investing, and payment features under one roof, saving consumers from going through traditional banks by integrating financial services into well-known platforms and applications. With more people looking for integrated solutions that meet their financial demands in the context of their digital lives, this strategy takes advantage of the changing consumer desire for accessibility and ease.
These all-inclusive digital ecosystems encourage higher levels of user participation while also offering convenience. New players can improve consumer happiness and loyalty by integrating financial services into everyday user interactions. Users are guaranteed access to the most updated and pertinent financial tools due to these ecosystems' constant adaptation and growth, which fosters continued innovation. Because customers are lured to the smooth, comprehensive experiences these new players provide in the embedded finance space, established banks will find it difficult to adjust to this paradigm change.
