Developing a Successful Embedded Bank Experience: 5 Areas of Focus


As a bank, your customers expectations are shifting and they're demanding integrated experiences. Brett King, one of the world’s most notable influencers in the financial sector, noted that friction is the single most disruptive force in banking. That is to say, financial institutions that fail to weave banking capabilities into the fabric of everyday life, will slowly but surely wither and die. Even without the weight of those words bearing down on the shoulders of banking executives, it is abundantly clear that client expectations are rapidly shifting. A friction-free world where everything is integrated and accessible from the mobile device of our choosing is no longer science fiction.

Few would argue that the world’s biggest banks have been struggling to keep up. Conventional banks are quite literally marble monuments of conservatism and stability - the antithesis of agility and innovation. While the banks sophomoric attempts to remain relevant in the digital age took the form of online banks and clumsy mobile applications, they have rapidly matured and so too has their approach. The objective is no longer to simply court a new generation of customers.  Rather banks are looking to deliver services that reflect the best of the web to their entire customer base. Most notably to their commercial banking customers in the form of embedded banking services. 

Embedded banking makes it possible for people to complete conventional financial transactions within the confines of the applications and platforms they rely on to run their businesses. In other words, commercial banking customers can access core services and take advantage of new products without having to bounce between browsers and devices. It is a capability that effectively eliminates the primary source of friction that plagues traditional commercial banking relationships. 

The benefits for banks that get it right are extensive and far reaching. Most importantly embedded banking makes services more sticky. It also increases adoption and utilization which improves loyalty and reduces churn. The ability to complete banking transactions in native business applications also boosts customer satisfaction and NPS scores; a key metric for almost every banking executive. Beyond that, embedded banking provides opportunities for banks to cross-sell and upsell new products and leverage real-time usage data to enhance existing banking products and inform new ones.

As financial services and digital innovation converge in an effort to catch-up with consumers’ rapidly evolving expectations, embedded banking services are poised to help banks cross the chasm. However, banking leaders looking to be part of the early majority need to start planning now. To aid in that effort, we’ve identified 5 key areas of focus in the development and delivery of a successful embedded banking experience:

  1. Know What ERP Systems Your Clients Use:
    Core to embedded banking is the ability to deliver conventional banking services within a customers existing suite of tools. Not surprisingly, that requires a deep understanding of the most popular ERP systems. At FISPAN we make it possible for banking clients to manage liquidity, conduct and reconcile payables, and consolidate receivables from a bank- branded experience right within Netsuite, Microsoft Dynamics, Quickbooks, or SAP.

  2. Know what market segment and verticals you’re targeting and what bank products they use:
    As with the development of any new product or services it is critical to understand your target customers; what market segment and verticals will you target? What bank products do they use? Where are they underserved? Where are your products under utilized.

  3. Figure out how you will you support client adoption and success:
    Let’s be frank. Customer-centricity is a relatively new concept for financial services. Traditional products were created for profitability, not to alleviate a customer pain or problem. Bankers will need to turn their innovation models inside out. That means a deeper understanding of how their customers can use their products in context. Embedded banking is an innovative service, not a silver bullet. 

  4. Find out whether your can support a new channel internally or need to partner with a FinTech:
    Unlike traditional product extensions and promotions, embedded banking requires new infrastructure and support models. That means auditing existing operational models to see if they are robust enough to support this new channel.

  5. Determine whether your trust, onboarding and auth models ready for this
    Closely related to technical infrastructure requirements, executives need to determine if their existing trust, onboarding and authorization models meet data privacy and security requirements. Choosing the right technology partner is a massive component of that. At FISPAN we are SOC 2 Type 2 compliant, resilient, available and performant.

Outside of those five core areas there are the traditional considerations involved in developing a go-to-market strategy. Those include, but are not limited to, creating a clear business model and business case, a framework for customer success and support and identifying objectives that ladder up to key business metrics. 

The concept of embedded banking is not new, however the ability for banks to deliver against it is. While capabilities are rapidly advancing, the future potential is astounding. In the very near future, embedded banking will evolve from the ability to surface passive services into highly sophisticated platforms powered by machine learning and artificial intelligence. Automated, contextual banking systems with the ability to make forward thinking strategic recommendations will not only reduce the friction of traditional banking but usher in an entirely new era of financial services.    

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