Driving Innovation with Embedded Banking - Activate at Money 20/20 Highlights
Embedded banking presents enormous opportunities for banks and fintechs. Recent S&P Global analysis shows that banks that partnered with fintechs and enterprises saw double-digit growth in their deposit volume. On the fintech side, a report from Andreessen Horowitz found that SaaS companies that embed financial services to their core product can generate up to 5 times more revenue per customer.
Embarking on an embedded finance partnership can yield significant advantages, yet initial success hinges on adeptly navigating technological and regulatory hurdles. A well-defined strategy and selecting the appropriate Banking as a Service model are crucial in charting the course for bank and technology company partnerships. According to Treasury Prime VP of Banking, Jeff Nowicki, and FS Vector Principal, Ethan Singleton, identifying an ideal partner involves evaluating risk tolerance, aligning expertise, and ensuring mutual scalability for banks and brands.
The two addressed these issues at a fireside chat, “Driving Innovation with Embedded Banking,” at Treasury Prime’s user conference, Activate, during Money 20/20.
Top insights on how banks and fintechs can partner on embedded finance to drive innovation:
- Banks that are “BaaS curious” and considering partnering with a fintech need to assess the operational and regulatory impacts, starting with their strategic plan on their addressable market. They should also consider what sort of technology they might need, and how to address the concerns of regulators.
- For banks starting with BaaS and embedded finance, it’s a good idea to start with a product that you have expertise in. So, if a bank is primarily a consumer lender, then focus on fintech partners that want to offer consumer lending products.
- While a seamless technology layer can streamline the process, the most successful embedded finance partnerships require direct, regular communication between the fintech and partner bank or banks.
Here are some highlights from the panel:
Watch the full panel on-demand for more detailed discussions about how banks and fintechs can take a strategic approach to embedded finance services. Download it here:
Want to see other sessions from Activate? Watch the highlights.