LONDON — Will embedded finance technology usher in a new era of banking, or is the impact of the technology overblown? 

Bank executives from ClearBank, Deutsche Bank and Raiffeisen Digital Bank weighed in at FinovateEurope this week.   

ClearBank 

Head of Embedded Banking Paul Staples at $3.4 billion ClearBank said that many organizations have embedded banking services in their offerings for multiple reasons including to: 

• Increase customer loyalty; 
• Add a source of revenue; and 
• Build on available offerings. 

However, some banks are struggling to make these offerings commercially viable, Staples said. 

“There is very limited data that would suggest that embedded finance drives loyalty,” Staples said. “If you’re using this to build a new client-facing proposition for your products, it might take 12 to 36 months for the rollout, despite having a high pool of adopters among your clients.” 

Rather than embedding banking services for the sake of it, companies and brands need to build these features with a purpose and make sure that they are solving a problem rather than being added features for long-term success, Staples said. 

Deutsche Bank 

The $578 billion Duetsche Bank’s Joris Hensen, founder and co-head of the bank’s API program, said that embedded finance might not be a groundbreaking concept, but it will help in transforming financial services for banks, brands and customers alike. 

“You suddenly have a new way, a different way to engage with your customer … [as] it provides personalization and modernization to the customer,” Hensen said. 

FIs must pick partnerships for embedded finance carefully because consumer data can be at risk through transactions, Hensen said, adding that using APIs to transfer data is one of the best methods available. 

Raiffeisen Digital Bank 

Krzysztof Tarach, head of lending at the $224 million Raiffeisen Digital Bank, said that certain segments of embedded finance like lending will stick around because they are main revenue generators for banks and can increase sales for the brand or organization offering embedded finance. 

Organizations and brands that don’t capitalize on embedded finance will find themselves at a disadvantage over time, Tarach added. 

“You can stand on one leg and see if you have managed to stand up that one line long enough,” Tarach said. “But if you don’t do it, you’re taking unnecessary risk of not having a second line of revenue, as simple as that.” 

Using embedded finance offerings will also become a need over time for organizations and banks alike, Tarach said. 

Consumer behavior is changing from doing banking in the branches to online banking to mobile banking to the point where “they are no longer interested in using industrial applications,” Tarach said. 

“It’s always about chasing the customer,” Tarach said. “We’re looking for the place where the customers actually are [like social media apps and shopping apps] and shortening their [payments and banking] journey.” 

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