How embedded banking is redefining the future of finance

Oscar Gonzalez, Citizens: Embedded banking integrates financial services into business platforms, enhancing customer experience and maximising efficiency.

How do you view the impact of embedded banking on the traditional business/commercial banking model and Treasury Management? What challenges do you foresee for established institutions like Citizens, and how are you positioning yourselves to stay competitive?

Embedded banking significantly reshapes the traditional commercial banking model by integrating banking services directly into clients’ business platforms, such as enterprise resource planning (ERP), accounting software, and treasury management systems. 

This is a shift from the conventional model, where businesses had to access external banking portals separately or use file transmissions to manage their finances. This move makes banking a more contextual part of a business’ daily operations. With embedded banking, we’re moving towards a model that minimises friction and maximises efficiency.

This approach benefits both clients and banks. Clients gain a streamlined experience with better control and efficiency in managing payments and account reconciliation workflows. Banks, meanwhile, can offer more personalised services and deepen relationships with clients, increasing customer satisfaction and loyalty. 

As financial institutions make this shift, they must account for several considerations. These include: 

• Integration complexity: Embedded banking requires seamless integration with multiple platforms, each having their own integration specifications. At Citizens we’ve partnered with fintechs to collaborate on API-based ERP integrations. These partnerships support quick, turnkey solutions that maintain connectivity over time and keep our products aligned with evolving client needs.
• Data security and privacy: As financial institutions integrate their services into clients’ internal systems, they must ensure robust segregation of duties (user entitlements) and security to protect against cyber threats and fraud. At Citizens we’ve implemented advanced security measures - leveraging secure API technology, cloud-based infrastructure and payment approval controls - to facilitate secure transactions.
• Regulatory compliance: Regulatory compliance is of the utmost importance for any financial institution. Our Treasury Solutions team works closely with our Legal and Risk departments to address regulatory considerations early and integrate compliance into our product development processes, particularly around data sharing, privacy, and security.
  
  

With the rapid growth of fintech players, how does Citizens differentiate itself from new entrants in the financial services ecosystem? What strategies are you implementing to maintain and strengthen your market position?

Our approach to the marketplace is informed by our desire to provide the best, most reliable solutions and services we can for our clients. We provide customers with the security, reliability, and peace of mind that comes from working with a robust and established financial institution, while also maintaining an intense focus on innovation and innovation culture. A few of the factors that differentiate us in the embedded banking space include: 

• Focus on user experience: By providing an intuitive and entirely embedded experience, we can meet customers where they are and help them achieve better business outcomes.
• Investment in technology and innovation: A good example of this is our Citizens ERPConnect embedded banking solution. The solution is constantly adding payment methods and systems supported to keep pace with market demands and stay ahead of the competition. 
• Prioritising security and compliance: With growing concerns around data privacy and cybersecurity, our institutional expertise in risk management and regulatory requirements is a key differentiator. 
• Expanding distribution channels with embedded banking and APIs: Citizens is adopting embedded banking and APIs with different models depending on client segments and the applications our clients use daily. For example, we offer Open Banking (FDX) APIs for business banking applications, ERPConnect for middle market ERPs and we are working to use client-facing APIs for direct connectivity with bigger corporate clients.
  
  

Can you share insights into Citizens' embedded banking journey so far for Business and Commercial Banking segments? What have been the major milestones and challenges along the way, and how are you planning to evolve your approach in the future?

How important are partnerships with fintechs and other third-party providers for Citizens' strategy? What do you look for in these collaborations, and how do they contribute to your overall goals?

Partnerships with fintechs are an important part of Citizens’ embedded banking strategy. We view fintechs less like competitors and more like collaborators. Whether through an internal build or a third-party partnership, we constantly strive to expand our product offerings in ways that enable us to reach clients through new distribution channels. 

When selecting fintech partners, we prioritise these criteria:

• Reliability and security: We work with partners who have a proven track record of secure and reliable implementations.
• Scalability and flexibility: Our partners must support a wide range of platforms and integration options.
• Comprehensive functionality: We look for partners who can support various payment rails and account information reporting.
• Innovation and continuous improvement: We prioritise fintechs with a strong product roadmap and a commitment to evolving their technology.
• Industry reputation and experience: Fintechs with a solid reputation and experience working with large financial institutions.

Oscar Gonzalez is Product Management Director, VP at Citizens. Oscar leads the product strategy and commercialisation of embedded banking, APIs and portal experiences for Citizens’ commercial clients. Oscar has over 20 years of experience in digital channels, transaction banking and technology. He is a frequent speaker at industry events and a contributor to industry publications. Prior to joining Citizens, Oscar held leadership roles with multinational organisations, including Santander Bank, Marsh McLennan, and Deloitte. Oscar is based in Boston, MA.

About Citizens

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with USD 219.9 billion in assets as of June 30, 2024. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions.