The research highlights key findings in the realm of embedded finance. Almost two-thirds (63%) see it as a growth opportunity for banks, with 58% of UK banking executives encountering the term frequently. 84% share a common understanding that the customers UX belongs to the non-financial brand. However, 75% admit their businesses lack a clear, shared action plan for embedded finance.
The full whitepaper, inclusive of the results from independent research and a survey of 250 executives and managers from UK banks, offers a view on what influences the approach to embedded finance innovation across UK financial institutions. Carried out in collaboration with Censuswide during May 2023, Weavr’s research delves into ten crucial questions, extracting a wide range of thought-provoking answers.
While responses to the survey indicate embedded finance is a promising commercial growth opportunity, a significant number of businesses appear to lack a defined strategy to capitalise on it.
Executives from banks and financial companies express concerns regarding the compliance implications of potential embedded finance implementations. Such concerns may lead them to undertake a more cautious internally focused R&D, causing them to miss out on the benefits of leveraging external expertise from existing vendors and their technology. Analysis in the new whitepaper from Weavr infers that banks may find themselves constructing fragmented, small-scale embedded finance systems, failing to benefit from potential speed to market and scalability offered by a partnerships.
UK banks and financial institutions are equally excited by the prospects of embedded finance and apprehensive of the challenges of execution in the face of the constantly increasing burden of regulation, most recently Consumer Duty. Therefore, several banks started seeking partnerships with embedded finance technology providers who can equip them with proven solutions that can scale with the support of the banks' capabilities and balance sheets. Weavr's launch in June 2023 of the Embedded Finance Cloud, its proprietary technology stack to enable banks to create and distribute financial products that are 'embeddable by design', is an example of this trend.
Weavr’s CEO and co-founder, Alex Mifsud, reflecting on the whitepaper, said that what stood out from the research was that 79% of execs in financial services companies in the UK are discussing embedded finance at least once per week. Given the broad audience surveyed, that is a surprising figure. One of the biggest single conclusions is that financial services companies cannot ignore the new embedded finance distribution channel. Furthermore, as their research demonstrates, more and more banking professionals are recognising that embedded finance innovation is not the same as Open Banking and cannot be expected to succeed if narrowly interpreted as a derivative of past efforts to develop premium APIs.
Misfud added that offerings like the Embedded Finance Cloud equip banks and e-money establishments with the tools to build financial products that are designed for embedding, where risk and compliance are integral. By embracing solutions that afford control and safety, financial bodies can swiftly and safely tap into new revenue channels.
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