If more companies start acting like banks, what happens?
Since the outbreak, several companies have had to adapt their customer service practises. These beneficial changes will continue for a long time to come, as customer expectations have also increased. Two major changes in the way businesses assist their consumers with money will take place in 2022. Because of “embedded finance,” in 2022, any business can become a financial services provider.
Firms will aim to give their consumers with banking and financial capabilities, such as online payments, investment products, bank accounts, insurance, and loans, in order to attain this end. Big technology businesses have already begun to move into this space, but by 2022, this capability will be made available to all industries as well.
API-based financial services innovation has long flourished in Europe, where major advances are expected. Because of the country’s open banking policy, cross-border trade regulations, and multi-currency banking, this is mostly attributable to To thrive, embedded-finance offers will need a strong infrastructure and a set of behaviours that are already in place thanks to the rise of the neobanks.
It was found that 61% of Germans were eager to use financial products from companies like Lidl and IKEA, according to a Solarisbank poll published this year. Customers – including individuals and businesses – who have developed a relationship of trust with a particular provider or platform can now expect this level of preparedness to be extended to others. More than half of European GDP comes from small and medium-sized businesses (SMBs), which have traditionally been underserved. Embedded-finance products will allow SMBs to obtain access to more financial services themselves, as well as to become financial-services suppliers.
Enhancing the customer experience, increasing loyalty, increasing conversion, and driving up margins are all possible with embedded finance. A short-term loan, a debit/credit card, or an insurance product – long seen as the realm of regulated financial-services companies – are now at the fingertips of many brands via APIs. Furthermore, Juniper Research predicts that the embedded-finance market would reach $138 billion (£100 billion) in 2026, up from $43 billion in 2021, indicating significant room for expansion.
Customers enjoy a hassle-free purchase experience when all of their financial needs are met in one spot. Embedded payments, like those offered by Uber and Klarna’s “buy now, pay later” programmes, are already familiar to many of us. Brands will begin to use these more widely in the near future. A number of other products and services, such as embedded insurance, are also expected to gain in popularity. As a result of the company’s extensive data collection, it is now able to give customers discounts of up to 30 percent on their car insurance premiums because of this information.
For B2B commerce, the complexity of escrow and invoice financing and payments and foreign exchange create significant barriers to online adoption. This will also have an impact on B2B commerce Customers who want a straightforward and comprehensive answer to their financial needs may now get it from marketplaces and SaaS platforms alike, thanks to APIs that make these services more widely available.
It’s easy to see where the opportunity lies. Banking will no longer be the sole domain of banks in 2022.
