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Huge appetite for embedded finance amongst UK banks

A new whitepaper offers insights into the nuances influencing the approach to embedded finance innovation across UK banks and 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.

Embedded finance is a new set of models and technology, but it’s already a widely discussed topic among innovation, growth, and product leadership in banks.

Some have made impressive early moves in targeted areas such as BNPL, but for most banks it’s still early days for real-world product and partnership development, and beyond that, of visible go-to-market activity.

Executives from banks and financial firms express apprehensions regarding the compliance implications of potential implementations.

Such concerns may lead firms to undertake more cautious internally-focused R&D that approaches embedded finance without the benefit of leveraging external expertise, existing vendors and their technology.

Analysis in the whitepaper infers that banks may find themselves constructing fragmented, small-scale systems, missing out on the potential speed to market and scalability promised by a partnership approach.

UK banks and financial institutions are equally excited by the prospects of it and apprehensive of the challenges of execution in the face of the constantly increasing burden of regulation, most recently Consumer Duty.

Several banks are now 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.

“What stood out most from the research was that 79% of execs in financial services firms in the UK are discussing embedded finance at least once per week,” says Alex Mifsud, CEO, Weavr.

“Given the broad audience surveyed, that is a truly extraordinary and surprising figure. The biggest single conclusion is that no financial services firm can ignore the exciting new distribution channel that is embedded finance.

Furthermore, 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.”

Key findings:
  • Almost two-thirds (63%) consider embedded finance a significant commercial growth opportunity for banks.
  • 58% of UK banking executives encounter the term at least once a week, if not more often.
  • 84% of UK banking executives can agree on a definition of embedded finance, with the understanding that the end customer’s UX falls under the non-financial brand, rather than the brand of the bank.
  • 75% of UK banking executives say their business lacks an action plan on embedded finance that is both clear and shared internally.

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