New report unveils UK banks’ stance on embedded finance
Drawing insights from independent research, including a survey of 250 executives and managers from UK banks or financial firms, Weavr’s whitepaper provides a comprehensive look at current attitudes towards, and actions to develop, embedded-finance offerings by UK financial institutions.
Amongst the key findings, the research found:
- Almost two-thirds (63%) consider embedded finance a significant commercial growth opportunity for banks.
- 58% of UK banking executives encounter the term ‘embedded finance’ 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.
The full whitepaper, inclusive of the survey results, 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.
Executives from banks and financial firms express apprehensions regarding the compliance implications of potential embedded finance 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 new whitepaper from Weavr infers that banks may find themselves constructing fragmented, small-scale embedded finance 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 embedded finance 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. Weavr’s launch in June 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, stated “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. 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, as our 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.
He added, “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 maximum control and safety, financial bodies can swiftly and safely tap into new revenue channels.”
To read Weavr’s whitepaper, please visit: weavr.io/banks