Embedded Finance Takes Center Stage
Corporate banking clients are becoming increasingly demanding when it comes to getting advanced digital tools and support from their financial institutions (FIs), according to the June 2022 edition of PYMNTS’ Next-Gen Commercial Banking Tracker®.
Whether it’s a small- to medium-sized business (SMB) or a large corporation, business leaders today have cranked up their acceptance of and need for digitization across their empires since the start of the pandemic, meaning commercial banks must increase their understanding of these needs and know how to deliver these digital tools for their business clients or lose them to someone else who can.
“Businesses increasingly expect to engage with their banks across digital channels rather than in person or by phone,” PYMNTS found. “They also require access to more advanced digital tools, including embedded finance and digital payments integration.”
A PYMNTS survey of chief financial officers (CFOs) at middle-market companies found that 59% viewed payments digitization as essential for a healthy balance sheet, and 71% had increased their payments digitization efforts since the pandemic began.
“Too many commercial banks fail to deliver on digital, however, especially for SMB clients,” according to the tracker. A large-scale industry report found that 68% of SMBs want to digitally handle all banking and finance issues, but 38% do not think they currently receive a satisfactory digital experience from their FI, the tracker stated.
The tracker explored the digital landscape for corporate banking, focusing on what businesses want from their banks, and how these FIs can stay competitive.
One area of greater importance for commercial banks will be embedded finance, which refers to the back-end integration of financial services software into online stores and other digital channels. Integrating this software in this way gives customers access to banking products such as buy now, pay later (BNPL) and consumer loans within a merchant’s website or digital ecosystem rather than being redirected to the FI providing the underlying service for more seamless, secure transactions.
“Research has found that embedded finance is rapidly gaining popularity with SMBs,” the tracker stated.
For more information, download the Next-Gen Commercial Banking Tracker®.
NEW PYMNTS DATA: THE TAILORED SHOPPING EXPERIENCE STUDY – MAY 2022
About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are getting it right and where they need to up their game to deliver a customized shopping experience.