The financial industry is undergoing a radical transformation with digital innovation, and embedded banking is taking the lead. With the emergence of new technological trends, this innovative concept enables companies to improve customer experience without disrupting their existing system. In recent years, embedded banking has become prevalent as more companies collaborate with financial institutions to provide seamless banking services to their customers. The Apple and Goldman Sachs partnership is a prime example of the growing trend of embedded banking services.
Embedded Banking: Taking Hold in the Industry
Embedded banking is a relatively new concept that involves the integration of banking services into non-banking applications, such as retail, healthcare, and social media platforms. It offers value to all stakeholders: customers get access to additional financial services, and companies can add additional revenue streams to their existing services. According to a report by ResearchAndMarkets, the embedded finance market is expected to grow from $43.8 billion in 2020 to $80.5 billion by 2025, at a CAGR of 12.9% during the forecast period.
Apple Card owners have convenient access to a Goldman Sachs savings account, thanks to the partnership between Apple and Goldman Sachs. This is one of the most notable examples of the growing trend of embedded banking. The process is easy and seamless, allowing customers to manage their finances in a convenient manner. Users can track their earnings, set savings goals, and monitor their balance within their Apple wallet, providing a streamlined banking experience.
Instant Deposits of Apple Cash into Savings Account
Apple Cash is an incredibly popular feature among Apple users, allowing for easy peer-to-peer payments. With embedded banking, the balance in the Apple Cash account is instantly deposited into the connected savings account. This means customers can earn interest on their balance, generating additional income without any effort. Rapid access to deposits also encourages customers to save more money, making it a valuable feature for improving their financial well-being.
Convenience, Ease, and Trust: Key Attributes of Embedded Banking
Along with the benefits of embedded banking, convenience, ease, and trust are essential attributes in creating a seamless experience for customers. By integrating banking services into existing applications, customers can access banking services without leaving the app, creating a frictionless user experience. As a result, customers are more likely to be satisfied with the service and develop a strong sense of trust with the financial institution.
Embedded Payments: The Dominant Segment of the Embedded Space
Embedded payments are the largest segment of the embedded space and offer various advantages to businesses. Implementing digital payments into an existing system can increase revenue, value per customer, and retention rates. By cutting out intermediaries, payment processes can become faster and more efficient, providing an overall improved customer experience. The widespread adoption of mobile payment options like Apple Pay has resulted in the growth of embedded payments, transforming the payment landscape.
Software platforms that incorporate embedded payments are seeing significant benefits. The convenience offered by integrated payment processing leads to customer loyalty and a marked increase in transactions. By integrating payment processing software, businesses can seamlessly incorporate payment processing into their existing system, creating a streamlined, user-friendly experience. Online marketplaces like Airbnb and Uber have seen success by incorporating payment processing into their platforms.
Momentum of Embedded Banking
Embedded banking is gaining momentum and transforming the financial industry. By integrating banking services into non-banking applications, financial institutions are providing innovative solutions that increase customer satisfaction and generate additional revenue streams. Businesses must embrace this trend to stay competitive in the market.
Similarities between Embedded Payments and Embedded Banking
Embedded payments and embedded banking share many similarities. Both integrate financial services into non-financial platforms, improving the overall user experience. The success of embedded payments has paved the way for embedded banking. By offering banking services, companies can create comprehensive solutions that are more robust than standalone payment solutions.
Embedded banking is the future of the financial industry, as evidenced by the partnership between Apple and Goldman Sachs. By incorporating banking services into non-financial applications, companies can create a seamless user experience that increases customer satisfaction and generates additional revenue streams. The success of embedded payments has paved the way for embedded banking, and this trend is gaining momentum. Companies that embrace embedded banking services will benefit from a competitive advantage and provide a superior user experience.
