In the rapidly evolving landscape of financial technology, embedded finance has emerged as a critical component for growth and sustainability. Our expert today offers insights into the latest survey conducted by Treasury Prime, which sheds light on how community banks in the US are integrating embedded finance to address fluctuating customer expectations and the challenges posed by economic uncertainties. The discussion explores the motivations behind the survey, the key findings, and the broader implications for the financial sector.
What motivated Treasury Prime to conduct this survey on Embedded Finance adoption?
The motivation behind Treasury Prime’s survey stems from the need to understand how community banks are navigating the growing demand for embedded finance solutions amid rising customer expectations and economic turmoil. As embedded finance becomes a strategic necessity, Treasury Prime wanted to gauge how institutions are adapting and where they see opportunities and challenges.
Can you give us a brief overview of how the survey was conducted?
The survey was conducted over a two-week period from March 23 to April 8, 2025, where 300 decision-makers from community banks were interviewed. These participants held senior leadership roles and were involved in decision-making processes related to IT, operations, risk management, and strategy. This comprehensive outreach allowed Treasury Prime to gather a wide array of insights into the current state of embedded finance adoption.
Who were the decision-makers surveyed?
The decision-makers surveyed were individuals occupying senior leadership roles such as Vice Presidents or higher. These were key figures involved in decision-making for IT, operations, risk management, compliance, commercial or retail strategy, or organizational strategy within their community banks.
What roles did these individuals have in their respective community banks?
These individuals played pivotal roles in their institutions, influencing areas critical to the adoption of new financial technologies. Their responsibilities included overseeing IT infrastructure, managing operational risks, ensuring compliance, and shaping both commercial and organizational strategies.
What percentage of community financial institutions are engaged with Embedded Finance programs?
According to the survey, a full 100% of community financial institutions are either actively participating in, rolling out, or at least exploring embedded finance programs, highlighting the universal recognition of its essential role in contemporary banking.
How are community banks balancing regulatory compliance with the adoption of new technologies?
Community banks are adopting a compliance-first approach, aiming to strike a balance between the need for agility and the rigors of regulatory discipline. This involves investing in modern tech stacks that can swiftly adapt to regulatory changes while supporting innovative solutions like embedded finance.
How do decision-makers view the role of Embedded Finance in their institutions’ long-term success?
Embedded finance is seen as vital to the institutions’ survival and success, with 99% of decision-makers affirming its importance. There is a unanimous belief that embracing these technologies is crucial for maintaining competitiveness and ensuring future growth.
Why do 60% of them consider it extremely important?
The 60% who regard embedded finance as extremely important recognize that it allows banks to offer integrated services that meet contemporary customer demands. This integration can streamline operations, enhance customer experiences, and open up new revenue streams.
What are some of the expectations community banks have from Embedded Finance partners?
Community banks expect their embedded finance partners to prioritize compliance while also offering cutting-edge technology solutions. This dual focus ensures that the banks can innovate within the confines of regulatory guidelines, minimizing risks while maximizing potential growth.
How does regulatory uncertainty impact their approach to Embedded Finance?
Regulatory uncertainty keeps compliance at the forefront of strategic planning, often dictating a cautious but proactive approach. While banks are eager to innovate, they also prioritize staying within legal boundaries to avoid potential pitfalls.
How confident are decision-makers in their current tech stacks?
Decision-makers demonstrate a significant level of confidence in their tech stacks, with many acknowledging their systems as capable of supporting both current and emerging technologies. This confidence is crucial as they navigate the complexities of modern financial services.
What percentage of them feel their tech infrastructure is modern and upgraded?
About 55% of decision-makers believe that their tech infrastructure is fully modernized and upgraded. This reflects a commitment to continuous improvement and adaptation, ensuring their systems are robust enough to handle the demands of embedded finance.
Why is real-time payment infrastructure considered critical for expansion by some decision-makers?
Real-time payment infrastructure is seen as a crucial element for expansion because it meets the immediacy that today’s consumers expect. Faster transaction times can enhance customer satisfaction and drive growth in both volume and scope of financial services offered.
How many decision-makers underscored its importance?
Around 40% of decision-makers emphasized the critical nature of real-time payment infrastructure for their expansion strategies, recognizing it as a cornerstone for future growth and competitive positioning.
How does Treasury Prime suggest community banks prepare for long-term growth using Embedded Finance?
Treasury Prime advises community banks to embrace embedded finance by continuously improving their tech stacks, ensuring robust regulatory compliance, and carefully selecting partners who align with their strategic goals. This approach helps lay a solid foundation for sustainable growth.
What role do regulatory compliance and tech stack improvement play in these strategies?
Regulatory compliance serves as a guiding principle that frames all strategic initiatives, while tech stack improvements enable agility and innovation. Together, they form a comprehensive strategy that ensures banks not only remain competitive but also secure and efficient in their operations.
What is your forecast for embedded finance in the future?
Looking ahead, embedded finance will likely become more integral to banking operations, advancing beyond a trend to a basic requirement for survival in the industry. As the environment continues to shift, those banks that innovate while maintaining compliance will lead the charge into the future of financial services.