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Embeddable banking: Driving the sector towards financial inclusion

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According to the Accenture 2020 Global Banking Consumer Study, 50 percent of consumers currently interact with their bank through a mobile app or website at least once a week, compared with 32 percent two years ago.

Embeddable banking: Driving the sector towards financial inclusion
The rapidly growing digitization in India has allowed consumers to access their banking services anytime from any place. According to the Accenture 2020 Global Banking Consumer Study, 50 percent of consumers currently interact with their bank through a mobile app or website at least once a week, compared with 32 percent two years ago.
The study also found that the number of consumers owning neo bank accounts increased from 17 percent in 2018 to 23 percent in 2020.
However, there are several challenges for banks and fintech in implementing the processes. The low conversion and connectivity with the banks due to regulatory and risk compliance is one of such challenges. Whereas for banks, it sometimes becomes exacting to manage the high cost of APIs with other scalability issues. Hence, embeddable banking comes into play, wherein banks and fintech can collaborate to offer innovative financial services to the customers.
How is embeddable banking driving financial inclusion?
In the fast-paced world of technology, where consumers prefer everything to be at their fingertips, the growing importance of embeddable banking is in the spotlight. From EMIs on Amazon purchases, flight travel insurance on Indigo, and automated cab payments in Ola, consumers like their payments to be invisible. Banking technology companies are leading this shift.
According to a Fintech features report, the market value of embeddable banking is expected to grow from $3.2 trillion in 2020 to $7.2 trillion by 2030. An Embeddable Banking platform can enable Banks to provide APIs and SDKs to Fintechs while allowing Fintechs to embed banking products within their apps. This is further driving a significant proportion of financial inclusivity in the country as more and more banks have tied up with several fintech companies to expand and innovate their offerings.
● Single interface for payment
Instead of having multiple platforms to process a transaction, embeddable banking integrates the financial services software into a single platform, making it easier and convenient for customers to make payments online while undertaking any purchase activity. This encourages more consumers to become a part of the online payments ecosystem.
● Seamless payment experience
Embeddable banking fastens the payments process, reducing any friction to provide customers with a seamless payment experience.
● Increased number of tie-ups by companies
With the global integration of payment platforms into the company systems, more and more companies have enabled online as a mode of payment. Moreover, the constant offers on prepaid payments intrigue users to open a bank account and transact online through faster payment gateways like UPI and other wallets. This drives financial inclusion.
● Hyper-personalized services
Customers like being valued, and embeddable banking allows banks and companies to do the same. With flexibility in offerings and greater transparency, new banking technologies help instill customer loyalty. This, in turn, leads to more new customers and greater financial inclusion.
Conclusion
With more new technologies coming into play, it is fair to say that embeddable banking is the beginning of the revolution that the banking sector in India requires. Ease of access, convenience, and faster payments is what the customers of today demand, and banks and fintech are rapidly adjusting to those demands.
From what the banking sector in India was a few years ago to what we witness now, is proof that new banking technologies have significantly driven financial inclusion in the country. With more and more consumers switching to digital modes of payment and enjoying the services that embeddable banking provides.
The author, Murali Nair, is President of Banking at Zeta. The views expressed are personal
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