Every industry goes through a cycle of disruption when new channels of engagement emerge. Amazon introduced eCommerce to the masses and upended the retail industry forever, while television, film and recorded music were each transformed by the advent of streaming services.
The financial services industry is now on the cusp of a similar cycle of disruption that is already transforming how consumers access capital to fund everything from exercise bikes to commercial equipment: embedded finance. Trust is shifting from incumbent financial institutions to innovative players and mechanisms like marketplace lenders and embedded finance, that successfully break down traditional barriers to obtaining funding. According to one survey, more than 60% of consumers would use a financial service from an e-commerce provider. Yet, there’s opportunity here for banks and credit unions, as well. New regulations, advances in open banking and the arrival of Banking as a Service (BaaS) all open the door for traditional financial institutions to take leading roles in embedded finance.
Embedded finance is positioned to become the number one distribution channel for financial services within the next ten to twenty years, which means the time to start preparing for the revolution is now.