The increase in built -in finances is a direct response to what consumers have been demanding for years: simplicity and speed. With the appearance of the iPhone and the explosion of web services, a latest standard appeared – the ability to access and pay for almost all the things from one device.
Set finance is a natural evolution of this variation that meets users exactly where they are, and turns day by day platforms into financial ecosystems. It has already evolved from area of interest innovation to a fundamental pillar in the digital economy – especially in the case of startups. Now it is not only about payments or banking integration, but also a re -image of all business models and creating latest streams of revenues that didn’t exist before.
However, in the case of traditional banks it is difficult to maintain up with this trend. Why? What do consumers really expect?
What is adoption?
The heart of an explosive increase in the built -in finance is one easy factor: convenience. If you come to the era before the numbers, paying bills meant standing in the line, dealing with documents and visiting physical branches. It was slow and frustrating. The digital revolution has modified all of it. Now consumers need to pay, borrow, invest and insure directly in the applications they already use. You knock the screen and it’s ready – this is a reference point.
Numbers say volumes. According to Bain & Co. AND Bain CapitalIN Revenues from built -in financial platforms and infrastructure suppliers are expected to extend from $ 21 billion in 2021 to $ 51 billion in 2026. Transaction volume? It forecasts to achieve $ 7 trillion, which is 10% of all financial transactions in the USA.
The next most important driver is a technological jump. Ten years ago, integration with banks required huge IT teams and multimonthort road maps. Today, startups can hook up with financial services through open API interfaces during the day, because there are platforms similar to Stripe AND Revolut. These tools significantly reduce each the cost and complexity of the integration of monetary functions.
But perhaps the biggest motivation? Income. In the case of non-financial firms, finance is built-in greater than just a feature with added value-it is also a key monetization mechanism. Platforms can now get a percentage of each transaction, while increasing the viscosity of shoppers. To take Shopify: Almost half of his revenues do not come from subscription, but from financial services similar to payments and loans. This is a victory in which startups willingly use.
Do traditional banks maintain?
Here the photo becomes more complicated. Most traditional banks still operate in older systems from the Eighties. Migration to modern API -friendly infrastructure is not only extremely expensive, but also to painful. Imagine that you just have 30,000 employees or even 10,000, and it’s good to migrate all the things on a latest platform. In addition, the entire database infrastructure is hereditary, your processes are heritage – it is difficult to all.
To compete, some, say, banks “level 1” pour billions to the implementation of an open API interface. But many “level 2” and long -lasting banks simply lag behind. Leadership is often aging, regulatory requirements are stiff, and cyber security standards (how much is to follow) hinders innovation. Rather a lot still requires personal visits to get easy tasks or launch basic services in outdated systems, similar to voice trade. This makes them fight to maintain pace with fintech players who offer a smoother and smarter experience due to the project.
Changing customer expectations
It is not enough to supply a check account or bank card. Users now need “great applications” – platforms that mix many financial (and non -financial) services in one seamless interface. Thanks to modern digital banks, you’ll be able to clearly see where your money is, how much you have earned or lost, and exact currencies have been used. Then you log in to a traditional bank (this is an example of a real) and inform you: “We will contact you with the FX rate for transforming dollars into euro.” You are waiting for E -Mail and it appears that evidently you entered the time machine.
Banks do not necessarily have to build all the things themselves; Partnerships are a real path. But the key is to be sure that all experience will happen in one application. So those that manage to create a market in their application or on the website, the rest won’t lose each market share and revenues.