Are banks still necessary? The rise of embedded finance

The financial sector is experiencing a significant transformation with the advent of embedded finance. With upgraded technology and advanced fintech firms, it has become easier for businesses to integrate financial services into their offerings.

Nowadays, there are a plethora of fintech startups that offer quick, seamless, and trustworthy financial services to consumers. These fintech firms are now taking over the traditional banking sector with embedded finance services.

Embedded finance refers to the integration of financial services with non-financial services, such as e-commerce, ride-hailing apps, and other software services. The concept of embedded finance provides consumers with easy access to financial services, without leaving their preferred apps.

All over the world, various businesses are partnering with fintech startups to offer financial services to clients via their apps. These days, one can quickly get loan approvals, make payments, invest in stocks, or receive insurance services from within an app.

Therefore, with the growing popularity of embedded finance, some wonder if bank institutions are still necessary in today’s financial industry.

Despite the advancement of embedded finance, banks still play a critical role in the economy. Banks are essential for lending, funding, and investing in significant projects like infrastructure development and job creation.

Moreover, banks offer a wide range of services like mortgages, loans, investment management, and customer support that some fintech firms might not provide. Banks are also the most trusted custodians of money in society due to various factors, including well-established reputations, compliance with regulations governing the industry, and security features that assure customers about their funds’ safety.

In conclusion, embedded finance is undoubtedly transforming the financial industry, making financial services more accessible to users. However, banks still have important roles to play, especially when it comes to credit, fiduciary services, and infrastructure and lending. Hence, while fintech firms expand into the banking sector, bank institutions will continue to be relevant in the finance industry.