Essential Strategies To Future-Proof Your Financial Institution

As banks and credit unions move into a new technology era, they realize that their existing innovation cultures are broken. New fintech competitors are gaining market share. They are gaining deposits when traditional financial institutions are on balance losing deposits.

There’s a lot of discussion within the bank and credit union industries about embedded finance and embedded fintech as a technology strategy, but not enough understanding and urgency to appreciate it as a future-proof business strategy. One thing is clear however—the need to act quickly is essential as new competitors gain ground on traditional financial institutions’ customer base.

The focus has historically been placed around the innovation of products, then products became commoditized. The shift was then to innovate around service, then service became commoditized too. Now, once again, banks and credit unions have to innovate around products AND service where the two are at the center of the overall strategy and no longer on the periphery.

As a result, they now face existential challenges. The consumption of banking services is increasingly unbundled from the traditional financial services industry. New niche players in mortgage, student lending, small business, and payments have long exposed the slowness of traditional banks and credit unions to respond to rapidly changing customer expectations – at a monumental cost to those established financial institutions.

The race for relevancy is on. Financial institutions that act quickly and are open to exploring new strategies will put themselves in a better position for long-term success. Two of the most talked about strategies are Embedded Finance and Embedded Fintech. They are distinctly different business strategies that offer financial institutions exciting possibilities to reach new market segments and offer consumers more of what they want and need – at a faster pace than ever before. 

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