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Study: Two-thirds of banks rely on embedded finance

Vienna, June 09, 2022

The banks seem to have woken up: They want to get involved in “buy now, pay later”, and subscriptions. 85 percent of institutes consider the interface to the customer to be too important to lose. A new study by Credi2, for which 120 managers from German banks were interviewed provides insights into banks and their perception of embedded finance.

Providers such as Klarna, Afterpay and Paypal have been dominating the embedded finance market for several years. Integrating financial services into products and services from non-banks seemed to be a no-go for traditional institutes. “The majority of banks have abandoned the idea of selling financial services only in the traditional banking sector. They are following their customers to the point of sale,” says Christian C. Waldheim, co-CEO of fintech Credi2. 63 percent of decision-makers are convinced that embedded finance suits their bank’s business model. Only one fifth does not consider integrated financial services to be economically attractive enough.

Winning over generation Y and Z with embedded finance

There are many reasons why banks have so far been reluctant to engage in embedded finance. Every second decision-maker self-critically admits to having underestimated the potential. At the same time, there is a lack of resources such as staff and IT. Furthermore, every third institute lacks the necessary know-how and the implementation is considered to be complex.

Nevertheless, banks know that they have to meet consumers’ requests for flexible payment methods. 62 percent want to win over new and especially young customers of the generation Y and Z with embedded finance offers. Around every second person hopes for additional sources of income and cross-selling potential.

White label solutions for a quick market entry

Current projects should follow as quickly as possible: 89 percent of decision-makers surveyed do not want to waste any more time in order to benefit from the enormous growth potential. “And their chances are good. Because the embedded finance market is currently developing with great dynamic and a large number of different offers. There is still room for banks,” says Waldheim. Instead of developing new products themselves, many banks turn to external service providers for support. With white-label solutions, which the specialists seamlessly adapt to existing IT structures, banks can be on the market with an embedded finance product within a few weeks.

Credi2 specialises in embedded finance solutions for ‘buy now, pay later’ and subscriptions. The fintech enables banks, merchants and OEMs to offer modern sales financing solutions via the Credi2 platform. Customers include Volkswagen Bank, Raiffeisen Bank International and Apple. Credi2 has worked with these companies to launch innovative and highly successful payment solutions in a short period of time.  

The Vienna-based scale-up was founded in 2015 by Daniel Strieder, Michael Handler and Jörg Skornschek. In addition to the founding trio, the management team also includes Christian C. Waldheim and Jennifer Isabella Schimanko. Credi2 is a fast-growing fintech currently employing more than 90 people from all over Europe.