By Abbie Rodriguez, Senior Vice President Lender Experience for TruStageTM
The term embedded finance gets thrown around a lot. But what does it really mean? A simple definition might look something like this: the opportunity to integrate financial products and services right into the customer experience, at the point of need.
In reality, it’s not a new concept; embedded customer experiences have become the norm for consumers. For example, if a customer is shopping for a new sofa or fridge, they’re going to be offered financing for that product at the point of sale.
Today, however, advancement in technology vastly improves how embedded finance can be applied to payments, lending and insurance. As we continue to innovate, these use cases will keep evolving in terms of how we think about those financial products and services, and the ability to expand access for consumers and drive convenience.
How does embedded finance help meet consumer needs?
As technology continues to change the way consumers engage with brands, consumer expectations for ease and convenience are front and center.
Credit unions have always put member service at the forefront. The question now is how do we preserve that level of service while meeting the expectations for ease and convenience? Embedded finance gives consumers the ability to access credit unions’ products and services at the moment of need. This starts with really understanding the consumer journey — where they’re shopping, what their needs are and what capabilities credit unions need to insert at the right place and time in that journey.
Looking at the consumer experience holistically, it’s easy to see how credit unions themselves play the role of a platform that consumers are spending time on. Credit unions should consider leveraging this opportunity to embed products and services that are meaningful to consumers.
How can credit unions start providing the embedded experience members expect?
The best way for credit unions to get involved is to just get started. Leverage the member data and insights you have now to determine where your members’ transactions are happening. This information can help you understand how to embed your products where members need them.
Remember that your credit union is an important platform where your members engage with you, sometimes on a weekly or daily basis as they check their accounts. Credit unions should consider capitalizing on this member engagement by optimizing their own digital storefront so their members can gain access to products and services conveniently. Get creative and figure out ways to leverage those moments to embed relevant offers that meet their needs.
Credit unions heading into 2024 should consider prioritizing their institutions’ embedded finance capabilities, if they aren’t already. The key is to just get started. Leverage your existing member data for insights into opportunities and consider working with fintech companies to enable these capabilities. Meeting consumers where they are with your products and services will be critical to remain relevant as consumer expectation for this level of convenience continues to grow.