ASA predicts a new wave of regulation, focus on customer choice to shake up the financial services industry next year
ASA, an embedded fintech solution that connects financial institutions with customer-facing fintechs in a secure, compliant and easy to implement marketplace, today shared trends expected to most significantly impact the financial services landscape next year.
The rise in embedded fintech. As we continue to face thinning margins, skyrocketing customer expectations, quickly evolving technology and an increasingly competitive marketplace, banks and credit unions must quickly determine how to retain relevance and prominence in customers’ and members’ financial lives.
In response, more financial institutions will embrace embedded fintech, extending their brand and presence into everything the customer does in ecommerce. To do so successfully, banks and credit unions will look to a collaborative banking model.
Collaborative banking allows institutions to connect with customer-facing fintechs via digital rails that anonymize and tokenize all customer data. This removes the regulatory risk traditionally associated with bank-fintech partnerships and enables unprecedented innovation.
An influx of fintech regulation. Keep an eye on the regulatory and compliance landscape. With recent challenges exposed in the Buy Now Pay Later (BNPL) space and Banking as a Service models, more will prioritize account holder permissioned, anonymized, secure data transactions to enable access while reducing risk. The narrowed compliance focus for those who have pursued Banking as a Service especially will be a complex task as the players face increased regulatory scrutiny. Many will find themselves looking at alternatives to gain market share and meet customer needs.
The increasing importance of customer choice. Open banking has demonstrated the critical imperative of putting the account holder in control of their data and finances. However, most of the control that has been granted today is largely one sided; the customer can choose what technology they want, but that choice almost always results with the account holder having to share data or open accounts outside of their financial institution. More emphasis will be placed on giving customers and members control over not only the technology they adopt, but which institution (and therefore the type and level of trust and service) backs it.
“Despite recent challenges, the financial services industry continues to be filled with opportunity and innovation. It’s time for financial institutions and fintechs to reconsider how they work together,” said Landon Glenn, CEO and founder of ASA. “Next year, we expect to see the rise of embedded fintech, backed by a collaborative banking model. This will help solve increasing compliance and risk challenges while empowering the customer with greater control and choice.”