Uncovering value in embedded finance for banking & capital markets - Managing risks in the transition to integrated financial services

July 2023

Embedded finance presents a compelling set of possibilities for businesses to reach customers in new ways, build operational scale, and rethink how products and services are deployed. By offering financial services, platforms can deepen their relationship with customers and provide them with additional value beyond their core products. As is often the case with new opportunities, there are risks to consider.

As we have written about previously, success across the challenging assumptions to chart new growth — requires a major shift in mindset and capabilities. Our proprietary risk framework sets out five emerging areas for participants within financial ecosystems to consider, stretching beyond existing risks that are inherent to financial products. The five areas include interoperability, data containment, complex partnerships, vulnerable customers, and distributed risks. Forming an understanding of each of these is critical to managing emerging risks in a prudent and collaborative manner.