A Simple Guide for Credit Union Employees
Have you heard the term “embedded finance” and wondered what that meant? It is often used in a way that everyone should be able to know what it is when they hear it, and then there is “embedded banking” or other similar terms that are not the same. It might sound complex, but it’s a concept that can be easily understood and explained. Understanding embedded finance is essential for credit union employees to effectively communicate its benefits to members and stay ahead of the curve.
What is Embedded Finance?
In simple terms, embedded finance integrates financial services into non-financial products or services. It’s like adding a financial feature to something that isn’t primarily a financial product. For instance, a ride-sharing app offering in-app payments or a retail platform providing buy now, pay later options are examples of embedded finance.
Why is Embedded Finance Important?
- Enhanced Customer Experience: Embedded finance offers customers a seamless and convenient experience. Providing financial services directly within their preferred platforms eliminates the need for customers to switch between multiple apps or websites.
- Increased Customer Loyalty: Customers who can easily access financial services through their favorite platforms are likelier to remain loyal to those brands.
- New Revenue Streams: For credit unions, embedded finance can open up new revenue streams by partnering with businesses in other industries.
How Can Credit Unions Leverage Embedded Finance?
- Partnerships: Collaborate with businesses in industries like retail, e-commerce, and healthcare to offer your financial services through their platforms.
- API Integration: Utilize APIs (Application Programming Interfaces) to connect your systems with your partners, enabling seamless integration of financial services.
- Product Innovation: Develop innovative financial products that can be easily embedded into other platforms. For example, create a budgeting tool that can be integrated into a productivity app.
Example: A Credit Union Partners with a Gym Imagine a credit union partnering with a local gym. The credit union could offer a co-branded gym membership card with a built-in debit card. This would allow members to pay for their gym membership, purchase gym merchandise, and even pay for other expenses using the same card.
Embedded finance is a powerful trend that offers numerous benefits for credit unions and their members. By understanding this concept and exploring opportunities for partnerships and product innovation, credit unions can stay competitive and provide exceptional value to their customers. When it comes to signing new members or granting loans look to Oak Tree to have the documents for your credit union!
