The Evolution of Data Sharing Part 2: Unlocking the True Value of Embedded Finance Beyond FDX

The transformative potential of FDX-powered embedded finance blends secure data sharing with seamless customer experiences. The synergy between APIs and evolving customer expectations reshapes both fintech and banking landscapes, promising strategic partnerships, amplified revenue streams, and fortified risk management. 

In our first part of the Evolution of Data Sharing series, we took a look back at the driving forces that led to data sharing standards. Here we dive into the value that embedded finance offers to banks and their customers, and how standard APIs are no longer enough to deliver competitive value to end-users. The ideal embedded finance solution to meet these needs would include an open architecture and direct integrations, empowering banks and delivering effortless connectivity for business customers, paving the way for a secure, seamless, and customer-centric financial future.

Financial institutions (FIs) strive for an ideal wherein secure, controlled, and accessible data sharing prevails. Imagine a world where these elements seamlessly converge to create an environment that satisfies customers’ cravings for reliability and connectivity.

In this ideal scenario, FIs want a landscape where APIs ensure flawless interactions and frictionless data sharing. Their ultimate desire? A seamless experience where customers stay within the systems that they use to conduct their business on a daily basis. For customers navigating through fintech apps or managing accounts in accounting systems, the essence of data sharing should be effortless and unobtrusive. Thus, the primary goal is to ensure data sharing remains unbroken, fulfilling customers’ goals of a hassle-free and continuous experience.

With this in place, businesses could effortlessly access the data essential to fuel their unique models and cater to specific needs. This vision positively influences three core areas: customer satisfaction, risk management, and revenue generation.

Customer Satisfaction

Today’s business customers highly value the convenience of staying within their preferred native apps. A business navigating vendor bills and reconciling ledgers in NetSuite  wants to avoid the need to toggle between platforms to achieve this. Their expectation is simple: everything should be accessible and manageable within their chosen app.

From the bank’s perspective, this translates to providing end-customers comprehensive access to all their banking relationships and accounts. It’s no longer just about checking balances; customers seek visibility into commercial credit card accounts and loan data in one place.

This shift in business expectations redefines the landscape for both fintech vendors and banking institutions. For fintech vendors, the emphasis is on embedding services seamlessly into the platforms customers already use, ensuring a cohesive experience. Meanwhile, banks are adapting to offer a comprehensive suite of services accessible within these embedded ecosystems, meeting customers where they are and providing a more holistic view of their financial lives.

Risk Management

Within this integrated financial ecosystem, maintaining synchronization with centralized bank entitlements becomes pivotal. Ensuring that entitlements granted by banks for specific products or services remain in sync with the embedded finance platforms is crucial. This alignment guarantees that customers experience a cohesive and secure interaction between their preferred platforms and banking services, mitigating potential risks, and ensuring compliance.

Revenue Generation

The convergence of embedded finance and secure data sharing isn’t just about seamless customer experiences; it’s also a gateway to new revenue streams. By leveraging data sharing capabilities inherent in embedded finance, banks can offer value-added services, opening avenues for additional fee revenue. Moreover, the collaborative potential between banks and platform providers fosters strategic partnerships. Sharing data enables a deeper relationship, resulting in mutual benefits and expanded opportunities for both parties.

The Ideal Embedded Finance Solution

In drawing a picture of the ideal embedded finance solution, we would include an open finance architecture that drives value-driven integration, transforming financial interactions and fortifying relationships between FIs and their customers.

• Open Finance Solution for Value-Driven Integration
  The ideal embedded finance solution would serve as a catalyst for FIs, elevating their competitive edge and fostering differentiation within Treasury Management and Corporate Banking divisions. By embracing this solution, FIs unveil a more expansive exposure to their services through direct marketing integrated into software packages.
• Empowering Banks with Enhanced Capabilities
  The ideal solution would deliver a robust framework facilitating product entitlement, seamless onboarding, and comprehensive reporting structures for FIs. It would empower them to efficiently track, provision, and bill bank customers, streamlining internal processes and enhancing customer relationship management.
• Seamless Integration for Business Banking Customers
  At its core, the ideal embedded finance solution champions accessibility and convenience. It would enable business banking customers to effortlessly access their bank data and execute payment functions directly within their preferred applications. This seamless integration goes beyond conventional banking experiences, elevating usability and transforming the daily workflows of finance personnel engaged in reconciliation and AP payment tasks.

A Transformative Shift

This collaborative synergy between embedded finance and robust data sharing practices signifies a transformative shift in the financial landscape. It’s an era where banking functionalities merge effortlessly with everyday platforms, delivering a more connected and efficient financial future.

As technology continues to evolve, this integration ensures that platform providers have access to the necessary financial data, fueling innovation and catering to the evolving needs of users. The journey ahead promises a continued focus on a secure, seamless, and integrated financial experience—prioritizing customer satisfaction, risk mitigation, and revenue generation.

Enabling FDX APIs may get you to par with industry standards and upcoming consumer regulation, but it doesn’t unlock the true value of embedded finance that can only be achieved by extending the connections further into the third-party applications. Ninth Wave has done that for our clients, giving them the extra lift with our off-the-shelf embedded integrations to connect quickly and seamlessly to leading applications such as NetSuite, Quickbooks, Sage, and more.

Ninth Wave Direct, our Embedded Finance solution, is tailored for financial institutions seeking to offer streamlined operations and enhanced customer value, and can revolutionize your customers’ financial functionalities within their existing software, enhancing cash flow, transparency, and reporting.

While FDX may be the growing US standard of financial data sharing, taking the next step to further integrate into third-party applications is what will really bring value to your customers and a competitive advantage to your financial institution.

In our next installment in this blog series, we’ll explore building the ideal state of open finance and what that future looks like for financial data sharing in the evolving world of standards, specifications, and regulations.

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