Embedded Banking and Automotive, Part II: The opportunity for Financial Services companies

My big questions right now are: Which companies will take the leap and create production solutions, and what can we expect to see in the first wave of new services in the market?

While I don’t have complete answers to these questions, I’ve got some ideas on potential solutions worth exploring for several UK banks and Fintech that I’m sharing in this follow-on piece.

But let me start by re-introducing the concept for those newer to it:

(Re)Introduction to New Opportunities in Embedded Banking The concept of embedded banking continues to redefine the intersection between financial services and daily consumer interactions, with the auto industry being a developing frontier. As detailed in our previous blog, this innovative paradigm isn’t a fleeting trend; it’s a significant shift towards integrating banking directly into vehicular environments. This transformation is being enabled by IoT, AI, and blockchain technology advancements, fostering a seamless fusion of mobility and financial services.

Leveraging Embedded Banking: A Strategic Focus for Financial Services For financial services professionals, especially those responsible for digital technology and new product innovation, the opportunities presented by embedded banking in the automotive sector are ripe for exploration. This space offers a platform for creating user-centric products and enhancing operational efficiencies through strategic partnerships with automotive companies.

1. NatWest Group: Driving financial innovation on wheels

NatWest could pioneer distinctive services in the embedded banking realm by partnering with automotive manufacturers to integrate banking services directly into vehicle dashboards. For example, NatWest might develop an app specifically for electric vehicles (EVs) that combines vehicle charging management with financial services. This app could allow users to pay for charging sessions automatically, apply for green loans directly from their vehicles, and access specialised financial advice on energy savings and investments in renewable technologies.

2. HSBC: Tailored automotive financial ecosystems

HSBC can build on its global presence and robust digital banking infrastructure to create a cross-border embedded banking service within vehicles. This could include a multi-currency digital wallet that allows international drivers to make and receive payments in different currencies without worrying about exchange rates or international fees. Such a wallet could be especially beneficial for businesses in the logistics and transportation sectors, streamlining financial operations across borders directly from their fleets.

3. Chase: Revolutionising car ownership and financing

Chase Bank could revolutionise how customers finance and own cars by using embedded banking solutions that personalise the car-buying experience. Imagine a scenario where potential buyers could receive real-time loan approvals as they test-drive vehicles. Chase could collaborate with automotive dealerships to embed these financial services within the car’s infotainment system, providing tailored loan options based on the driver’s credit profile and the vehicle’s specifications, all accessed through the dashboard.

4. Square: Transforming in-car payments

Square, known for simplifying payments, could innovate further by enabling small businesses to manage their operations directly from their vehicles. For instance, mobile companies such as food trucks or pop-up retail shops could use an integrated Square app on their vehicle’s system to manage sales, track inventory, and process payments directly at the point of sale, enhancing the agility of business operations.

5. PayPal: Seamless payment integrations for autonomous vehicles

As autonomous vehicles advance, PayPal could explore integrations that allow these vehicles to conduct transactions on behalf of the user. For instance, an autonomous vehicle could pay for its parking or toll fees using a PayPal account linked directly to the vehicle’s operating system. This system could also extend to in-car shopping experiences, where the vehicle orders and pays for groceries or takeout via voice commands.

6. American Express: Enhancing premium travel experiences

American Express could enhance its offerings by integrating premium financial services into luxury vehicles, focusing on the needs of affluent travellers. An embedded banking feature could include exclusive access to travel-related financing, such as immediate upgrades for travel accommodations or instant insurance cover for international car rentals, all manageable via the car's infotainment system. Moreover, AmEx could offer real-time notifications and rewards redemption for travel expenses directly through the vehicle, adding a layer of convenience and luxury to the driving experience.

7. Barclays: Empowering young drivers and families

Barclays could develop embedded banking solutions targeted at young drivers and families, emphasizing safety and financial education. By integrating tools that monitor driving habits with personalised financial advice and savings goals, Barclays could help young drivers understand the cost implications of vehicle maintenance, insurance, and fuel. Additionally, family-oriented services could include budgeting tools for family road trips and automated savings for vehicle-related emergencies, all accessible through the family car’s dashboard.

8. Citigroup: Streamlining fleet management financials

Citigroup could cater to corporate clients by offering embedded banking services tailored for fleet management. These services could include integrated payment solutions for fuel, tolls, and maintenance alongside detailed financial reporting tools directly accessible from fleet vehicles. Using data analytics, Citigroup could help businesses optimise operational costs and offer customised financing packages for fleet expansions or upgrades.

9. Fidelity: Investment services on the go

Fidelity Investments could leverage embedded banking to provide real-time investment services to clients directly from their vehicles. As clients commute, they could receive updates on their portfolio, make trades, or consult with their financial advisors through secure video conferencing integrated into their car’s systems. This service would especially appeal to busy professionals who need to manage their investments efficiently without compromising their mobility.

10. Venmo: Social payments for carpooling and ride-sharing

Venmo could introduce features catering to the growing carpooling and ride-sharing trend. By embedding its services into vehicles, Venmo could facilitate easy cost splitting among passengers for fuel, tolls, or even shared vehicle leasing. Such features would not only enhance convenience but also encourage environmentally friendly practices by making carpooling financially more straightforward and transparent.

11. Goldman Sachs: Wealth management and advisory services

Goldman Sachs could extend its wealth management services to the automotive sector by offering in-vehicle financial advisory. While on the go, clients could interact with AI-driven financial advisors that offer customised investment advice based on real-time financial markets and the individual's portfolio performance. This could also integrate with Goldman’s consumer banking brand, Marcus, providing everyday financial management in an accessible, mobile format.

12. Nutmeg: Tailored financial guidance in your car

Nutmeg could utilise embedded banking to deliver personalised investment insights directly through the vehicle’s infotainment systems. While on the move, drivers could check the performance of their portfolios, receive tailored investment advice, or adjust their investment strategies via an intuitive interface. This service would be particularly beneficial for those looking to optimise their time by managing financial investments during their commute, aligning with the needs of busy professionals who prefer seamlessly integrating their financial management into their daily routines.

13. Revolut: Dynamic currency conversion for international drivers

Revolut, known for its innovative currency exchange services, could create a dynamic currency conversion feature for vehicles, which would be particularly beneficial for international or business travellers. This service would automatically convert fuel, toll, and parking payments into the user's home currency at the point of transaction, using real-time exchange rates, all manageable through the car’s dashboard system.

14. Monzo: Integrated budgeting tools for drivers

Monzo could leverage its popular budgeting tools by integrating them into vehicle systems, allowing drivers to manage their transportation spending more effectively. This could include setting monthly budgets for fuel, maintenance, and other car-related expenses, with notifications and insights provided directly through the vehicle's interface to help users stay within their financial goals.

In the coming year, the convergence of financial services and automotive technologies presents significant opportunities for growth and innovation. It’s essential for leaders in the financial sector to develop and implement integrative solutions, establishing partnerships that effectively combine mobility and financial operations. By adopting embedded banking, financial institutions such as NatWest, HSBC, Chase, Square, PayPal and others will be able to improve customer experiences, streamline operations, and generate new revenue streams.

At Futurice, we’re in the unique position of having first-hand experience in this space and strategic partnerships with some of Europe's top OEMs. This combination means we're well-equipped to pioneer advancements in embedded banking, potentially setting new standards for functionality and user engagement in the automotive sector.