Banks Tap FinTechs and Embedded Finance for Deposits

Traditional banks are increasingly leaning on FinTech partnerships to fuel their growth, a trend that directly impacts how consumer financing is funded and delivered at the point of sale. Recent earnings reports from major players like Fifth Third, The Bancorp, and Pathward show that these institutions are no longer just competitors to FinTechs; they are become the back-end engines for them. For a retailer, this means the 'Buy Now, Pay Later' (BNPL) or specialized lending program you offer is likely backed by a major regulated bank, even if the brand on the app is a startup. Fifth Third, for instance, reported that its embedded finance division reached $100 million in quarterly revenue. This shift is important for operators because it adds a layer of stability to the alternative financing market. When banks provide the underlying deposits and regulatory oversight, the financing tools you offer customers are less likely to disappear overnight due to market volatility. These partnerships are also allowing banks to lower their own costs, which can lead to more competitive rates or better approval odds for your customers. As banks move further into the 'Banking-as-a-Service' model, expect more seamless integrations between your checkout process and the financial institutions holding the money.

Source: PYMNTS

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