Embedded Finance vs Open Banking: What's the Better Build?

Cross River

February 1, 2024

3 min read

In a recent webinar, Cross River’s Head of Product Strategy, Luca Cosentino, joined Trustly’s Head of Merchant Product & Network, Ken Kruszka, in an insightful conversation about open banking vs. embedded finance and the implications they can have for customers. Check out this video for all the highlights from their conversation.

Here are some quick highlights that delve into real-world applications for open banking and embedded finance, the future of financial innovation, and more:

  1. Embedded finance vs. open banking: Open banking liberates vast bank data, enabling new features and use cases. Embedded finance uses this data to enhance consumer experiences.

  2. Real-world implementation: Companies like Uber, Lyft, and Starbucks integrate finance seamlessly into consumer experiences. WeChat has become an all-encompassing platform for various transactions, signaling a future of integrated finance. 

  3. Trustly's role in open banking: Trustly pioneers open banking in the US, focusing on redefining payment speed, simplicity, and security. Trustly foresee regulatory clarity sparking a surge in financial service innovations. 

  4. Guidance for engineers and product teams: Trust in financial services is paramount. Understanding consumer financial sentiments is essential for achieving goals in open banking and delivering superior user experiences. 

  5. North America is learning from Europe: Recognizing a 15-year lag behind Europe in open banking, North America is now learning from Europe's successes and failures. This has promoted North America to prioritize fraud prevention in its open banking strategies, contrasting Europe's central regulation-driven system with its market-driven approach. 

  6. The importance of precise industry terminology: Clear language enhances understanding and collaboration. The fintech sector's evolution into more specific terms like insurtech, proptech and regtech exemplifies this need for precision. 

  7. Impact of Dodd-Frank regulation on embedded finance: Open banking will balance data access with the responsibility to protect and indemnify data usage, preventing an unregulated environment. 

  8. The importance of partnerships like the one between Trustly and Cross River: Before partnerships, companies had to independently establish their own bank sponsorship relationship. Partnerships like the one between Trustly and Cross River streamline compliance and data sharing, freeing companies to innovate in embedded finance. 

  9. Trustly's solution for multi-bank connectivity: Trustly's API provides a unified point for connecting with multiple banks globally, facilitating the creation of integrated consumer experiences.

  10. Considerations for embedded finance product managers: Understanding consumer needs and the complexities of financial systems is crucial for building effective embedded finance strategies.

  11. The future of open banking and embedded finance: The future holds immense potential for innovation, offering opportunities for creators to build groundbreaking solutions. 

  12. Predicting the next big industry for embedded finance: Like the internet's evolution, open banking and embedded finance are at a crucial point for expansive growth and innovation across industries. 

 Watch the full recording of the Cross River x Trustly webinar here.