Three winning go-to-market strategies for embedded finance

At Marqeta, we’re proud to work with many established businesses that are delivering unparalleled innovation in payments, and some are extending that success into financial services traditionally associated with banks. Because our business is rooted in innovation and we are focused primarily on client success, our team loves to dig in and help clients develop solutions that provide a truly differentiated customer experience. A big part of that is understanding who the customers are and what they want.

That’s one of the reasons we regularly engage research firms to conduct studies of market trends. We make it our business to intimately understand our clients’ market challenges and opportunities, and we provide insights on trends and possible implications.

Our research has found that there has been a recent shift in the relationship between consumers and their financial institutions which may present significant opportunities for new entrants. However, as some that have tested the market have found, it’s usually not as simple as it might seem. The most recent State of Consumer Money Movement Report, which surveyed 2,000 U.S. consumers as well as 1,000 from Australia, and 1,000 from the United Kingdom, found that about one in three (31%) U.S. consumers surveyed were thinking about changing banking providers. But thinking about it is a lot different than actually doing it. Below are three insights that might help you craft a compelling go-to-market strategy.

Rethink replacing the incumbent

If you’re intending to convince consumers to switch banks, it may be a harder task than you imagine. The vast majority of consumers are satisfied with their primary bank, with 81% of people surveyed globally stating that their primary banking provider offers all of the services that they want. Banking is a sticky business, and trying to get people to switch will be a costly proposition. Our survey found that more than half of consumers have never changed their primary banking provider. 

The good news for new entrants into the space is that you don’t need to replace the primary bank because a lot of people have multiple accounts. A GOBankingRates survey found that half of Americans use more than one bank, and our survey found that 26% of consumers who use a traditional financial institution as their primary bank, also have an account with a digital bank. So, you don’t need customers to dive in head first, you just need them to dip their toe in the water.

Build trust over time

A March 2023 survey from Morning Consult following reports of bank instability found that a solid majority of Americans still trust their bank. However, not every bank is perceived as being equally trustworthy. The Morning Consult survey showed that nearly 8-in-10 (78%) of national bank customers say they trust their bank, while 57% of digital bank customers say they trust their bank. Our survey found that 55% of respondents would not consider banking with a non-financial services company. Younger consumers were more open to it, while 76% of 51–65-year-olds said no way.

Since it appears that most consumers aren’t quite ready to fully commit to a digital bank or embrace the idea of banking with a non-financial services company yet, encouraging a test or trial run may make sense. Our survey found that relatively few digital bank customers (22%) store more than half of their money there. About a third (34%) store less than a quarter of their money in the account. This incremental approach gives you the opportunity to prove you are worthy of their trust.

How you’re different matters

We often talk with clients and prospects about creating differentiated financial offerings and banking experiences. In a competitive market with strong incumbents, what sets you apart is extremely important. You’ll need to have a wow factor to get attention. You’ll need to make a positive difference in the lives of your customers to have any chance of enticing them with your financial services offering. 

That being said, it should come as no surprise that when it comes to money, financial benefits are king. Our survey found that people considering moving to a digital bank are mostly attracted to the almighty dollar, with 25% pointing to cash incentives and 20% saying higher interest would be persuasive. Respondents also said more modern features (20%), a better app (17%) and more seamless money movement (15%) would get their attention.

The right partner

We offer these insights because we know you want to be a partner in your end customers’ financial lives and we want to help you be able to deliver to your customers. Our mission is to relentlessly drive innovation in a way that makes it possible for anyone to turn their vision for financial services into a reality that has all the ingredients needed to succeed. Our team is passionate about diving into client challenges and fully understanding market limitations and potential.