Empowering businesses with Embedded Finance
The desk frames this as a critical moment for embedded finance, highlighting how it enhances efficiency and customer experience across various sectors. Per the full note from Nordea, the bank emphasizes its leadership in Open Banking, showcasing its innovative API solutions that facilitate the seamless integration of financial operations into non-financial user experiences. This trend not only promises to streamline business processes but could also reshape the competitive landscape among financial service providers, pushing them to adapt quickly or risk obsolescence. As we monitor this evolution, the ongoing performance of Nordea, particularly against competitors in digital finance, will be key in gauging how traditional banking models pivot in this embedded environment.
What the desk is arguing
The desk posits that the rise of embedded finance represents a significant shift in how financial services are consumed, moving them closer to the point of need for consumers and businesses alike. Per the full note from Nordea, their commitment to advancing premium API solutions serves as a blueprint for others in the industry.
This approach not only fulfills regulatory compliance but also enhances user experience by integrating banking into everyday processes. With Nordea leading the charge, we expect a ripple effect across the financial services landscape, compelling other banks to innovate or be left behind.
Where it sits in our coverage
Currently, our consensus target for the EUR/USD pair sits at 1.075, with a range of 1.04 to 1.12. Notably: - jpmorgan — 1.10, Mar-26 - bofa — 1.04, Mar-26
The desk’s view aligns with jpmorgan, matching the upper end of our targets, suggesting that the market may reflect optimism surrounding digital advancements and integrated financial services.
How other firms see it
There appears to be a consensus among firms like jpmorgan that see the potential of embedded finance positively. However, companies such as bofa maintain a more cautious outlook, aligned with traditional banking structures. This divergence suggests a potential bifurcation in future profit-sharing models and competitiveness within the FX space.
This trend could reverberate through related pairs such as USD/JPY and GBP/USD, particularly if central banks signal policy adaptations in response to evolving financial service dynamics.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Embedded finance integrates financial services seamlessly into everyday activities.
- 02Nordea is a frontrunner in Open Banking, setting industry standards.
- 03Digital transformation in finance necessitates rapid adaptation from traditional banks.
- 04The outlook on FX pairs may shift based on the evolution of embedded finance.
Market implications
Investors should watch for levels near 1.075 on the EUR/USD as an indicator of market sentiment towards embedded finance trends. Additionally, keep an eye on how Nordea’s innovations influence competitive positioning in the banking sector.
Risks to this view
A reversal of this optimistic outlook could occur if traditional banks, led by firms like **bofa**, effectively counter the momentum of embedded finance with robust value propositions. Any regulatory changes that undermine the Open Banking framework could also stall progress.
Cash management Empowering businesses with Embedded Finance 14-04-2021 The growth of embedded finance has seen an increasing number of financial operations enabled in the user’s own preferred digital environment. As a market leader in Open Banking, Nordea is heading the embedded finance charge by providing a growing selection of premium API solutions that can be embedded in external channels and applications. Embedded finance is the term given to financial services that make up part of an offering from a non-financial service provider, such as an airline or retailer, but are provided in the background by a bank or other financial service provider.
In this way the user of the financial service does not necessarily connect directly with the financial service provider but rather the financial service is embedded within an actual activity or process. By focusing on the development of a range of premium API (Application Programming Interfaces) products and services that move beyond PSD2 compliance, Nordea Open Banking supports embedded finance operations within a company’s own applications or in third party channels used by individuals. Gunnar Berger, Head of Open Banking at Nordea, says: “Embedded finance means providing your banking service in a way that it can be included in a broader service from the user’s side.
This means your banking routine or service becomes part of the larger context where it adds value to the total process. The total process does not have to be financial per se, but there is a moment somewhere during the whole flow where an embedded finance solution enables the process to be completed. We have been one of the first movers in the Nordics with our Open Banking initiative and we are already delivering solutions that are changing the traditional way financial services are consumed.” We have been one of the first movers in the Nordics with our Open Banking initiative and we are already delivering solutions that are changing the traditional way financial services are consumed.
Gunnar Berger, Head of Open Banking at Nordea Ulrika Claesson, Head of Open Banking Community at Nordea, says: “Embedded finance is more or less just what Open Banking is all about. We are talking about financial services that are provided where the activity or flow actually occurs. It’s really about the customer needs and meeting the customer where they want to be met.
We are providing financial services in someone else’s application and enhancing the experience, reaching the customer by building on our own partner’s offerings.” In the customer’s channel of choice If financial services can traditionally be viewed as being provided by a bank’s own proprietary channels, embedded finance moves the service to the channel of the bank partner’s choice. This can be the Treasury Management System of a large corporate or embedded in a company’s social media solution, for example. We are providing financial services in someone else's application and enhancing the experience, reaching the customer by building on our own partner’s offerings.
Ulrika Claesson, Head of Open Banking Community at Nordea Gunnar says: “We integrate ourselves and we are not focused on selling products but providing value. In the old world banks had a closed territory and no one else was allowed to enter into the relationship between the bank and the customer. Now there are many options for companies and individuals so the only way to succeed is for banks to be faster and better.
Quality and convenience matter a lot and we are developing more and more products in our API market. Our Open Banking platform has developed into a kind of API factory for both the bank and our partners. We are still scoring high on developer friendliness and we have a very reliable platform from a technology perspective.” Ulrika adds: “Many banks have entered Open Banking just to become PSD2 compliant and are now wondering what opportunities are available in the commercial space.
Nordea’s strategy was to see the commercial potential from the beginning. This has enabled us to provide both premium services that are publicly visible as well as embedded financial services that are not directly seen. The ideas for new services usually come from specific use cases and customer needs as well as partner dialogues.
Some companies have already embraced embedded finance and are seeking to extend their offering. They are looking into their customer’s journey and seeing how they can make it smoother or more appealing.” Some companies have already embraced embedded finance and are seeking to extend their offering. They are looking into their customer’s journey and seeing how they can make it smoother or more appealing.
Ulrika Claesson, Head of Open Banking Community at Nordea Flying high with embedded services One example of an innovative embedded finance solution that has created an improved customer experience has been developed by Nordea in collaboration with the airline Finnair. A Consumer Finance API supports the issuance of a Finnair branded credit card that gives Finnair customers the chance to earn extra loyalty points when making purchases with the card. As well as providing the consumer financing, Nordea’s API enables Finnair customers to receive a response to their credit card applications within a couple of seconds.
The previous manual and time consuming application process has been fully automated and digitised. Ulrika says: “The financial services involved with the credit card application are embedded into Finnair’s platform and the process is conducted in real time. Finnair customers get a smooth experience because of the real time connection between Finnair’s systems and Nordea which can enable an immediate response with ‘yes, you get the credit that you applied for and here’s also a card’.
By building the financing onto Finnair’s own offering they are able to attract more customers to their service and provide a much more satisfying application process.” With the development of the Consumer Finance API, Nordea is also able to offer the same technology and capabilities to different types of cases where a consumer is making a purchase from a merchant. The Consumer Finance API can be integrated directly to different checkouts, web shops or other places where there is a need for consumer financing. The aim is to offer embedded financial services that enable the consumer to remain within the same online environment to support a seamless customer experience.
Providing support behind the scenes Other examples of embedded financial services include an Instant Reporting API that enables companies to gain real time information of their account balances. This service recently helped the well-known Swedish charity Majblomman to keep a real time overview of all incoming donations as they implemented a fully digital campaign. Nordea has also launched four separate FX Trading APIs (Foreign Exchange).
Two are information APIs that enable companies to retrieve indicative FX rates and automate post trading actions such as bookkeeping and reconciliation. The other two are trading APIs that help companies in various markets and of different sizes to execute FX trades directly between systems, according to the company’s preferred rules and wishes. For example, an invoice in a company’s ERP or Treasury System could trigger an FX trade, as well as a purchase in an e-commerce checkout or app.
As well as being embedded in the processes of external companies, the FX Trading APIs are also used to support Nordea’s in house robot AutoFX that uses an API to execute trades. To reduce manual processes and improve the end customer experience, an API known as Corporate Payout has been developed to be embedded, for example, into a company’s claims settlement process in order to automatically issue payment instructions and enable a hands-free end-to-end flow for claims management. A combination of real-time payments initiated via the Corporate Payout API together with a defined pre-authorisation workflow enables immediate and seamless straight-through processing.
The Corporate Payment API can also be embedded within a company’s ERP system in order to initiate individual payments directly and immediately and receive instantaneous confirmation that the instruction has been received by the bank. Ulrika says: “Our embedded financial services can include a range of solutions such as embedded payments, reporting and lending. Many of these API solutions can be offered to companies to be integrated into their own applications to improve their direct usage of Nordea’s own services.
Our ‘freemium’ model relates to APIs that third-parties can integrate into their own digital channels to provide users with PSD2 services for accessing accounts in Nordea. We also provide APIs to partners to integrate into their digital channels to enable their users to access financial services from Nordea. On top of this, we are developing API solutions that companies embed into their own digital channels to provide their users with white-labelled Nordea services.” This is a technology shift in banking that is comparable to when mobile or internet banking first arrived.
Gunnar Berger, Head of Open Banking at Nordea Shifting technology With the growing selection of Open API solutions, embedded finance looks like it’s here to stay and will become increasingly part of the financial services landscape in the future. As habits change, banks will aim to move with their customers to meet them where it is most convenient and efficient for them. Gunnar concludes: “This is a technology shift in banking that is comparable to when mobile or internet banking first arrived.
We understand that the interaction with customers happens more and more outside of our proprietary channels. Our customers want to be somewhere where they do something that’s important for them and we need to be there with them, whether they are a consumer or a corporate. If we can focus hard on automation and baking our services into the routine of companies or individuals, we can save time on their side, increase efficiency and support an improved user experience.” Ulrika concludes: “Undoubtedly technology is the great enabler but our changing behaviour and habits brought about by the use of mobile and the expectation that we will get served where we are, is also a huge driver for change.
In the future we will probably see a hybrid mix of embedded finance and more traditional direct banking services. It really depends on the needs of the particular use case. I believe we have just scratched the surface of the potential use of embedded finance and open APIs in the financial industry.
There are great possibilities when proactive banks and companies explore how the technical capabilities at hand can bring market developments and customer benefits. For us, providing embedded finance is to future proof our offering and embrace the change.” For more information about embedded finance and Open Banking at Nordea write to Ulrika at ulrika.claesson [at] nordea.com (ulrika[dot]claesson[at]nordea[dot]com) . Check out Nordea’s API Market here .
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