Trend #1: The rise of embedded finance

  • Embedded finance has emerged as a critical trend, allowing non-financial players to seamlessly integrate financial services into their offerings. The flexibility provided by modular BaaS platforms, exemplified by Treezor, has revolutionized how companies – from startups to multinational enterprises – cater to diverse and complex needs, spanning employee benefits, corporate mobility, travel and digital banking.

Trend #2: Regulatory changes

  • Over the past decade, European directives – notably PSD2 – have reshaped legislation to boost competition in the payments industry. This has led to the rise of Electronic Money Institutions (EMIs) and Payment Institutions (PIs), handling substantial financial flows. However, an assertive stance from regulators in 2022 and 2023 has increased compliance standards. Entities prioritizing compliance and security are positioned for long-term survival. However, this implies substantial financial and human investments and poses a challenge many current participants in the embedded finance landscape may need help to meet.

Trends #3: AML-CFT Prioritization and reinforcement 

  • The fight against money laundering and terrorism financing is essential, and regulatory requirements, while potentially tedious, signify the reliability and robustness of BaaS solutions. Treezor, as a regulated Electronic Money Institution, has fortified its AML-CFT control framework. Its acquisition by Societe Generale has provided further access to valuable resources, enabling it to streamline regulatory requirements and verification processes with cutting-edge AI-based platforms.

Trend #4: Technological surge and interoperability

  • The surge in new technologies, including the prevalence of smartphones, has driven the adoption of embedded finance. The key strength lies in the interoperability of solutions, facilitating seamless integration into existing systems like mobile applications. Minimizing redirects and interruptions enhances the customer journey, potentially leading to higher conversion rates and improved customer retention.

Trend #5: Digital transformation impact

  • Companies embracing digital transformation recognize the imperative of integrating financial elements into the customer journey for sustained growth. Deliberate analysis of banking data not only improves the range of services but also paves the way for new solutions. Offering embedded financial products like SEPA and card payments enhances brand prominence and reinforces client trust.

As we navigate the ever-evolving landscape of financial services, the trends shaping the payment sector are emblematic of a dynamic industry. Fueled by regulatory shifts, technological advancements and a commitment to compliance, BaaS and embedded finance players like Treezor foster competition, empower consumers with control over their data and align seamlessly with the evolving regulatory framework. The future of the payment sector is set to be driven by innovation and a strong customer-centric approach.

Read the original version of this article in Italian here.

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