Banking is facing emerging competition from AI-native platforms that tailor to individual consumer needs. At the fullest extent of their powers, these AI solutions could guide every financial decision a customer makes. 

Non-banks, including fintechs, are turning into de facto financial hubs by embedding payments, lending, and savings directly into the experiences people use every day. According to the World Economic Forum “the financial system of the future won’t be built in banks — it’ll be embedded in the apps, platforms, and services people already use.” Embedded finance is expected to reach $7.2 trillion in value by 2030, according to a joint report by Dealroom and ABN AMRO Ventures.  

AI overlays and fintech companies are rapidly influencing customers’ decisions about whether to spend, save, borrow, or pay down debt. If a customer receives a clear, personalized nudge in a budgeting app, wallet, or AI assistant, it’s safe to say they may start to gravitate towards said apps rather than their bank.

Research in embedded finance shows that nearly two-thirds of consumers admit they would trust AI to look after their financial interests, especially when it simplifies complex decisions. That’s exactly what large tech platforms and infrastructure providers are banking on: AI-guided financial experiences that build convenience for consumers. 

AI is what makes these non-banks dangerous competitors. It can tailor credit limits and repayment schedules, and relay advice based on a user’s real-time behavior. Customers are becoming accustomed to experiences that use their personal data to make their day run smoother. Believe it or not, the average user isn’t thinking about product or features; they want complex systems boiled down into an easy-to-understand next step. 

 

Here’s what we’re seeing today in embedded finance: 

  • Traditional banks aren’t on the way out. They still lead in trust and licenses, but aren’t typically on the cutting edge of AI and embedded systems. 
  • Fintech and embedded providers excel at APIs, speed, and niche problems, carving out personalized solutions for users’ needs. 
  • Big tech and AI platforms own distribution, data, and interface attention, positioning themselves as an alternative source of finance.  
  • A growing layer of AI-powered guidance tools sits atop all this, shaping how customers interpret information and which options they choose. 

There are greater risks for community and regional institutions than for a hotshot tech company launching “a better bank app.” If customers stop feeling the need to bank with traditional banking because their financial lives are managed through AI and embedded experiences, banks risk losing relevance and visibility.

Executives need to reframe how their institutions show up in terms of their customers’ needs and financial outlooks: 

  • Consider AI as foundational. An operating layer across engagement, risk, and operations, not just a chatbot in the corner. 
  • Partner where it makes you faster and more human. Integrate AI-driven guidance and embedded finance into channels your customers already trust. 
  • Reframe the role of your digital channels so success looks more like customers following through on healthier financial habits. 

 

Financial institutions that grow in the next decade will adopt embedded solutions that provide depth, clarity, and guidance tailored to consumer needs and wants. Growth engines are built upon the relationships you have with your clientele, and those that build with those relationships in mind go further. If you’re ready to start mapping where AI-embedded guidance can enhance your relationships with customers, connect with INSPIRED Vibe.

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