The automotive industry is transforming vehicles into mobile banking centres with the introduction of embedded finance. This allows drivers to seamlessly pay for fuel, tolls, parking, and electric car charges without leaving their cars.
Embedded banking or embedded finance is a technology that is used on many websites for easy transactions. It integrates financial services like payments, accounts, or lending into non-financial products or services. That technology can also be brought into your car.
It turns banking into a part of driving, creating an efficient experience for drivers. With this new system, drivers can easily manage all of these payments automatically making for seamless transactions.
Benefits of Using Embedded Banking
Built-in banking does more than just make payments easier. It can also help drivers choose the right car based on how they drive. For example, if someone often drives long distances, the system might suggest a fuel-efficient car. If another driver drives mostly around town, a smaller car might be recommended. This intelligent system can make buying a new car easier and more personal.
Insurance companies can also benefit from this technology. They can see how people drive and adjust their premiums accordingly. For example, a cheaper insurance premium may be given to a driver with a clean driving record. On the other hand, a driver who has a history of speeding or traffic accidents may get a more expensive premium. This makes insurance fairer and more personalised to each driver.
Car companies that are the first to add built-in banking will have a big advantage. Buyers will want to buy cars with this new and convenient feature, giving these companies an edge. In addition, this technology allows car companies and banks to increase revenue. They could offer special deals or services to drivers who make frequent use of the in-car payment system.
Enhanced Financing Options
Embedded finance simplifies vehicle financing by integrating financial services into the car-buying process. Furthermore, customers can apply for and manage loans directly through their vehicle’s interface, with loan options personalised to their financial profile and driving habits. This innovation improves user experience by making payments, financing, and insurance easier and more secure.
Embedded banking turns cars into mobile banking hubs, leveraging data from modern vehicles to customise financial products. Moreover, insurance premiums can adjust based on driving behaviour, financing can match vehicle usage, and payments for charging or tolls can be automated, enhancing efficiency and customer satisfaction.
Seamless Transactions
Embedded finance simplifies transactions by allowing drivers to pay for services like fuel, tolls, and parking directly through their vehicle’s system. This integration eliminates the need for physical payment methods, making the driving experience smoother and more convenient.
In the automotive industry, embedded finance also transforms how customers handle car purchases and financing. By integrating banking, lending, and insurance services into the vehicle’s interface, automotive companies can offer a more seamless and convenient experience. Using APIs from specialised providers, this approach opens new revenue streams and enhances overall customer satisfaction.
Increased Sales
Automotive companies that adopt embedded finance technologies can experience a significant boost in sales and revenue. By offering integrated financial services, car manufacturers can attract customers looking for modern, convenient solutions.
According to McKinsey, embedded finance can boost sales by increasing conversions, average purchase amounts, and customer loyalty. Research by RBC Capital Markets shows that buy now, pay later (BNPL) options can raise checkout conversion rates by 20-30 percent and lead to higher spending per transaction.
A major global retailer has found that customers using their embedded lending services spend 20 percent more. However, the solution must be easy to use; otherwise, abandonment rates can be high.
The Collaboration of Industries for Embedded Banking
This new technology also encourages teamwork between different industries. For it to work well, car companies, technology companies, and banks need to work closely together. They need to create strong security measures to protect users from potential online threats. This collaboration is important to ensure that the system is secure and reliable.
By connecting cars and financial services, embedded banking will accelerate innovation. It will help create a future where driving and banking are connected. This will lead to a more efficient and customer-friendly world.
New Technology Leaders
Mercedes-Benz is already leading the way with this technology through its partnership with Mastercard. In Germany, Mercedes-Benz customers can start the fueling process from their car and pay with their fingerprints. This is the first time in-car payments have been used at gas stations.
When a driver arrives at a connected service station, the Mercedes Me Fuel & Pay service starts automatically. The driver selects the gas pump, and the system calculates the cost. Payment is made with a fingerprint. After refuelling, the invoice appears on the screen and is emailed to the driver, allowing them to leave without visiting the checkout.
Future Prospects
This new technology will help both the automotive and banking industries. It makes life easier for drivers and promises to change the way we drive by enabling easy payments on the go.
Once all car companies start using built-in banking, the current system of driving will change forever. This technology will turn cars into more than just vehicles to get from one place to another; they will become smart, connected hubs that make life easier for drivers. The future of driving begins with the implementation of embedded finance.
- Embedded Finance
