Expanding Banking Channels Through Last-Mile Delivery Partnerships

  • Blog
  • October 2, 2023
  • Chris Siemasko

In recent years, traditional banks have found themselves in a challenging landscape: 75% of banking customers are attracted to fintech competitors as they offer fast, convenient, and cost-effective financial services, according to a study by Capgemini. This comes at a time when banks are focused on capturing customer core deposits. As a result, banks are looking for fintech or brand partnerships that will help them grow and expand their delivery channels.

They can achieve growth by joining forces with a fintech or commercial brand that has a captive customer or employee base and by combining the bank’s products with the brand’s experience, which opens up new business models for the bank to capture core deposits. This is often referred to as embedded finance or banking-as-a-service channels.

But to succeed in the embedded finance use case, banks require digital logistics to effectively expand channels, meaning they need to improve their first, middle, and last-mile delivery strategies. Now is the time to dive deeper.

First-Mile Delivery

If you think of logistics, the concept of first-mile delivery refers to the collection of goods from manufacturers. In the world of finance, a parallel concept emerges: First-mile is about delivering the financial products that banks or fintech companies offer, such as loans, payment solutions, and savings accounts, through application programming interfaces (APIs).

Platforms like Infinant offer virtual accounts and ledger subsystems, which enable access to product and feature APIs. This approach enables banks to streamline the financial services delivery process by onboarding new customers and offering additional services without the need for significant infrastructure changes. Therefore making it easier to scale their operations more seamlessly and enhance the customer experience.

Middle-Mile Delivery

This stage involves the orchestration of APIs and data flows, which allows banks to integrate third-party services and fintech innovations to expand their service offerings.

For instance, they can offer new types of accounts, integrate advanced financial analysis tools, or provide innovative payment options. At Infinant, we provide a studio to orchestrate onboarding, money movement, and card subsystems to generate feature journeys.

Orchestration of APIs also enables banks to rearrange, add, or remove components easily. So, as customer preferences ebb and flow and banks want to introduce a new feature or service, they can integrate the necessary APIs and data flows without having to change the entire system. Thanks to this flexibility, financial institutions can tailor services to the unique needs of customers and adapt to changing market conditions.

Last-Mile Delivery

Last-mile delivery is the final step, where the composable journeys created in the middle-mile delivery are embedded into customer-facing applications. What’s critical to understand is that when banks work with third-party BaaS providers, they assume responsibility for implementing products and services into end-user applications, meaning banks no longer exclusively control the last-mile delivery process.

To tackle the problem, banks need a platform to assemble, package, and distribute their products into digital applications, allowing them to keep full ownership and oversight of the end-to-end delivery.

For example, our Interlace Console offers banks a platform where they can setup, monitor, and reconcile every step of the process—and by combining this with our Interlace Studio, the bank can create feature “prefabs” that allow their fintech brands to easily embed features by copy/paste a method call and library in their applications.

Whether your bank is new to embedded finance or already running BaaS programs, reach out to see how we can resolve your current limitations (or help you avoid them to start with). We’re always open to sharing industry trends and making peer connections.