San Francisco — The quest to make payments less visible is gaining ground in businesses that are already complicated and often require difficult navigation to choose and then pay for a transaction.
"You want to be where the customers want to go. We don't want them to have to log out and then log back into another area to make payments," said Michael Ruttledge, the chief information officer and head of technology services for Citizens Financial Group during the keynote address at American Banker's Payments Forum on Wednesday.
Ruttledge was discussing embedded payments and
Supporting embedded finance has become a
Arizent, American Banker's publisher, this week released new research that found 55% of financial institutions are either offering or testing embedded payments.
"The growth in embedded finance is expected to be exponential," said Aaron Byrne, partner at L.E.K. Consulting during a panel discussion at the Payments Forum.
Like many banks, Citizens has increased its use of application programming interfaces, which enable the data sharing between organizations that make embedded payments and finance possible. Ninety-five percent of Citizens data traffic runs through APIs, according to Ruttledge, who also addressed trends such as generative AI and migrating broader bank technology to the cloud during his keynote talk.
The bank has more than a dozen gen AI projects in progress, addressing areas such as customer service, Ruttledge said, adding he's "bullish" on newer forms of AI that are designed to perform most, if not all, of the tasks that customer-facing agents typically perform. "It's early days," he said, noting the growth of what's referred to as "agentic AI."
Regarding embedded payments, Ruttledge told American Banker that payroll and e-gaming are emerging as major uses, due to the need to closely tie payments to the services that are adjacent to these functions.
Other banks are also drawn to health care, given its lucrative client mix and complicated payments needs.
"We can manage the whole health care cycle through embedded payments," Lia Cao, global head of embedded finance & solutions for payments at
There are additional opportunities to sell embedded payments support to online marketplaces, travel and fintechs.
"Marketplaces want to own the entire relationship with their sellers," Cao said, noting that could increase their revenue from the sellers and open an opportunity for banks to expand their payment technology. This gives the bank and its marketplace clients a chance to keep sellers from using other companies to process payments, opening additional avenues for cross-selling.
"Our clients can bring the entire experience in house," Cao said.
There is also upside for embedded finance adoption. The U.S. is lagging behind other markets in embracing embedded finance and payments due to the American financial services market being more mature, Cao said. Emerging markets have fewer barriers to adopting financial innovation, she said.
That lag in the U.S. will bolster the global embedded finance and payment markets in the coming years, Cao said. In the travel industry,
Banks can additionally find embedded finance clients among fintechs, according to Richard Kang, a senior vice president at Pathward. Many fintechs get started by focusing on one or a few products, Kang said, adding payments is often not among those services.
As the fintechs get larger, there is demand for a broader product base, and a need to add capabilities quickly.
"When you get to that next stage of growth, that means partnering with people who know more about payments than you do," Kang said.
Several of the panelists mentioned the potential to embed payments in digital gaming platforms, a use that drew some skepticism from the audience, given concerns about the risk of the business. But gaming is a highly regulated industry, which mitigates the danger of doing business in that sector, according to Cao.
