UK and European Banks and EMIs: Friends or Foes?

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23 January 2024

Capturing the Embedded Finance Opportunity


Electronic Money Institutions (EMIs) have played a key role in the growth of the fintech sector in Europe and are now becoming systemically important. However, the market has faced several challenges in the past 18 months or so, and conditions are now far tighter. Regulators are putting increased pressure on EMIs and their clients to demonstrate safety and resilience. As banks are looking to capture embedded finance opportunities, should they be viewing EMIs as competitors or collaborative partners, or perhaps both?

Celent kicked off this research seeking to better understand the risk posed by e-money across Europe and explore questions around how various players—fintechs, EMIs, banks—select and manage partners, such as:

  • What are the key criteria when evaluating partners? Have those criteria changed in recent times?
  • What is their partner selection horizon? Do players typically select partners on a short-term, medium-term, or long-term basis to start with? How often do they review partners? Do the current market conditions and potential risk of contagion change their attitudes?
  • How do EMIs approach safeguarding? How do they and their customers view safeguarding—as a hurdle barrier in selection (i.e., needs to be demonstrated, but a risk tick box), or as a strategic element for them (i.e., used as part of customer value proposition)? How important is deposit insurance, such as FSCS protection?
  • What are pros and cons of EMIs? How much of an issue is the inability of EMIs to offer interest-bearing accounts?

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