HSBC and Uber explored how embedded finance is changing the payments landscape at an event in London on Wednesday.

During a panel discussion at FinTech Connect 2024, Ishtiaq Ahmed, senior manager, emerging technology, innovation and ventures at HSBC said that the embedded ecosystem is “here to stay”, so banks and other industries, such as travel, retail, and hospitality, must learn to co-exist in the space.

He said that while embedded payments are embraced by consumers for their convenience, people have banked with financial institutions for centuries because there is an “element of trust” backed by security and regulations.

Ahmed added that many companies have attempted to create “super apps” with a unifying brand but said the reality is that this is “not commercially viable”. He did however say that this doesn’t mean a platform like this couldn’t work in the future.

“As banks and HSBC, we believe strongly that there needs to be an element of friction,” explained the emerging tech lead, adding that consumers must be aware of what decisions they are making through positive friction.

He said that the bank still wants to partner with companies like Uber or Starbucks, explaining that there needs to be collaboration between banks and other industries to work out what “happens in the background” when it comes to embedded finance.

“Everybody needs to think about how banking will evolve in the next decade and the one after that,” Ahmed told delegates.

He pointed out that for many digital-native consumers, brand loyalty is associated with what they integrate most with, explaining that his younger siblings would be happy to do their banking through Amazon or Instagram.

"But how do we make it safe and do it responsibly?" he asked.

When asked who gains the most from embedded finance - banks or the merchants - Ahmed said merchants.

He told delegates that merchants will see lower operating costs, adding that embedded finance provides further "stickiness" for them.

But Rema Rao, earner financial business APAC & EMEA at Uber disagreed.

"All the costs get stuck with us," she told delegates.

Rao also explained what Uber is planning when it comes to areas such as Buy Now, Pay Later (BNPL), including exploring ways to further expand alternative and local payment methods.

For example, it is looking at how it can tap into cohorts of spenders that don't yet use Uber or Uber Eats. In particular, it is targeting the senior market in APAC - looking at whether it can incorporate areas such as including financial aid or senior passes in order to engage the market.

Uber is also exploring embedded finance beyond just payments, for example by finding ways to advance inclusion for its drivers through financing. Other areas it is looking at is its small business customer base and how it could help them with problems such as natural disasters through lending, as well as exploring cross-border payments.

When asked where Uber draws the line when it comes to embedded finance, Rao said that "drawing the line is difficult". But she explained that the plan is to stick to its main business, rides and eats, with the company pivoting financially when it decides how it will grow the business.

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