This article first appeared on Private Banker International in the September 2021 edition.
What if you could reach a largely untapped market, and add a new profit line, without having to develop new services or spending millions on capex and opex? It’s not a rhetorical question, or blue-sky thinking. There’s a significant revenue opportunity right there for the taking, and it’s called embedded wealth.
A $100 billion revenue opportunity
Embedded finance is one of the most important trends in fintech. It refers to the business model whereby financial services, now digitized, can be offered through any distribution channel. And while most of the buzz around embedded finance is centred around payments, at additiv, we think it will have a far more profound impact on wealth management. This is referred to as ‘embedded wealth’.
As things stand, $33 trillion of the world’s investable assets aren’t professionally managed. That means a huge number of people aren’t growing their wealth or taking steps to secure their future. Assuming an average 30 basis points for wealth managers and their partners, there’s also about $100 billion in fees being left on the table.
So why is embedded wealth such a game-changer?
And why should banks get in on it sooner, rather than later?
Power to the people

Traditionally, when customers needed wealth management services, they’d have to understand their need and find their right solution. This involved researching what products were available and choosing from a selection of often highly standardized products.
Then, once they made their choice, customers had to jump through several hoops to get onboarded.
It’s a journey that’s fraught with friction and which, consequently, many customers abandon out of frustration.
According to The Battle to Onboard, a study of attitudes towards financial products, 63% of European customers never finish a financial product application, mainly because they find the process too long and cumbersome.
Even among those who already use wealth management services, there’s growing appetite for change.
In 2019, 82% of respondents to a survey said they expect every digital experience to be at least as good as that of tech giants like Google and Amazon, but the wealth management industry is still falling short.
If anything, Covid-19 has raised the stakes. Customers have increasingly high expectations when it comes to the quality of digital banking experiences. And the pandemic’s economic fallout has also put them under more pressure to make their money work harder.
By contrast, embedded wealth – which refers to offering wealth management services by embedding these into third-party channels and into existing user journeys – puts a relevant product in front of the customer when it makes sense to do so, on the channel where it makes most sense.
This has several advantages over the traditional model:
- It’s more convenient. This is because the solution is presented at a customer’s point of need. In fact, the customer may not even realize they need the product. Proactively presenting them with it in a relevant context adds value by anticipating those needs.
- It reduces friction. The product is part of an existing user journey, so the customer doesn’t have to switch channels. And because the channel on which the product is offered already has a lot of data about the customer, onboarding is quicker and simpler.
- It’s a tailor-made product. With embedded wealth, products can be designed around customers’ needs. Plus, the customer data can also ensure that the product offered is more relevant and therefore more valuable.
Why start offering embedded wealth?
In addition, they can leverage interactions plus large data sets to personalize and adapt investments to customer context (roundups, loyalty points, cashback etc), increasing sales conversion rate.
Thirdly, offering embedded wealth products makes acquiring customers far less costly.
Over the past decade, digitalization and the proliferation of consumer platforms have lowered the barriers to entry, even in industries with traditionally prohibitive start-up costs like banking.
This has given customers more choice, but also put a premium on their attention span. As a result, ensuring customers remain profitable is increasingly a challenge – particularly for banks who offer a limited range of services. In fact, the cost of customer acquisition is now thought to be $1,500 on average per customer. It has therefore never been more important to ensure customers (new or established) are (and remain) profitable.
Embedded wealth means that, instead of working to attract customers, banks can focus on creating highly targeted products and offer these when customers are already engaged and/or identified as needing them.
The same wealth product can also be distributed across a whole range of offerings, so platforms can generate large volumes of business more quickly and at lower cost.
Bringing embedded wealth products to life
The case for providing embedded wealth services through a BaaS platform
- Manages complex operational and logistical issues.
- Provides a system of intelligence that can handle a seamless customer journey – digital onboarding, customer relationship management, order handling, and advice – to the digital customer experience standards customers have come to expect.
- Brings a suite of essential services together into a set of standard APIs.
We’re also constantly growing our ecosystem of trusted partners, including ones that provide financial and pension planning analytics and Environmental, Social and Governance (ESG) investment data.
Put simply, working with us means banks can concentrate on what you do best: developing innovative financial products, without having to worry about technological implementation challenges or back-office admin.
Our sophisticated platform and market-leading partners will help you bring it all together.
And because those financial institutions embedding Saxo Bank’s products can bring insight into every aspect including delivery mechanism, product enhancements etc. This has driven product enhancements, along with requests for specific tools and functionality. It’s a win/win situation.
Ready or not, embedded wealth is coming
To find out more contact us or download our recent embedded wealth report: www.additiv.com/thought-leadership/embedded-wealth-management