The Embedded Finance Flywheel

The Embedded Finance Flywheel
How Financial Products Can Help Brands Generate

Millions in Revenue and Increase Customer Loyalty
Ron Shevlin
Chief Research Officer
Cornerstone Advisors
COMMISSIONED BY
TABLE OF CONTENTS
1 Executive Summary
2 Defining Embedded Finance
6 Consumers’ Brand Relationships
10 Consumers’ Interest in Embedded Finance
15 The Economics of Embedded Finance
17 Crafting an Embedded Finance Strategy
19 Endnotes
20 About the Author
21 About Cornerstone Advisors
21 About Bond
©2022 Cornerstone Advisors. All rights reserved.

EXECUTIVE SUMMARY
The topic of embedded finance has generated a lot of interest in recent years, with industry pundits claiming
that it’s “the future of financial services.” They don’t often define what “it” is, however. In this report, we’ll define
embedded finance as the integration of financial services into non-financial companies’ websites, mobile apps,
and business processes.
The theoretical value of embedded finance rests on a very important assumption—that consumers will choose
to obtain financial products from their favorite brands if the brands offer them.
Curiously, despite all the hype around embedded finance, this assumption has gone largely unexamined.
To correct this oversight, Cornerstone Advisors surveyed 2,555 adult U.S. consumers about their use of,
and interest in, embedded financial products and services from their favorite non-finance brands.
The results confirm the theory:
• Three-quarters of gamers are interested in an in-game account where they could deposit money and
use it to buy and sell virtual in-game items and collect rewards for game achievements/progress.
•T
wo-thirds of home fitness fans expressed interest in getting health insurance from home fitness
providers with rates based on their personal fitness habits.
•N
early two-thirds of fashion aficionados would consider getting an investment account from a
luxury brand that allowed them to easily invest in that company’s stock.
•S
ix in 10 car buffs would investigate auto insurance—with rates based on their personal driving
history and behavior—directly from a car manufacturer.
•H
alf of home improvement do-it-yourselfers are interested in a savings account that automatically
sets aside money to save for large home improvement projects from Home Depot or Lowe’s.
Among consumers who said they didn’t want financial products from a non-financial brand, only half said it was
because they prefer to get financial products from a bank. The more prevalent reasons were concerns that it would
be difficult or inconvenient to manage the product—a concern that good delivery and execution can overcome.
The impact of embedded finance goes beyond the revenue generated by the financial product, however. Among
consumers who already get a financial product from a non-financial brand, a third said the product caused them
to spend more money with the brand, three in 10 said they now choose the brand over its competitors more often,
and a little more than a quarter feel more loyal to the brand.
The bottom-line result of brands providing financial products to consumers is a flywheel effect—the financial
products not only generate revenue in and of itself, but they lead to consumers spending more money on the
brand’s products and services than they had before obtaining the financial product.
CORNERSTONE ADVISORS | The Embedded Finance Flywheel: How Financial Products Can Help Brands Generate Millions in Revenue and Increase Customer Loyalty 1
DEFINING EMBEDDED FINANCE
Embedded finance has become a popular topic in the banking and retail industries. What is it? A Google search
on the term returns more than 1.8 billion results, few bringing clarity to its meaning. Cornerstone Advisors’
definition is simple:
Embedded finance is the integration of financial services into non-financial companies’ websites,
mobile apps, and business processes.
In some respects, embedded finance isn’t new.
Take auto lending, for example. The vast majority—about 70%—of auto loans were acquired by consumers
during the automobile purchase process at the dealership. This approach to financing automobile purchases has
been the dominant form of financing in the market since the early 2000s.
The infrastructure that facilitates indirect auto lending is primarily provided by two platforms: Dealertrack and
RouteOne. Both platforms provide automotive dealerships with the ability to embed a network of lenders within
the automotive purchase experience that they offer to consumers, so that consumers don’t need to leave the
dealership and go to their bank to complete the transaction.
These transactions should really be called “affiliated” or “associated” finance, however.
Creating this indirect auto lending capability has been neither easy nor quick. Integrating thousands of car
dealerships and financial institutions into a centralized portal has taken Dealertrack and RouteOne decades to
complete. And the process still isn’t truly “embedded” into the car purchasing process.
This is an analog problem. The wide-scale digitization of consumer products and experiences, across verticals,
which the COVID-19 pandemic significantly accelerated, will dramatically reduce the time and expense of
embedding financial services in non-financial distribution channels.
The availability of application programming interfaces (APIs) will speed system integrations, and the availability
of customer data (which can be easily shared among systems through said APIs) will enable more personalized
offers and experiences for consumers.
The end result? An increasing number of banks and fintechs will partner with non-financial brands to launch
truly embedded finance products.
THE NEW EMBEDDED FINANCE
In practice, a good example of embedded finance is the debit card Lyft offers its drivers. Product features
like a strong rewards program and instant payments are coupled with customer experience improvements
like seamless account opening and integration into Lyft’s driver app to provide a compelling offer for Lyft
drivers (Figure 1).
FIGURE 1: Embedded Finance Offer from Lyft
Rewards
Faster payments
Seamless account
opening
Integrated
22-1005-01 Source: Cornerstone Advisors
Behind offers like these is a bank that: 1) provides the debit card, 2) accounts for the movement of money in and
out of the accounts, and 3) deals with the compliance requirements for providing the product.
Banks often see brands like Lyft, fintechs, and other consumer-focused companies as competitors or threats
in an embedded finance context. That’s narrow-minded thinking. Non-financial services companies are simply
potential distribution channels for banks, enabling the banks to reach a broader range of customers than they
could have on their own.
GROWTH DRIVERS OF EMBEDDED FINANCE
Across a range of industries, Lightyear Capital estimated that embedded finance will produce nearly $230 billion
in revenue by 2025, up from $22.5 billion in 2020 (Figure 2). At a five times revenue multiple, embedded finance
will create more than $1 trillion of value by 2025.
FIGURE 2: Embedded Finance Revenue Growth
Embedded Finance Forecast ($ in billions)
54%
$200 ’20-’25
CAGR
$180
$160
62% $140.8
$140 ’20-’25
$120 CAGR
$100 62%
’20-’25 $70.7
$80
CAGR
$60
$40
$15.7 $16.1
$20 $2.6 $5.0
$0.0 $1.4
$0
Wealth Management Consumer Lending Insurance Payments
2020 2025
22-1005-02 Source: Lightyear Capital

'
This growth will be driven by a rapidly maturing embedded finance ecosystem, which is made up of three
categories of participants:
• Banks. Today, only a small number of U.S. banks participate in the embedded finance economy.
By 2026, however, roughly 300 banks will share in the roughly $25 billion in annual revenue
generated by embedded finance, according to Cornerstone Advisors. 1
• Brands. The value of embedding financial services in a non-financial company’s offerings spans a
number of different areas, as Matt Harris, partner at Bain Capital Ventures, outlined in a seminal
article on embedded finance:
“Having financial functions integrated with software enables new functionality, leveraging the persistent
connection to move beyond transactions to relationships. If you’re utilizing software to run your business,
using that same software to get paid and make payments is logical and more natural than going to
your financial institution to do so. These relationships are data-rich, which leads to smarter cross-sell,
pre-qualification, and risk reduction. The monetization opportunities are not only large, but actually
meaningfully larger than the original software opportunity.” 2
• Banking as a service (BaaS) platforms. A major accelerant of embedded finance is the emergence
of BaaS platforms, which provide the technical, operational, and legal middleware between banks
wanting to offer BaaS and non-financial companies that need to find and integrate a bank partner
(or partners). These platforms dramatically lower the upfront costs and accelerate the time to
market for non-financial brands launching embedded financial products.
The infrastructure now exists to enable non-financial brands—across many industries and use cases—to offer
their customers access to seamlessly embedded financial products that strengthen the brands’ relationships
with customers.
The potential value of embedded finance rests on a very important assumption—that consumers will
obtain financial products from their favorite brands if the brands offer them.
Curiously, despite all the hype around embedded finance, this assumption has gone largely unexamined.
To address this oversight, Cornerstone surveyed 2,555 American adults about their use of and interest in
embedded financial products and services from their favorite non-finance brands, and the impact that
financial products have had, and could have, on their relationships with those brands.
CONSUMERS’ BRAND
RELATIONSHIPS
A central tenet of embedded finance is that non-financial brands are better positioned than banks to offer
financial products to their customers because of the strength of their relationships with customers and the
frequency with which they interact.
Understanding the nature of consumers’ brand relationships is crucial to understanding the overall potential
of embedded finance. To do this, Cornerstone asked consumers to identify their favorite general retail and
pharmacy brands. Not surprisingly, Amazon was the overwhelming favorite general retailer for 44% of
consumers, while CVS and Walgreens were nearly equal favorites in the pharmacy sector (Figure 3).
FIGURE 3: Consumers’ Favorite Retail and Pharmacy Brands
General Retail Pharmacy
22-1005-03 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022
Outside of general retail and pharmacy—brand categories that virtually all consumers interact with, to some
degree—we also asked consumers what other categories of products they most enjoy buying and/or using
and which specific brands or companies are their favorites (Figure 4).
Technology was the category that consumers reported liking the most, across generations, with Apple
enjoying the strongest brand affinity. Home improvement and gaming rounded out the top three, albeit
with stark generational differences (Figure 4).
FIGURE 4: Consumers’ Favorite Product Categories and Brands
% of Consumers Who Listed Category Among Top 3
58%
42%
39%
34%
25%
19%
Technology/ Home Gaming/Consoles Fashion/Luxury Home Fitness Automotive

Electronics Improvement Goods
Fifty-six percent of Gen Zers and 48% of Millennials listed gaming as a top three brand category that they enjoy,
compared to just 13% of Baby Boomers. By contrast, 58% of Boomers selected home improvement as a favorite,
compared to 37% of Millennials and 26% of Gen Zers.
Consumers are highly engaged with companies in their favorite categories. Among gamers, six in 10 said they
interact with their favorite brands every day, and more than half of home fitness fanatics and technology zealots
interact with their favorite brands daily (Table A).
TABLE A: Engagement Frequency with Companies in Favorite Categories
How frequently do you interact with companies in the following categories?

(Base=Consumers who selected category as one of their top 3 categories)
Daily Weekly Monthly Yearly
Gaming/Consoles 62% 20% 10% 7%
Home Fitness 54% 27% 10% 9%
Technology/Electronics 54% 20% 15% 11%
Fashion/Luxury Goods 33% 27% 24% 17%
Automotive 28% 20% 21% 32%
Home Improvement 16% 27% 37% 21%
Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022
Many consumers interact with their favorite brands through the brands’ mobile apps. Nearly two-thirds of
all American adults with a smartphone have Amazon’s mobile app on their phone, and more than half have
installed Walmart’s app. Restaurants’ mobile apps are popular, as well, with 45% of consumers having one or
more apps from their favorite restaurants on their phone (Figure 5).
FIGURE 5: Merchant Mobile App Adoption
Which of the following merchants’ (or type of merchants’)

mobile apps do you have on your smartphone?
Amazon 63%
Walmart 54%
Restaurants 45%
Starbucks 29%
Department stores 26%
Pharmacies 25%
Supermarkets 25%
Uber 25%
Lyft 14%
22-1005-05 Source: Cornerstone Advisors survey of 2,555 U.S. adult consumers, Q1 2022
Many consumers have funds loaded on merchants’ mobile apps, with Starbucks leading the way with nearly
80% of their mobile app customers with funds in the account. On average, consumers have between $30 and
$50 of funds loaded in the merchant mobile apps they have on their phones each week (Figure 6).
FIGURE 6: Funds Loaded on Merchant Mobile Apps
Funds Loaded on Merchant Mobile Apps
$53 100%
$50 90%
$44 79%
$41 $41 80%
$40
$34 70%
$33
$30 60%
$30 66% 63% 64%
50%
56%
48% 51% 40%
$20
30%
$10 20%
10%
$0 0%
Supermarkets Department Amazon Walmart Restaurants Pharmacies Starbucks
Stores
Average weekly amount of funds loaded % of mobile app users with funds loaded
22-1005-06 Source: Cornerstone Advisors survey of 3,030 U.S. adult consumers, Q1 2022
CONSUMERS’ INTEREST
IN EMBEDDED FINANCE
Embedded finance may be a relatively new term in the financial services space, but consumers have turned to
non-financial brands for some time now for financial-related products and services. Among consumers who
consider the technology/electronics category one of their top three favorite categories, 35% have already obtained
some form of financial service from a technology or electronics company—although that product was typically a
credit card or extended warranty and not a checking account, savings account, or an installment loan (Figure 7).
FIGURE 7: Consumer Adoption of Financial Products from Non-Financial Brands
Percentage of Consumers That Have Obtained a Financial

Product from a Non-Financial Brand*
(Base=Consumers who consider the product category one of their top 3 favorite categories)
35%
25%
23%
20%
11% 10%
Technology/ Home Gaming/Consoles Fashion / Luxury Home Fitness Automotive

Electronics Improvement Goods
*Products include credit cards, checking accounts, savings accounts, investment accounts, installment loans, insurance, and extended warranties
Across the various product categories, just 29% of consumers who have a financial product from a non-financial
brand say that the product has not impacted their relationship with the brand. In fact, the impact has been very
positive—about a third of these consumers said the financial product caused them to spend more money with the
brand, three in 10 said they now choose the brand over its competitors more often, and a little more than a quarter
feel more loyal to the brand (Figure 8).
FIGURE 8: Impact of Financial Product Adoption on Non-Financial Brand Relationships
How did getting financial products impact your relationship with the brand?
(Base=Consumers who obtained a financial product from a non-financial brand)
I spend more money with them than I did before 32%
I choose them over their competitors more than I did before 30%
I feel more loyal to them 27%
I recommend them to friends and colleagues more often 16%
It didn’t change anything 29%
The bottom-line result of brands providing financial products to consumers is a flywheel effect—the financial
products not only generate revenue in and of itself, but they lead to consumers spending more money on the
brand’s products and services than they had before obtaining the financial product.
The financial products opportunities for brands goes well beyond credit cards and warranties, however.
Cornerstone Advisors asked consumers who are engaged with the various product categories about their
interest in 15 specific products. Some of the highlights include (Table B):
•T
hree-quarters of gamers are interested in an in-game account where they could deposit money
and use it to buy and sell virtual in-game items and collect rewards for game achievements/
progress.
•T
wo-thirds of home fitness fans expressed interest in getting health insurance from home fitness
providers with rates based on their personal fitness habits.
•N
early two-thirds of fashion aficionados would consider getting an investment account from a
luxury brand that allowed them to easily invest in that company’s stock.
•S
ix in 10 car buffs would investigate auto insurance—with rates based on their personal driving
history and behavior—directly from a car manufacturer.
•H
alf of home improvement do-it-yourselfers are interested in a savings account that automatically
sets aside money to save for large home improvement projects from Home Depot or Lowe’s.
TABLE B: Consumer Interest in Financial Products from Non-Financial Brands
If a company you liked offered the following financial products, would you be interested?
(Base=Consumers who expressed interest in a particular category)
Category Product Description % Interested
Credit card that rewarded you for the purchase of games

75%
and for in-game purchases
Gaming/Console
In-game deposit account used to buy and sell virtual in-game
74%
items, and collect rewards for game achievements/progress
Health insurance with rates based on your personal fitness habits,

Home Fitness 68%
directly within their mobile app
Investment account integrated in the brand’s mobile app that lets

Fashion/Luxury Goods 65%
you invest in the brand’s stock, crypto, and other assets
Checking account that allowed you to deposit money, cash checks,

62%
withdraw money from ATMs, and earn rewards
Technology/Electronics
Savings account that automatically sets aside small amounts of
59%
money for you to help save for large purchases
Auto insurance, with rates based on personal driving history and

59%
behavior, that could be managed within the mobile app
Savings account that automatically sets aside money in addition to

Automotive 52%
monthly auto loan payments to save for your next automobile purchase
Credit card that offsets your carbon footprint by investing in

48%
carbon reduction (planting trees, protecting forests, etc.)
Checking account used to make purchases, cash checks, withdraw

59%
money from ATMs, and get rewards
Retail
Savings and investment account that automatically sets aside money
55%
to save for large purchases or invest in stocks
Health savings account that allowed you to save money (tax free)
56%
for qualified medical expenses (including Rx drugs)
Pharmacy
Ability to load and store money in their mobile app to use to pay
54%
for purchases and get rewarded when you transacted
Savings account that automatically sets aside money to help save

51%
for large home improvement projects
Home Improvement
Home equity loan that would allow you to pay for big home
49%
improvement/renovation projects, directly within their app
Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022
Compared to Baby Boomers, a larger percentage of Gen Zers, Millennials, and even Gen Xers are interested in
getting financial products from non-financial brands, averaging the percentage of those interested across the 15
hypothetical financial products (Figure 9).
FIGURE 9: Interest in Financial Products from Non-Financial Brands
Average % of Consumers Interested in Getting Financial Products from Brands

(Base=Consumers who expressed interest in a category)
64% 64%
60%
42%
Gen Zers Millennials Gen Xers Baby Boomers

(21-26 years old) (27 to 41 years old) (42 to 56 years old) (57 to 75 years old)
Why are so many consumers interested in these financial products from non-financial brands? They expect a
range of benefits including lower cost, greater convenience, and better rewards (Figure 10).
FIGURE 10: Why Consumers Would Get Financial Products from a Non-Financial Brand
Why would you get a financial product from a non-financial brand you liked?
81%
61%
58%
54% 54%
It would cost me I like and/or It would make using It would be convenient I would want
less to get the financial trust the the financial product to get the financial to get the
product from them company more convenient product from them rewards/benefits
On the flip side, among consumers who aren’t interested in getting financial products from the consumer brands
they like and interact with, nearly eight in 10 believe it would be difficult or inconvenient to manage the financial
product with the brand. In addition, 77% of the uninterested said they wouldn’t trust getting a financial product
from a non-financial brand (Figure 11).
FIGURE 11: Why Consumers Wouldn’t Get Financial Products from a Non-Financial Brand
Why wouldn’t you get a financial product from a non-financial brand you liked?
79% 77%
71%
54%
It would be difficult or I wouldn’t trust I prefer to shop around and I prefer to get financial
inconvenient to manage getting a financial compare different financial products from
the financial product product from them products before I buy one my current bank
THE ECONOMICS OF
EMBEDDED FINANCE
What’s in it, financially, for a brand to provide embedded finance products and services? Based on the results of
the consumer survey, we’ve estimated the potential revenue impact of embedded finance from the perspective of
a few leading brands.
PLAYSTATION
Gaming was a popular product category among those we asked about, with 40% of survey respondents indicating
that it’s one of their top three categories. Among those consumers, a third of them mentioned PlayStation as their
favorite brand in the category.
With roughly 250 million adults in the United States, that makes 100 million who are “gamers,” resulting in a total
addressable market of 33 million consumers for PlayStation to provide financial services and products to.
Statista estimates that in-game purchase volume worldwide was approximately $54 billion in 2020.3 Estimates
from ironSource attribute half of those sales to Asia, so we’ll use $14 billion — roughly one-fourth of the global
total — as the U.S. estimate.4 That produces an estimate of $140 in annual in-game sales per U.S. gamer.
In the Cornerstone survey, 79% of the gamers who consider PlayStation to be their favorite indicated an interest
in a credit card that rewarded them for in-game purchases. We’ll assume that just 10% of them — 2.6 million
gamers — accept a credit card offer from PlayStation in the first year it’s offered.
Those 2.6 million PlayStation gamers ring up an estimated $365 million of in-game purchases annually, which — if
purchased using a credit card — would yield roughly $6.4 million in interchange fees. In an embedded finance
context, PlayStation would split that revenue with a BaaS platform provider.
This embedded finance scenario produces more than $3 million in incremental annual revenue for PlayStation from
just a credit card offering. The impact of greater loyalty to the company and potentially increased in-game sales is
impossible to estimate.
HOME DEPOT
Home improvement is a top three product category for 42% of survey respondents, or roughly 105 million Americans.
Among the leading home improvement brands, Home Depot was cited as the most popular company by 49% of
them, or 51 million. And among those Home Depot DIYers, 53% expressed interest in getting a home equity loan
directly from a home improvement company.
If 5% of those 27 million Home Depot customers — 1.35 million — took out a $40,000 home equity loan (the average
home equity loan amount according to Cornerstone Advisors’ benchmark database) with Home Depot, that would
produce $54.4 billion in loans.
Based on Cornerstone’s data, the interest rate on a $40,000 home equity loan would average between 4% and 6%
with a cost of funds at about 50 basis points. This would produce net interest income of $1,800 per loan per year
(we’ll assume Home Depot’s partner bank gets the $50 loan origination fee).
If half of the full line is borrowed against in the first year, Home Depot would generate $900 in revenue per loan.
Assuming half the revenue is shared with the BaaS platform provider, Home Depot’s annual revenue from an
embedded finance strategy would be $600 million.
COACH
A third of the survey sample cited fashion and luxury goods as one of their top three shopping categories. Coach
was the most popular brand in the category, with 15% of fashion fans mentioning the company as their favorite
fashion brand.
Among Coach enthusiasts, 68% said they would be interested in an investment account integrated in the brand’s
mobile app that would let them invest in the brand’s stock, crypto, and other assets. If 5% of Coach’s 12.8 million
devotees opened this account, and the resulting 637,500 customers invested $2,500 in the account, Coach would
have $1.6 billion in assets under management (AUM).
If the embedded finance product produced revenue at 1% of AUM—and Coach splits that with a BaaS provider—
the fashion brand would generate an incremental $8 million in revenue.
CRAFTING AN EMBEDDED
FINANCE STRATEGY
Brands should consider the following actions as critical to their embedded finance strategies:
• Drive mobile app engagement. In the three embedded finance economics scenarios in the previous
section, we made what we believe are conservative and reasonable estimates of the first-year adoption
of embedded finance products from leading brands. The survey shows strong interest among consumers
to get a variety of financial products from their favorite brands—so the top of the marketing funnel
will be there. Converting interest into account openings will require smart marketing on the part of the
brands, and that marketing needs to start by driving mobile app engagement with brands’ already loyal
customers. Consumers who use merchants’ mobile apps—and load funds—are the best prospects for
brands’ embedded finance offerings.
• Develop strong product value propositions. Three product attributes stand out as reasons why
consumers want financial products from non-financial brands: cost, convenience, and rewards. Cost
is table stakes here. Differentiation of a brand’s embedded finance offering will come from some
combination of convenience and rewards. Making it drop-dead easy to integrate a financial product
into the way brands’ customers interact with the company already is the key to the product’s value
proposition. Designing a rewards and incentive structure is the icing on the cake.
• Personalize the product offerings. While younger consumers demonstrated stronger interest in
embedded finance than older consumers, that wasn’t always the case. For example, many Gen Zers
don’t own cars or homes, making them unlikely candidates for an embedded auto or home equity loan.
To succeed with embedded finance, brands need to offer different products that appeal to the different
segments of their customer base.
PICKING THE RIGHT BAAS PARTNER
The BaaS platform space is growing, and there are many good partners for brands to choose from. But different
platforms have different strengths and weaknesses. Brands evaluating BaaS platform providers should consider
the following:
• Brand-bank fit. What other brands and banks does a BaaS platform provider work with? How does a
brand’s customer base (in terms of demographics and financial product and service needs) mesh with
the BaaS platform banks’ strengths? A brand should choose a BaaS platform provider that already
supports consumers aligned with the brand’s customer base.
• Product specialization. BaaS platform providers are often strong in either lending or payments, and,
sometimes, not even strong in all payment offerings. A brand should choose a platform provider that
aligns with (or enhances) the embedded finance products it intends to offer.
• Brand-bank relationship. Does the BaaS platform provider facilitate a direct relationship between the
brand and the bank? Many BaaS platform providers will not let a brand and bank interact directly, which
is not desirable, and may even cause the bank some headaches with regulators. With a direct relationship,
brands have better oversight, control, and flexibility in program terms.
ENDNOTES
1
www.synctera.com/blog/banking-as-a-service-banks-25-billion-revenue-opportunity-in-fintech-banking
2
www.forbes.com/sites/matthewharris/2019/11/22/fintech-the-fourth-platformpart-two/?sh=bee6d075be6e
3
www.statista.com/statistics/558952/in-game-consumer-spending-worldwide/
4
www.is.com/glossary/in-game-purchase/#:~:text=In%2Dgame%20purchase%20statistics,and%2082.6%25%20
on%20Google%20Play
ABOUT THE AUTHOR
RON SHEVLIN
CHIEF RESEARCH OFFICER
As Cornerstone Advisors’ chief research officer, Ron Shevlin heads up CONTINUE THE CONVERSATION
the firm’s fintech research efforts and authors many of its commissioned 480.424.5849
studies. He has been a management consultant for more than 30 years, rshevlin@crnrstone.com
working with leading financial services, consumer products, retail, and Cornerstone Bio
manufacturing firms worldwide. Prior to joining Cornerstone, Ron was a @rshevlin
researcher and consultant for Aite Group, Forrester Research, and KPMG. /ronshevlin
Author of the Fintech Snark Tank blog on Forbes, Ron is ranked among
the top fintech influencers globally and is a frequent keynote speaker at
banking and fintech industry events.
ABOUT
CORNERSTONE ADVISORS
After 20 years in this business, Cornerstone Advisors knows the CONTINUE THE CONVERSATION
financial services industry inside and out. We know that when
www.crnrstone.com
banks and credit unions improve their strategies, technologies,
Cornerstone Advisors
and operations, improved financial performance naturally follows.
@CstoneAdvisors
Because we live by the philosophy that you can’t improve what
you don’t measure, Cornerstone shows financial institutions how 480.423.2030
to use laser-focused measurement to develop more meaningful info@crnrstone.com

business strategies, make smarter technology decisions, and
strategically reengineer critical processes.
ABOUT
BOND
Our embedded finance platform is revolutionizing the way CONTINUE THE CONVERSATION
financial products are built and tailored for your customers’
www.bond.tech
needs. By integrating with our platform’s modern APIs and
/bondfintech
leveraging our team’s program management expertise, you
@bondfintech
can confidently and quickly build, launch, and operate your
own financial products.
Bond provides a robust integration layer to make the process of

building and launching your own financial product the easiest it
can be. No need for extra contracts with banks or other technology
vendors for new integrations because Bond does it all. Bond also
manages your program so you don’t need to have banking licenses,
or worry about building your own compliance teams.
Have questions
about this report?
Contact:
Ron Shevlin, Chief Research Officer rshevlin@crnrstone.com
Cornerstone Advisors 480.424.5849
©2022 Cornerstone Advisors. All rights reserved.

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The Embedded Finance Flywheel

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The Embedded Finance Flywheel

How Financial Products Can Help Brands Generate

2 Defining Embedded Finance

6 Consumers’ Brand Relationships

10 Consumers’ Interest in Embedded Finance

15 The Economics of Embedded Finance

17 Crafting an Embedded Finance Strategy

20 About the Author

21 About Cornerstone Advisors

©2022 Cornerstone Advisors. All rights reserved.

The results confirm the theory:

In some respects, embedded finance isn’t new.

These transactions should really be called “affiliated” or “associated” finance, however.

FIGURE 1: Embedded Finance Offer from Lyft

22-1005-01 Source: Cornerstone Advisors

FIGURE 2: Embedded Finance Revenue Growth

Embedded Finance Forecast ($ in billions)

22-1005-02 Source: Lightyear Capital

FIGURE 3: Consumers’ Favorite Retail and Pharmacy Brands

General Retail Pharmacy

22-1005-03 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

FIGURE 4: Consumers’ Favorite Product Categories and Brands

% of Consumers Who Listed Category Among Top 3

Technology/ Home Gaming/Consoles Fashion/Luxury Home Fitness Automotive

22-1005-04 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

How frequently do you interact with companies in the following categories?

Daily Weekly Monthly Yearly

Gaming/Consoles 62% 20% 10% 7%

Home Fitness 54% 27% 10% 9%

Technology/Electronics 54% 20% 15% 11%

Fashion/Luxury Goods 33% 27% 24% 17%

Automotive 28% 20% 21% 32%

Home Improvement 16% 27% 37% 21%

Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

FIGURE 5: Merchant Mobile App Adoption

Which of the following merchants’ (or type of merchants’)

Department stores 26%

FIGURE 6: Funds Loaded on Merchant Mobile Apps

Funds Loaded on Merchant Mobile Apps

FIGURE 7: Consumer Adoption of Financial Products from Non-Financial Brands

Percentage of Consumers That Have Obtained a Financial

Technology/ Home Gaming/Consoles Fashion / Luxury Home Fitness Automotive

22-1005-07 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

I spend more money with them than I did before 32%

I feel more loyal to them 27%

I recommend them to friends and colleagues more often 16%

It didn’t change anything 29%

22-1005-08 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

Category Product Description % Interested

Credit card that rewarded you for the purchase of games

Health insurance with rates based on your personal fitness habits,

Investment account integrated in the brand’s mobile app that lets

Checking account that allowed you to deposit money, cash checks,

Auto insurance, with rates based on personal driving history and

Savings account that automatically sets aside money in addition to

Credit card that offsets your carbon footprint by investing in

Checking account used to make purchases, cash checks, withdraw

Savings account that automatically sets aside money to help save

Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

FIGURE 9: Interest in Financial Products from Non-Financial Brands

Average % of Consumers Interested in Getting Financial Products from Brands

Gen Zers Millennials Gen Xers Baby Boomers

22-1005-09 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022

22-1005-10 Source: Cornerstone Advisors survey of 2,555 U.S. consumers, Q1 2022