Banks built their businesses on context.

Branch managers knew their customers personally — local businesses, family circumstances, and financial goals. Those conversations often revealed needs long before they appeared in account activity or credit data.

But, as banking became digital, much of that context disappeared. Mobile apps made banking more convenient and scalable, but they also reduced many customer interactions to transactions. 

In a recent episode of What’s Your Wheelhouse?, embedded finance advisor Shaul David described this shift as the rise of the “context trade.” 

The core idea is straightforward: banks still provide regulated financial products, but partners increasingly hold the customer insight needed to deliver those products effectively. The organization that understands the customer’s immediate need often controls the moment of decision.

Here are 5 key takeaways from the conversation.

1. Embedded finance is changing where customer context lives

Digital banking improved convenience but weakened that advantage. Today, many of the richest customer signals live elsewhere. Software platforms, marketplaces, and industry-specific applications often have a better understanding of what a customer is trying to accomplish at a particular moment. 

Embedded finance represents an opportunity to regain access to that context — but only through partnerships with the organizations that now possess it.

2. Customer ownership may be the wrong goal

Banks, fintechs, and partners often debate who "owns" the customer relationship, but that question is becoming less relevant in a world where customers move seamlessly between platforms and providers.

What matters more is who understands the customer's immediate need and can help solve it. A partner that identifies a financing need, a cash flow challenge, or a purchasing decision at the right moment may have greater influence than the institution that technically owns the account. 

Rather than protecting ownership, financial institutions may be better served by building partnerships that allow them to participate in those moments of need.

3. Being best-in-class matters more than being everything

Bigger product portfolios do not automatically create stronger competitive positions. David believes many institutions would benefit from focusing more narrowly on areas where they have genuine expertise and a clear right to win.

That becomes increasingly important as customers gain easier access to information and alternatives. In what David describes as a world of "perfect information," customers can more easily identify the providers best suited to meet a specific need. 

Instead of trying to compete across dozens of products and services, banks and fintechs may achieve better results by becoming exceptional in a smaller number of areas and partnering for the rest.

4. The industry needs to focus less on process and more on outcomes

Financial services companies often assume that longstanding processes exist because they are required. In reality, many processes were designed for a different era. 

Now, information can be gathered across multiple touchpoints and workflows. This creates an opportunity for financial institutions to rethink how they design customer experiences. 

Rather than asking whether a process matches the way it has always been done, leaders should ask whether it is producing the right outcome for the customer and the business. The organizations that embrace that mindset may find it easier to create experiences that feel both compliant and intuitive.

5. AI's biggest impact may be on financial discovery

While much of the industry's AI conversation focuses on operational efficiency, David believes the more significant change may occur on the customer side. Consumers and businesses are increasingly turning to AI tools for research, recommendations, and decision support. As those behaviors become more common, AI could become a new front door to financial services.

This means banks may need to think less about building the perfect chatbot and more about how their products are discovered, evaluated, and selected within AI-driven experiences. 

Watch the full conversation below.