56% of EU retailers plan to launch new embedded finance offerings

A new independent survey of 753 senior decision-makers from European retail and eCommerce businesses reveals their appetite for embedded finance products.
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A new independent survey of 753 senior decision-makers from European retail and eCommerce businesses reveals their appetite for embedded finance products.

It found:

  • 74% of European retailers are already offering embedded finance solutions to customers
    • 56% plan to roll out more of these solutions in the coming year increasing the embedded finance market
  • Cashback loyalty schemes, credit cards and debit cards are the most common products currently being offered 
  • 73% of retailers say customers have expressed a desire for embedded financial products
    • However, 39% of decision-makers admit they do not fully understand the term ‘embedded finance’

The survey results shed light on European retail and eCommerce businesses’ growing interest in embedded finance products, indicating a shift away from traditional financial services. However, it is worth noting that despite the evident enthusiasm, 39% of decision-makers admit a lack of full understanding of the term ’embedded finance,’ highlighting the need for further education and awareness in this evolving landscape compared to traditional financial institutions and services.

embedded finance eCommerce

The embedded finance industry is picking up steam across Europe’s retail and eCommerce sector, with many financial institutions developing, with over half (56%) of retailers surveyed intending to either increase their offering (34%) or to start offering (22%) embedded solutions in the coming 12 months, new research from Banking-as-a-Service (BaaS) provider Vodeno has revealed. 

The company commissioned an independent survey among 753 senior decision-makers in retail and eCommerce sectors across the UK (251), Germany (250) and Belgium (252).

Europe’s retailers already offer embedded finance

embedded finance services

It found that a majority (74%) of Europe’s retailers already offer embedded financial services to their customers through embedded payments. However, the UK (82%) is well ahead of Germany (75%) and Belgium (64%). 

Only 5% of retailers which have not integrated financial solutions such as embedded payments into their customer journey have no plans to do so in the next year.  

Vodeno also quizzed decision-makers about which products they have implemented, and which are earmarked for investment in 2022.

Cashback through loyalty schemes, credit cards and debit cards are the most commonly offered financial solutions or services – 32% of the retailers currently offering embedded financial solutions provide these. These were followed by current accounts and loans (both 29%). 

In addition to the prevalent financial services like embedded payments, there is a growing interest in embedded insurance among European retailers. According to a survey by Vodeno, a notable 29% of retailers are planning to invest in embedded insurance in 2022, to provide their customers with seamless insurance products integrated into their shopping experience.

Buy Now, Pay Later (BNPL)

Buy Now, Pay Later (BNPL – 35%), overdrafts (36%) and decoupled debit (37%) are set to attract the most attention from those retailers investing in embedded finance over the coming 12 months.

embedded financial services

A vast majority (67%) of European retailers said that, in 2021, customers had indicated they would like to see financial services integrated into their offering. In the UK, the figure rose to 73%, compared to 71% and 58% in Germany and Belgium, respectively. 

Almost two-thirds (65%) of retail firms reported noticing more of their competitors offered embedded financial solutions in 2021. Again, this view was more prevalent in the UK (74%) than in Germany (65%) or Belgium (57%). 

What’s the future of Banking-as-a-Service and what does it mean for retailers and creators?

On a personal level, however, two in five (39%) senior decision-makers in the retail sector said they personally do not fully understand the term ‘embedded finance’.

Wojciech Sobieraj, CEO of Vodeno, said: “Interest in embedded financial solutions is rising rapidly among non-financial businesses, and with good reason. Smart brands understand the value of embedded banking because they know that creating a better checkout experience will increase conversion and customer engagement. This is the promise of Banking-as-a-Service.” 

”Our research shows that Europe’s retailers recognise the embedded banking opportunity and are planning to invest. But, it is important for brands to understand that not all BaaS providers are created equal. BaaS technology must be coupled with a licence and the compliance and regulatory expertise in order to offer these products.” 

“This is what we provide at Vodeno as one of the embedded finance providers, cloud-native, API-based technology alongside access to a European banking licence, to allow our clients to open new commercial opportunities, optimise their customer journey and enter new markets.”

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