-Embedded finance is top of mind for both the fintech community and the brands that
will bring services to market. There’s a veritable gold rush to launch embedded finance
services over the next five years, with three quarters of brands expecting to have
products in the market by 2023. The result will be more seamless consumer and business
experiences, and an additional 720.78 billion Euro of revenue for European brands by
2026. But it is primarily brand, rather financial considerations, driving brands towards
embedding financial services into their offerings. What were once services exclusively
provided by banks and card issuers, divorced from the shopping experience, are now
an invisible but inseparable part of the customer experience. However, a lack of fintech
knowledge and capability – and a limited talent pool, confusion over partnerships and
regulation are challenges brands must overcome to achieve embedded finance success.
-Most European brands looking to join the embedded finance boom will do so via an embedded payments offering, according to new data from OpenPayd, a leading global payments and banking-as-a-service platform. Nearly all companies surveyed (96%) said they were planning to offer embedded payments to customers in the next five years
-Brands are already investing heavily in embedded payments with almost a quarter (22%) having embedded payments in development and three quarters expecting to take products to market within the next two years.
-According to the brands surveyed, the three most appealing aspects of embedded finance are: retaining the front-end customer experience (85%), increasing the number of customers touchpoints with their brand (84%) and offering mobile wallet or current account options to customers (79%).
-As embedded finance matures there willbe more regulatory changes to contend
with, as we have seen within various branches of fintech. Embedded financial services require newer and different types of licensing with new controls and processes as regulators adapt quickly to address factors like data privacy and know your customer (KYC)
requirements. Brands will need to seek licenses and comply with regulations which can be both time-consuming and expensive, especially if it is the brand’s first foray into embedded finance.
The full report, Embedded finance surge to net €720bn for European brands by 2026 can be downloadedhere.