UK-headquartered brands hold higher revenue expectations of embedded finance than their European counterparts, according to a new report.
Over the next five years, UK brands expect to generate £230.48 billion from embedded financial services, 37% of the £619 billion (€720 billion) total for European brands.
Embedded finance is one of the hottest topics in FinTech today. It started hitting the headlines back in 2019 when Angela Strange proclaimed “every company will be a FinTech company”.
Following this bold assertion Simon Torrance, an expert in business model transformation, stoked the flames further in 2020 by claiming that embedded finance would be worth $7.2 trillion globally by 2030.
And in 2021 Grab Financial Group reported a 95% compound annual growth rate in its revenue – 93%, or $320 million, of which derived from embedded financial services.
UK firms are among the continent’s early adopters. 7% of them already offer embedded financial services, tied with Italian brands and only slightly behind Germany, where 10% of brands have launched embedded finance propositions.
14% of British brands are currently building an embedded finance product and more than a third (36%) expect to launch embedded financial services in the next year, followed by Italian (27%), German (26%), French (23%) and Spanish (21%) brands.
Embedded finance enables any brand or merchant to seamlessly integrate financial services into their core product at their customers’ point of need.
This creates new opportunities for any brand to add value by building more frictionless digital experiences for customers, adding convenient payment methods and offering customised financing solutions.
One commonly used example is in-app payments. Instead of having to dig into wallets, a consumer using an app with embedded payments can pay with just a few taps – Uber, for example.
Other current embedded finance products include ‘buy now, pay later’ options offered at checkouts in e-commerce stores, such as those offered by Klarna, and embedded banking services such as Shopify Balance which allows merchants to hold money, pay bills and spend directly from their Shopify Balance account.
Ultimately, employing embedded finance solutions allows the financial services element of a purchase to fade into the background of customer journeys.
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