UK's Embedded Finance Expansion Boosted, Yet Customer Expectations Soar
In a recent study by NatWest Boxed, the importance of easy integration and customer support for embedded finance providers has come to light. These factors are the top demands for brands, accounting for 31% and 28% of the importance respectively.
The study also reveals that only 53% of brands consider 'customer excellence' to be a characteristic of their current provider. This suggests a significant room for improvement in the sector.
However, the report paints a positive picture for brands that have embraced embedded finance. An impressive 78% of consumer brands report jumps in customer loyalty, average order value, and conversion rates following its implementation.
Brands are not shying away from offering a diverse range of embedded finance products, including point-of-sale credit, savings accounts, insurance, and merchant wallets. The need for a trusted partner who can support their growth ambitions and scale with them is evident.
Despite a rise in customer support enquiries following the launch of an embedded finance product, only 38% of brands are satisfied with the customer support offered by their provider. This indicates a need for providers to step up their support services.
The most common outcome reported by brands is increased customer conversion rates. Interestingly, 99% of brands are satisfied with their provider's current approach to risk, suggesting a high level of trust in their partners.
Major UK brands with an annual average revenue of over £100 million are seeing a positive business impact from deploying embedded finance. Moreover, more than half of brands are keen to promote their embedded finance provider to their customers as a recognised, trusted name.
The success of embedded finance is placing new demands on providers, with customer excellence becoming a priority over technical excellence. The report finds that 80% of brands have reported improved business outcomes following their rollout of embedded finance.
However, concerns about future compliance and regulatory requirements support are prevalent, with 75% of brands expressing their concerns. The upcoming new regulation for Buy Now Pay Later (BNPL) is expected to come into effect in 2026, requiring brands to seek reassurance regarding future compliance.
The report, "Embedded Finance: Success and shifting goal posts," also highlights that consumer brands are offering an increasingly diverse range of financial services as embedded finance scales. In the UK, companies like DriveWealth, which provides Brokerage-as-a-Service enabling investment experiences via APIs, are leading the charge in this space.
Despite some challenges, the future of embedded finance looks promising, with brands continuing to reap the benefits and providers adapting to meet the shifting demands.
