Marqeta Study: Embedded finance gains popularity in the UK

The company’s 2023 State of Payments report - surveying 4,000 consumers across three continents, including 1,000 in the UK - reveals how consumers are no longer treating embedded finance and digital financial services as a novelty, but are instead embracing the value that they can bring to their lives.

Adopting payment innovations

The digital technology blending both the physical and virtual worlds is changing everything from how people interact with one another to the businesses consumers frequent, but nowhere is the pace of change currently so rapid as in the world of financial services, as per Marqeta. One way businesses, banks, and fintechs are meeting changing consumer financial demands is through embedded finance with capabilities such as in-app payments or Buy Now, Pay Later (BNPL) services being integrated into the purchasing experience.

Marqeta’s 2023 State of Payments report, an annual survey of consumers about their purchase preferences, shows the confidence that consumers have in new digital payment technology and embedded finance. The study reveals that 72% of UK mobile wallet users surveyed have made a purchase via a retailer’s embedded mobile app owing to the enhanced experience. Almost three-quarters (73%) of UK mobile wallet users surveyed went on to share that they would feel confident enough to leave their wallet at home, and only rely on their phone for making payments.

Confidence extends to digital payment processes with 76% of UK respondents stating that they will always add a new card to their mobile wallet, and 89% believing this to be a ‘simple’ process, up from 81% in 2022. As a result, 93% of UK mobile wallet users surveyed reported having one or more cards loaded into their mobile wallet. Beyond this, mobile payment methods continued to rise in popularity as convenient, frictionless payments took precedence:

• 68% of UK consumers surveyed reported using a mobile wallet in the last 12 months;

• 95% of UK consumers surveyed reported using contactless payments in the past 12 months;

• 73% of UK consumers surveyed reported using peer-to-peer (P2P) payment transactions at least once;

• 65% of UK consumers surveyed believe cash will disappear completely, with a further 44% believing this will happen within the next 10 years.

Officials from Marqeta said that embedded finance is enabling brands to become financial service providers, offering consumers more streamlined payment experiences. What their report shows is that after years of massive digital innovation, consumer confidence in modern, embedded payment methods is high and companies who don’t offer these can miss out on future adoption.

Traditional banks still hold consumers’ trust

Marqeta’s study goes on to show that, while demand for digital and embedded finance services is moving into mainstream adoption, when it comes to banking preferences, UK consumers remain resolutely committed to their primary or traditional banks. 84% of respondents said they used traditional banks as their primary providers, with 41% stating that they had remained with their bank for over 10 years. A further 77% of those surveyed said they had no intention of changing their primary banking provider. The vast majority of respondents use their primary bank provider for debit card (77%) or savings account (53%) services.

Notably, however, UK consumers are balancing their loyalty to their primary banking providers with their desire for superior user experiences for certain capabilities. The Marqeta study reveals that 43% of UK respondents would now consider getting financial services from non-financial providers including tech companies, social networks, or retailers.

Marqeta’s representatives added that we’re at an inflection point when it comes to legacy providers coexisting with new-age payment services. While the report shows a current balance between traditional and digital-first, embedded finance is challenging companies to think about how they build payment solutions into their offerings. Long-term consumer loyalty will depend on who can provide the most exceptional end-to-end user experiences.