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UK retailers report positive revenue impact from Embedded Finance

Friday 22 March 2024 11:55 CET | News

A new report by NatWest Boxed and BCG has showed that UK retailers have reported incremental revenue growth as a result of Embedded Finance.

New research from retailers in the UK indicates that Embedded Finance could unlock a significant incremental revenue between 4-7%, according to a new report published by NatWest Boxed and Boston Consulting Group (BCG).  

Banking-as-a-Service allows retailers to partner with technology and/or banking providers to offer financial products and services to end-customers. When financial products and services are directly integrated by retailers into the customer journey, it is referred to as Embedded Finance. Retailers have reported a 5-12% boost in conversion rates, a 15-30% increase in average order values and a 4-7% incremental revenue growth overall from the use of Embedded Finance.

A new report by NatWest Boxed and BCG has showed that UK retailers have reported incremental revenue growth as a result of Embedded Finance.

Ecommerce has been a key driver of embedded finance growth, providing a widely adopted channel to reach customers. Research shows that segments with higher BaaS revenue tend to have higher ecommerce penetration of over 50%. Technology platform capabilities and end-to-end customer support were identified as the top reasons for selecting a BaaS provider, more important than price. 

The report explores the following 

The revenue potential for retailers from the use of Embedded Finance, with a focus on fashion, home improvement and marketplaces sub segments. 

The key enablers driving the growth of Embedded Finance, including the correlation between ecommerce penetration and BaaS revenues across retail segments.  

How Embedded Finance has enabled an evolving credit value chain, with credit cards at risk of cannibalisation vs POS financing which shows growth potential.  

How retailers can get started with their embedded finance journey, focusing on identifying customer needs, choosing the right products and services and identifying a BaaS provider that has a clear understanding of the business’s customers, products, technologies and operational context and requirements.  

The range of BaaS providers in the market offering an array of capabilities. When selecting a BaaS provider, technology platform capabilities and end-to-end customer support were identified as the top selection criteria, more important than price. 

In-house vs. capabilities provided by BaaS providers: Retailers interviewed chose to retain the front-end UI / UX, customer journeys, marketing and branding, all in-house, leaving responsibility for the back-end technology, regulatory expertise and operations to the provider. 

About NatWest Boxed 

NatWest Boxed offers a cloud-native Banking-as-a-Service platform that enables brands and fintechs to offer financial services to their customers, securely and at scale. Boxed was established in 2022, through a strategic partnership between NatWest and Vodeno to create a new Banking-as-a-Service business in the UK. Combining its technology stack, banking licence, compliance expertise and operational support, its vision is to power the UK’s best embedded financial experiences. 

Source: Link


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Keywords: embedded finance, report, research, fintech, banking
Categories: Banking & Fintech
Companies: NatWest
Countries: United Kingdom
This article is part of category

Banking & Fintech

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NatWest

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