New research from retailers in the UK indicates that embedded finance could unlock a significant incremental revenue between 4-7%. That is according to a new report published by NatWest Boxed and Boston Consulting Group (BCG) today.
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.
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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.
Andrew Ellis, CEO, NatWest Boxed, said: “Embedded finance is reshaping the retail industry. With developments in cloud-native technology and product innovation converging, retailers are increasingly offering financial services and embedding them into customer journeys. But with an increasingly complex landscape of products, technology and suppliers to choose from, retail leaders need to ensure they focus on the right services with a trusted and secure BaaS partner to maximise the opportunity.”
Other points explored in the report
The report also explores the revenue potential for retailers from the use of embedded finance, with a focus on fashion, home improvement and marketplaces sub segments and the key enablers driving the growth of embedded finance, including the correlation between ecommerce penetration and BaaS revenues across retail segments.
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By GlobalDataThe report also looks at how embedded finance has enabled an evolving credit value chain, with credit cards at risk of cannibalisation vs POS financing which shows growth potential and 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.
