Banking-as-a-Service (BaaS) allows retailers to partner with technology and/or banking providers to offer financial products and services to end customers. When retailers directly integrate financial products and services into the customer journey, this 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.
E-commerce 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 e-commerce 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.”
Mark Dynes, managing director & partner, BCG: “BaaS and embedded finance is enabling all types of retailers to become a distributor of financial services. As our research shows, retail leaders can rely on embedded finance to meet a broader set of customer needs and maintain control of critical brand experiences. The results have been game changing, with a compelling impact on conversion, basket sizes and long-term engagement.”
The report explores:
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