The past few years have seen massive transformation within the retail space, and the pandemic only accelerated existing digital trends, particularly with eCommerce
Today, retailers understand that a frictionless online customer experience (CX) influences not only customer retention, but also revenues and sales growth.
Building relationships with consumers has always been an important part of retail, and smart brands know CX is the best way to do so. When shopping online, today’s consumer expects more than just their personal information auto-filled at checkout. They expect a smooth and seamless experience, and increasingly many are expecting embedded financial services to be offered to them throughout the purchasing journey.
This embedded banking phenomenon is increasingly common with major retailers – for example, Apple offering a Buy Now, Pay Later for some of their products, and Tesla offering insurance at the point of sale. These products are not just external links to third-parties – they are tailored financial services being directly offered to their customers. These retailers are putting CX at the forefront, and with the right technology, embedded financial solutions are possible for any retailer.
Banking on themselves
Today, Banking-as-a-Service (BaaS) providers can offer any non-financial company a fully functional and compliant banking product tailored to their business. Traditionally, building such a product from the ground up was not feasible for everyone because of the cost and the regulatory complexity involved. The right BaaS provider can make banking products accessible and easy and affordable.
The link between BaaS solutions and improved CX is being driven by the rise of new Open Banking policies, which enable the underlying data and infrastructure to be shared between parties more easily. In the case of Vodeno, our cloud-based platform uses advanced API technology that seamlessly bridges the gap between the retailer’s platform, the customer’s interface and banking applications, providing a frictionless experience for the end-user.
This is where CX starts to look like an ever-more appealing proposition for retailers. Research has found that the new revenue potential generated through Open Banking-enabled SMEs totalled £500 million in 2018, with that figure forecast to reach £1.9 billion by 2024. This growth is too great an opportunity for retailers to overlook, especially when the benefits of embracing embedded banking go beyond increasing revenues.
Focus on loyalty
A key part of retail has always been understanding the customer, and anticipating their needs in a way that encourages them to keep coming back. This is why focusing on offering a personalised experience that seamlessly integrates users’ preferences and personal information is so important. In fact, Google found that 73% of consumers say that a good experience is key in influencing their brand loyalties.
What’s more, an Open-Banking enabled platform can offer value to the retailer as well as to their customer. Businesses that aim to know their customers better will find that through Open Banking, they have access to more data about their customer’s preferences and habits, and can leverage that information to strengthen their relationship.
Better off embedded
Fintechs and BaaS providers are becoming better equipped every day to support retailers and non-financial companies of all sectors, making the process of embracing and integrating embedded banking solutions into their ecosystems easier and more affordable. The benefits to retailers are clear – an improved customer experience, increased loyalty and retention and better insights to engage their customers..
The driving force behind the retail-fintech revolution is BaaS innovation, with the underlying technology that powers these new products becoming faster and smarter. Embedded banking will continue to change what consumers expect from retailers, and those who overlook the opportunity will be left behind. Retailers need to understand how embedded banking can accelerate their business, and it is critical to choose the right BaaS partner to reach their ambitions.
About the Author
Tom Bentley, Chief Commercial Officer, Vodeno. Also a member of the Executive Board and responsible for the Commercial and Marketing strategy in the development of Vodeno globally. Vodeno, a Warburg Pincus backed company, is the most comprehensive Financial Services OS with a 400+ million balance sheet to enable ‘Banking as a Service’ across Europe for regulated and non-regulated brands and entities. Vodeno Platform operates entirely in the cloud, comply with strict regulations, leverage over 80+ curated partners and allow innovation at speed.
Featured image: ©Zhu Difeng
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