How retailers can increase customer engagement by being a one-stop shop for their financial needs. 

The biggest change I’ve seen in online retail in the last decade is the introduction of personalization. Think targeted ads, personal offers and ‘we think you might like’ suggestions. This has been a huge success. I read recently that 90% of marketers say online retail personalization has boosted their revenues. While one report by Gartner noted that businesses that invest in personalization typically outsell competition by 30%. The only thing surprising about those figures was how low they were. 

I work every day with online retailers helping them to personalize their services, but we’re not helping them personalize the products their customers buy. That’s old news. We’re helping them personalize the way they buy them and analyzing what those purchases mean for their wider financial lives. 

Today, almost everything we do is personalized via algorithms, from the way we watch movies to how we date. So it’s always seemed strange to me that the way we manage and spend our money is so universal. Yes, there are numerous banks and financial services providers, but once we settle on one, every customer is offered the same services and products at the same time. 

Thanks to embedded finance this is no longer the case. In fact, customers don’t even need to go to a bank to access those services. It’s online retailers themselves that are offering them. 

Embedded finance has already changed how we shop

Although the term ‘embedded finance’ (meaning the embedding of financial services into digital products) may be new to many, it is not a particularly new concept. Especially not to online retail. Ever since the e-commerce boom of the late 90s, people have been making payments via websites and platforms. It might be far from the frictionless user experience you get today, but undeniably it was still embedded finance

Today, it’s most recognizable in the form of Buy Now Pay Later (BNPL) providers like Klarna. Their point of sale (POS) loans are embedded via API into the payment flows of online retailers and customers can access quick, simple loans just when they need them. 

All of this has undeniably been a huge success. According to one study, across the UK, Germany and Belgium, 75% of retailers are using embedded finance to offer credit cards, ‘Buy Now, Pay Later’ (BNPL) schemes and loyalty incentives, while 56% are planning to introduce further financial services in the near future. 

The point of sale isnät always the point of need

The primary reason for Klarna’s success, at least initially, is that customers were presented with a financial service right when they needed one. About to pay? Well before you do, here’s an easy way to pay in the future or spread those payments out. 

Value-add products being offered at the point of sale or after the sale has been completed is nothing new. But pick up is famously low. Why? Because the point of sale isn’t always the point of need and there are often multiple, non-personal products to choose from. Choice paralysis can be really damaging. 

Embedded finance can change this. Online retailers can offer a huge variety of innovative financial services from the world’s best fintechs exactly when customers need them most. Specific insurance, wealth management, investments, business loans, cards, virtual accounts, cross-border payments, foreign exchange and more – all at the point of need. 

Purchases aren’t the only triggers either. Certain spending patterns signify certain life events and thanks to open banking, online retailers can leverage those patterns to offer highly personalized, suitable products. 

There’s one problem though. Integrating with one financial service provider is quick and cost-effective. However, finding and partnering with multiple providers is not. All of these products have different APIs. Even among similar products. Luckily, that’s no longer the case. 

Aggregators are fintech multi-adapters

Companies like mine, AAZZUR, spend our time partnering with the best fintechs in the world and integrating their services into our own ecosystem. These then become available to online retailers with only one integration. 

A good way to think about it is how your laptop, phone, tablet, router, headphones and sound system all have entirely different charging ports. The solution? A multi-adapter. 

This means online retailers from any sector can gain access to new financial products for their customers with one integration. 

Online retailers can essentially become a one-stop shop for financial services, allowing their customers to conduct all of their financial business on their site and platform. These can be products that enhance their current offering but they can also be entirely new products and revenue streams. 

If they choose, online retailers can even become banks themselves – something modern consumers have an appetite for. 

Not only does offering these services create new revenue streams, it increases retention and engagement. One report found 87.5% of non-financial companies that have begun to offer financial solutions had increased engagement levels, while 85% said they’d attracted new customers. 

It’s no surprise then that embedded finance is predicted to be worth $3.5tn by 2030, with retail set to make up almost half of that. 

Philipp Buschmann

Philipp Buschmann is co-Founder and CEO at AAZZUR, a one-stop shop for smart embedded finance experience. Recognized as a rising star in the FinTech space, AAZZUR’s mission is to build profitable banking whilst at the same time empowering consumers to have access to better informed financial choices.

Philipp is a serial entrepreneur with extensive experience working in Challenger Banking, Financial Services, IT, and Energy across the world. He took one of his business’s public - Ignis Petroleum was publicly listed in the US and Germany.

Having started as a developer in Financial Services, Philipp has first-hand experience of the banking revolution from both a technology and financial perspective. His interest in behavioral economics helped inspire AAZZUR’s revolutionary work on customer centricity in banking.

Unlock the Power of WiFi 6: How To Leverage It...

TBT Newsroom • 01st March 2023

Are you tired of being left behind in the technological world? Well, fear not! WiFi 6 is here to save the day and bring your business into the future. With unprecedented speeds and a host of new capabilities, WiFi 6 is the must-have technology for any business looking to stay ahead of the curve.

Sustainable Phones

TBT Newsroom • 04th May 2022

Cat phones (made by UK-based company Bullitt Group) are explicitly designed to be rugged, with devices built to last and have a longer lifespan. Industry Analyst firm Canalys notes that the current average lifecycle of smartphones in the mass market is approximately 37 months for iPhones and 33 months for Android devices.

From Credit Cards To Mobile Payment  

Ripsy Plaid • 27th April 2022

Plaid, the open finance data network, and payments platform have appointed Ripsy Bandourian as its first Head of Europe as it continues to rapidly expand across the continent. Based in Amsterdam, Ripsy will lead the business strategy and operations for Plaid’s Europe arm as it moves into its next stage of growth. 

How biometric technology can be used for remote proof of...

Chris Corfield • 08th April 2022

The pandemic has accelerated the adoption of digital financial services, driving organizations to speed up their transformation programs globally. Most banks, as well as pension providers, are still in the early stages of integrating technologies such as machine learning and artificial intelligence, and as the world continues to battle the long-term effects of COVID-19, the...