How embedded finance is impacting the retail industry

Philipp Buschmann
25 September, 23

Embedded finance has been the buzzword in the world of retail for a few years now, and has been changing the game. The integration of financial services into non-financial products or services, such as buying a car, renting a house, or ordering a cup of coffee is becoming increasingly popular. This trend is now gaining momentum among retailers who want to offer greater convenience and value to their customers. In fact, it is EF is not new; being able to pay with a card really was what got online retail started.

Embedded finance is an essential part of retail offerings, far beyond the standardised financial products and services, it is now offering consumers products and capabilities they didn’t know existed, but ones they are happy to take advantage of now they are available. This disruption of the traditional banking model means consumers are no longer satisfied with just purchasing products or services, they want in fact a complete experience that includes flexible payment options, loyalty rewards, and personalised financial advice. Retailers are therefore leveraging the power of embedded finance to offer such features to their customers and improve their overall shopping experience.

Below are some of the ways, embedded finance has impacted the retail industry:

New Payment Options -, Embedded finance is facilitating the rise of new payment options. Mobile payments, for example, are becoming increasingly popular, as customers are able to make purchases using their smartphones. This has created new opportunities for retailers to offer more convenient payment options to their customers. Mobile payments can also help to reduce friction at the checkout, thereby improving the customer experience. People no longer have to carry a wallet or purse, or even money or cards. Everything is on their phone, it could not be simpler or, faster. This creates an enormous advantage for retailers as it cuts through barriers that before may have impeded spontaneous purchases because people didn’t have enough cash or left their wallets at home. It provides instant access to currency.

Also, an interesting development is the circumvention of the card companies with direct payment options account to account.

Point-of-sale Financing – One of the most significant impacts of embedded finance on the retail industry is the ability to offer point-of-sale financing. This means that customers can apply for financing at the time of purchase instead of having to apply for credit separately. This also known as BNPL (buy now and pay later) is particularly beneficial for retailers who sell high-ticket items such as furniture, electronics, and appliances. Point-of-sale financing also helps retailers to increase their sales as customers are more likely to make a purchase if they have access to financing options.

Customer Loyalty – Another way in which embedded finance is impacting the retail industry is by improving customer loyalty. Retailers can offer loyalty programs that enable customers to earn rewards or discounts every time they make a purchase. By linking these programs with financial services such as credit cards or mobile payment systems, retailers can provide customers with a more holistic and valuable experience. This, in turn, creates a sense of loyalty among customers who are more likely to return to the retailer for future purchases. Let’s say you are in the market for a new credit card. Rather than going to a traditional bank or credit union you decide to use a fintech service to compare different credit cards options. After inputting some basic information about your credit score, spending habits, and rewards preferences, you are presented with a list of credit cards that are tailored to your needs. Once you have chosen the best credit card, you can apply directly through the fintech service’s platform and are approved within minutes.

Personalisation – Embedded finance is also enabling retailers to offer personalised financial advice to their customers. With access to customer data, retailers can analyse spending patterns, income, and other financial behaviours to provide tailored advice to their customers. This can help customers to better manage their finances and make more informed decisions about their purchases. Retailers who offer such services differentiate themselves from competitors and grow customer loyalty. For example, a digital banking app might offer a cash-back reward for using their debit card to make purchases at specific retailers or online merchants. The more a customer uses the card, the more cashback they earn, which can be redeemed for a variety of rewards, such as gift cards, merchandise, or statement credits.

Democratisation of Financial Services – Perhaps the most significant impact of embedded finance on the retail industry is the democratisation of financial services. In the past, only banks and financial institutions could offer financial products and services. But with embedded finance, retailers are becoming financial service providers in their own right. This has led to a more competitive marketplace, as retailers compete with traditional financial institutions to offer customers the best financial products and services.

As retailers become more proficient at offering financial services, they are also taking on greater responsibility for managing risks associated with financial transactions.

It is essential for retailers to comply with financial regulations, monitor financial transactions, and ensure the security of customer data. This means that retailers must invest in technology and risk management systems that enable them to manage financial services safely and responsibly, in today’s digital world, these technological tools are essential.

Embedded finance has become a game-changer for the retail industry, presenting lucrative opportunities for retailers to boost profits. Through the integration of financial services into non-financial products or services, retailers are not only creating additional value for their customers but also enhancing customer loyalty. This is achieved by offering point-of-sale financing, loyalty programs, personalised financial advice, and a range of new payment options. Despite the initial challenges, the potential benefits of embedded finance for retailers are vast. We will witness further innovation in this space in the years to come, ultimately driving higher profitability for retailers and more ease for customers.

By integrating financial services into non-financial products or services, retailers are creating more value for their customers and improving customer loyalty. Point-of-sale financing, loyalty programs, personalised financial advice, and new payment options are just some of the ways in which embedded finance is impacting the retail industry.

Despite the challenges, the potential benefits of embedded finance for retailers are vast, and it is likely that we will see further innovation in this space in the years to come.

About Philipp Buschmann, Co-Founder and CEO at AAZZUR

Philipp Buschmann is co-Founder and CEO at AAZZUR, a one-stop-shop for smart embedded finance experience.  Recognised 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 of working in Challenger Banking, Financial Services, IT and Energy across the world.  He took one of his businesses 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 behavioural economics helped inspire AAZZUR’s revolutionary work on customer centricity in banking.

Philipp holds an MBA from the London Business School. He is passionate about entrepreneurship and loves exchanging ideas, insights and discussing FinTech’s future.  He has spoken at major Fintech events including Money 20/20, MoneyLive, Finovate, Fintech Matters, and the Future of Retail Banking.

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