UK retailers report revenue boost from embedded finance

UK retailers have reported “incremental” revenue growth of between 4% to 7% as a result of implementing embedded finance, according to new research by NatWest Boxed and Boston Consulting Group (BCG).

The 21 large retailers surveyed also reported a 5% to 12% boost in conversion rates and an increase in average order values of between 15% to 30% from the use of embedded finance.

The research by BCG and cloud-native Banking-as-a-Service (BaaS) platform NatWest Boxed found that segments with higher BaaS revenue tend to have higher ecommerce penetration of over 50%.

Retailers identified technology platform capabilities and end-to-end customer support as the primary reasons for choosing a BaaS provider, over and above price.

Andrew Ellis, chief executive officer of NatWest Boxed, observed that 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,” he said.

“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.”

The findings have been published in a report, ‘Bridging Finance & Retail: The Power of Banking-as-a-Service’.

Managing director and partner at BCG Mark Dynes added: “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.”

NatWest Boxed was established in 2022, via a strategic partnership between NatWest and Vodeno to create a new BaaS business in the UK.