As an increased cost of living continues to impact people across the UK, it is becoming increasingly clear that consumers are keeping a much closer eye on their money. In the midst of this challenging environment, the adoption of embedded finance is rapidly increasing; according to new research from Vodeno and Aion Bank.
European Banking-as-a-Service (BaaS) provider Vodeno has revealed that 37 per cent of users are more likely to seek out brands that offer embedded banking products like BNPL and flexible payment options due to the high cost of living, with this figure rising to 50 per cent for those aged 25 to 34.
Competitive prices were cited as the most important factor to 44 per cent of consumers when it comes to their brand loyalty, closely followed by a good selection of products (43 per cent).
The results highlight that the availability of embedded banking products directly in the websites and apps of consumer brands is starting to make an impact on customer loyalty. Overall, 40 per cent of consumers say they will only stay loyal to brands that offer financial benefits like BNPL and cashback, with this figure rising to 50 per cent among 25 to 34-year-olds.
Regarding engagement with loyalty programmes, 46 per cent are more likely to use a brand’s loyalty card to make purchases if it included BNPL. This figure was highest amongst the youngest consumers surveyed, rising to 53 per cent for those aged 16 to 24 and even higher (65 per cent) in the 25 to 34 demographic.
Overall, the new Vodeno/ Aion Bank research highlights that embedded banking adoption is now significantly impacting brand loyalty. Consumers appear much more likely to use embedded banking products from brands as a result of the cost-of-living crisis – an advantage for any firm offering these services to users.
“Competition for the consumer has never been more fierce”
The impact of embedded finance may even go beyond brand loyalty, with the research revealing that consumers that had tried a brand’s embedded banking product are more likely to return to their app or website.
Nineteen per cent of all respondents said they shop with their favourite brands ‘monthly’, while 16 per cent said ‘once every two or three weeks’.
But of those who had engaged with embedded banking products, 36 per cent said they return to the brands between three and five times a month – and the figure rose to 43 per cent for those aged 25 to 34.
Kim Van Esbroeck, country head for Aion Bank Belgium and chief revenue officer for Vodeno and Aion, said: “We cannot ignore the benefits of embedded banking. Our research offers strong evidence that consumers are not only using these products, but it is also positively influencing their loyalty to BaaS-enabled brands.
“Competition for the consumer has never been more fierce, particularly in these difficult financial times, and brands that offer flexible payment and lending options provide more choice, which can boost consumers’ spending power when they need it most.
“Embedded banking is also making an impact on brand loyalty, with 43 per cent of 25 to 34-year-olds saying they shop more at brands that offer an embedded banking product. We have already seen how BaaS-enabled embedding banking is helping to innovate customer journeys, and it is clear the next area of disruption will be to supercharge brands’ loyalty programmes.”