UK brands will claim the lion’s share of the £619 billion European embedded financial services market in the next five years.
UK-headquartered brands hold higher revenue expectations of embedded finance than their European counterparts, according to new data from OpenPayd, a leading global payments and banking-as-a-service platform. Over the next five years, UK brands expect to generate £230.48 billion from embedded financial services, 37% of the £619 billion (720 billion Euro) total for European brands.
As revealed in ‘Embedded finance surge to net €720bn for European brands by 2026’, 73% of European brands plan on launching embedded financial services within the next two years. UK firms are among the continent’s early adopters. 7% of them already offer embedded financial services, tied with Italian brands and only slightly behind Germany, where 10% of brands have launched embedded finance propositions. 14% of British brands are currently building an embedded finance product and more than a third (36%) expect to launch embedded financial services in the next year, followed by Italian (27%), German (26%), French (23%) and Spanish (21%) brands.
One of the early examples of embedded finance, Buy Now Pay Later (BNPL), has taken the e-commerce world by storm. Worldpay estimates that BNPL accounted for 2.1% of global e-commerce transactions in 2020 – roughly $97 billion. Juniper Research anticipates that BNPL will account for more than 50% of the market for embedded finance by 2026.
“BNPL has rapidly hit the mainstream. It’s now almost unthinkable for an e-commerce player to not offer BNPL. In the next two years the same will be true of more sophisticated embedded financial services that extend far beyond e-commerce,” said Iana Dimitrova, Chief Executive at OpenPayd.
“The UK is a world leader in financial services. Now it’s becoming a world leader in embedded financial services. However, it’s critical brands embrace the partnerships they need in order to ensure embedded payments, banking, lending and insurance achieve the success we’re witnessing with BNPL. Brands will need help accessing the fintech skills they need to put embedded finance propositions in place and support navigating increasingly complex regulations. We’ve only scratched the surface of the huge, unmet demand for embedded finance across Europe – the next two years are going to be transformative.”
Conducted by Coleman Parkes, respondents included 150 senior executives from B2C and B2B marketplaces, horizontal and vertical SaaS brands and gig economy platforms across the UK, France, Germany, Italy and Spain. Brands covered markets from eCommerce and manufacturing to technology services and mobility and generate a minimum of €60m in annual revenue. The survey was completed in July 2021 in accordance with the Market Research Society’s Code of Conduct. Respondents were responsible for the identification and implementation of new product and service offers to customers.