Consumer demand for embedded finance ‘high’

There are “significantly strong levels” of consumer demand for embedded finance products, according to new research from core banking platform Tuum.

The study, which surveyed 2,000 consumers and over 106 IT decision makers in financial services in the UK, highlighted a high demand from consumers for services like insurance and loans as opposed to sourcing separately, but “only if the process of doing so is simple and straightforward”.

84 per cent of respondents in financial services said that embedded finance was a new priority revenue stream.

The report found 44 per cent of consumers are likely to want to take out insurance on items like holidays or mobile phones at the checkout; 41 per cent would like ‘Buy Now, Pay Later’ (BNPL) options, and 34 per cent would be likely to take out loans for high value items.

While most banks – 64 per cent - don’t currently offer these services, according to the research, they do have it on their roadmap for the next year, with 31 per cent of these banks planning to have services ready to offer as a plug-in for third-parties to deliver to consumers within the next six months.

“As consumer demand for easy, integrated finance options rises, this data confirms a trend we’ve been seeing for some time; banks rising to the challenge and changing their business strategy to position themselves as ‘infrastructure providers’ in addition to offering traditional banking services,” said Tuum co-founder and chief banking officer, Rivo Uibo. “By powering finance through consumer-facing third parties like retailers, banks can create new revenue streams and ensure they remain relevant. The savviest in the industry know the size of the technical lift this change entails, and next-generation core banking technology is growing in popularity as a means for banks to be able to support growth of embedded banking services.”

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