• Rich Bayer, Clearpay UK Country Manager at Block


• 07.05.2025 06:45 pm
#EmbeddedFinance #RetailInnovation

The rapid rise of embedded finance is fundamentally altering the retail and financial services landscapes. What was once seen as an emerging trend has become a powerful force, driven by shifting consumer behaviours and accelerated technological innovation. 

At the heart of this transformation is Buy Now, Pay Later (BNPL). By offering payment flexibility without upfront fees or interest, BNPL meets the expectations of younger, digitally native consumers who are increasingly steering away from traditional credit. According to EY’s 2024 research, 69% of Gen Z consumers frequently use debit cards, while only 39% regularly turn to credit. The demand for transparent, interest-free payment options has never been stronger - and embedded finance is answering the call.

At the same time, the retail journey itself has evolved. Platforms like TikTok and Instagram have become critical points of discovery and decision-making, with 40% of Gen Z respondents citing social media as a primary influence on purchasing choices. Embedded finance, particularly through BNPL, seamlessly fits into this new landscape, enhancing the customer experience by making shopping more accessible, intuitive, and financially manageable.

As embedded finance matures, BNPL stands at the forefront - helping to drive a future in which retail is more inclusive, flexible, and consumer-centric.

Traditional banks must accelerate innovation

The momentum behind embedded finance is posing a stark challenge to traditional financial institutions. To stay competitive, banks must move beyond incremental change and embrace the principles that have made embedded finance so appealing: agility, speed, and personalisation.

The stakes are high. The UK’s e-commerce market is projected to reach $541 billion by 2030, with BNPL expected to account for 8% of e-commerce transaction value. Meanwhile, nearly half (44%) of Gen Z reported using BNPL in 2024 - a clear indicator that the next generation of consumers is rethinking its relationship with traditional banking.

While some banks are exploring embedded finance solutions, fintechs continue to lead in innovation and customer experience in an increasingly digital-first world, where consumer expectations are being reset daily.

The future of embedded finance

As embedded finance becomes more deeply woven into the digital ecosystem, consumers’ financial lives will continue to evolve as they seek payment methods that more closely suit their needs.

Today’s consumers expect financial services to be instantly available at the point of need, without friction. Embedded finance enables users to discover brands, make purchases, manage spending, and split payments - all without ever switching applications. 

Financial services are becoming an invisible layer across commerce and lifestyle platforms - available instantly, seamlessly, and intuitively.

The new standard for digital banking

The success of embedded finance signals a fundamental shift: consumers no longer simply want "digital" services - they expect effortless, real-time, integrated experiences.

Social media and e-commerce marketplaces are not just marketing channels; they have become shopping destinations. Embedding financial services such as BNPL directly into these platforms empowers consumers to transition from inspiration to purchase in a single, frictionless flow.

The bar for financial services has been raised. Consumers want personalised, immediate, and integrated solutions that align with their digital lives. The future belongs to those who can make finance not just accessible, but invisible - effortlessly embedded into every transaction, every platform, and every experience.