Easier access to financial services in comparison to traditional banks is a key reason for 41% of consumers turn to embedded financial services, according to a new study by Solaris and Roland Berger. The ‘Disrupting the value chain for financial services - How to drive revenue growth with embedded finance’ study composed the views of 1600 consumers equally split across the four major European markets: Germany, Italy, Spain and France.  

41% of participants named product accessibility as the defining factor for using embedded financial services and products. This can be attributed to simpler applications and faster KYC processes.  

That was ahead of 39% of respondents noting strong availability of embedded finance solutions at the checkout and 32% acknowledging improved user experience as well as 31% referencing attached benefits such as loyalty programs and payback schemes.  

The rise of cashless and cardless payment methods was prevalent in the types of embedded financial services that consumers are currently using, with digital wallets accounting for 36%, ahead of credit cards 34% and online bank accounts 28%. Only debit cards (39%) are being used by more people than digital wallets. Interestingly, while buy-now-pay-later (BNPL) were noted by 18% of respondents across Europe, in Germany BNPL was by far the most popular embedded financial solution as acknowledged by 51% of those surveyed.  

Jörg Diewald, Chief Commercial Officer at Solaris said: “The market for embedded financial products is increasing in maturity. In recent months, we have seen that the need for faster, safer and more attractive financial products is at the heart of our partners' response to customer behavior. Digital financial services from brands are no longer just a trend, but are establishing themselves as a serious alternative to traditional banking products.” 

When asked what parameters would make a consumer more likely to use an embedded finance solution, more than a quarter (26%) cited that being able to obtain multiple products from one brand as a key factor, with digital wallets the most desired new product. 

The study also revealed that nearly half of consumers (48%) have used an embedded finance product from e-commerce businesses, followed by retail (42%) with travel (31%) and transport and mobility (29%).  

Diewald added: “The research demonstrates the potential that brands have to grow their customer base by offering multiple embedded finance solutions. For consumers, this could include a debit card from a favourite brand that offers loyalty rewards, a point-of-sale loan to spread the cost of a purchase, or an insurance product tailored to the contents of the shopping cart.” 

The research discovered that data security remains the largest area of concern in relation to taking out embedded finance products for 61% consumers ahead of transparency (42%) and trust, as noted by a third (33%).