Zachary Scott, Managing Director at Publicis Sapient on Buy Now Pay Later demand in the UK and the changing nature of CX in 2025 and beyond…

In the dynamic world of consumer Embedded Finance, Buy Now, Pay Later (BNPL) services have become a game-changer. They offer shoppers greater flexibility and convenience. BNPL allows consumers to make immediate purchases while spreading payments over time, often without interest. Its popularity skyrocketed during the pandemic. Fuelled by the e-commerce surge, it continues to play a pivotal role in shopping habits. Recent surveys reveal that 39% of U.S. consumers plan to use BNPL within the next six months.

This growth isn’t confined to the U.S. It’s a global phenomenon. U.S. fintech giant Affirm recently launched its BNPL services in the UK, marking its first international expansion. Affirm selected the UK due to strong demand from merchants eager to incorporate flexible payment options into their offerings.

The BNPL boom reflects a broader trend in Embedded Finance, which integrates financial services seamlessly into non-financial interactions. BNPL, for instance, embeds financing directly into the retail experience. This allows consumers to access payment plans as part of their shopping journey. This integration simplifies the traditionally separate processes of purchasing and financing, creating a smoother, more user-friendly experience.

Optimising customer experience for Embedded Finance

The value case for Embedded Finance is based on this seamless customer experience and the opportunities it offers to enhance the services offered. Partner companies are able to provide financial services without having to maintain extensive and complex financial infrastructure, leveraging technology to facilitate these offerings instead.

Already, several opportunities are emerging that are poised to propel the growth of embedded finance into new sectors and applications. Banks and retailers should be prepared to seize opportunities from embedded insurance products, embedded wallets in non-financial apps, and new forms of embedded lending that go beyond the existing BNPL instalment model.

Consolidating Services

However, to succeed in this next phase, financial service providers and their partners will have to keep pace with and be ready to adapt to changing consumer preferences and requirements. Staying ahead of the curve takes more than just improving individual interactions. It involves curating a comprehensive journey that aligns with consumers’ expectations for simplicity, transparency, and flexibility. People are increasingly seeking a mobile-first platform that caters to both their financial and non-financial needs in a single, unified space. Driving further consolidation of customer journeys through Embedded Finance is likely to be a critical strategy for industry leaders in the next wave of adoption.

Advancements in open banking protocols and the rise of new FinTech ventures are setting the stage for more integrated financial and non-financial services, further blurring the boundaries between these two traditionally distinct customer journeys. Emerging trends in Generative AI and conversational banking will also contribute to the enhanced customer experience. These technologies are set to shape consumer expectations, with more and more people looking to access support and services through conversational experiences. Embedded Finance is no exception.

New Opportunities

For financial service providers, embracing these trends opens myriad possibilities. Leading the charge in Embedded Finance can contribute to customer acquisition, generate direct revenue from the new services offered, and enable cross-selling of other financial products.

For partners within the Embedded Finance ecosystem, the opportunities are equally substantial. As well as driving Net Promoter Score (NPS), they can unlock new referral or commission-based revenue streams.

It’s clear that the future of consumer finance is deeply linked to the progress of Embedded Finance. As more offerings beyond BNPL emerge, the boundary between financial services and non-financial experiences can become increasingly blurred. For providers and partners ready to embrace this change and leverage it to meet evolving customer needs, this represents a substantial opportunity.

Learn more about Embedded Finance from Publicis Sapient

  • Embedded Finance

Lucian Daia, CTO at Zitec, on the rise of embedded finance driving customer loyalty across financial services

The frenzy of Christmas and Halloween marketing is already in full swing, with date reveals of Christmas market returns to pumpkin patch locations. Retailers are gearing up to execute their strategies as the Golden Quarter approaches. This year, however, retailers have another string to their bow, another key message to snag a customer: ‘Buy Now, Pay Later’ (BNPL).

Business is booming in the BNPL game, with the market quadrupling in size since 2020. It is expected to hit a record level of £30bn in 2024. The payment option is fast becoming a staple in the digital wallets of millions for the major retail milestones of the year.

Halloween is the first major retail moment in the run-up to the festive season as Britain settles back into its winter routine. However, the rise of BNPL points to consumer behaviour that’s fast evolving and anything but predictable.

But BNPL is just one piece of the puzzle. The Financial Conduct Authority (FCA) estimates that it’s likely more than half of UK adults are now using digital wallets. Furthermore, it’s expected to comprise half of all e-commerce spend (£203.5 billion) by 2027. Instant payments are also a growing part of the payment mix, with the innovation expected to represent 10.8% of overall payments by 2028. Retailers must navigate a wave of new technologies that are redefining check-out and payment processes.

Allowing new payment innovations like BNPL

Retailers sink or swim based on the customer experience they deliver. From the rise of omnichannel strategies to speedy same-day deliveries, click and collect options, and attention-grabbing immersive experiences… There’s no shortage of initiatives to drum up customer loyalty. Now, payment solutions are part of the equation. Embedded Finance is front and centre of this change, integrating financial services (like loans, insurance, debit cards etc.) into businesses that don’t usually handle finance.

Application Programming Interfaces (APIs) offer a “Plug and Play” type functionality. Retailers can offer seamless payment solutions like BNPL or digital wallets directly on their systems. This integration keeps shoppers on the site and reduces the tiresome friction of third-party pop-up systems. Moreover, it offers features like zero-interest point-of-sale loans or app-based rewards. Of course, it allows them to check-out as easily and as quickly as possible too.

Bye-bye Velcro

Bye-bye Velcro, hello snazzy digital wallet that holds payment cards and bank account details all in one place. Digital wallets have become essential components of modern payments and offer a convenient and less risky way for shoppers to buy their items.

Gone are the days of searching for physical cards under stashes of files or keying in repetitive digits on a keyboard. Digital wallets also offer a reduced risk of fraud because of advanced encryption and tokenisation technologies. Beyond security, digital wallets provide retailers with valuable consumer insights.

For instance, if a customer buys a Halloween costume and decorations, retailers can use this data to target them with personalised offers. Such as a discount on     themed candy bowls or matching spooky accessories. This level of personalisation is make or break for retailers today. Customers are setting a higher bar than ever for personalised content, offers and experiences that meet their needs and interests.

Speeding up cash flow with BNPL

Another innovation retailers need to have on their radar is instant payments. Unlike traditional systems that mean transactions can take hours or even days to complete, instant payments ensure funds are transferred within seconds.

For retailers, especially those operating on thin margins or managing high transaction volumes, the speed at which funds are made available can be make or break. The quick availability of cash means retailers can better manage their finances, buy new stock and address operational costs at pace.

Contrary to common belief, Brits don’t love queuing; in fact, they hate it. Faster payment options in-store have been pivotal in giving customers the speedy experience they demand so they can get on with their day. Quick transactions not only improve cash flow and reduce delays but enhance the customer experience. Making it ideal for those who’ve left their shopping too late, or forgotten an item on their list. As a result, customers walk away with the right impression.

Ditch the lines and pay with a tap

Retailers should be equipped with mobile point-of-sale (mPOS) systems that allow customers to make payments through their smartphones or other mobile devices, cutting down on wait times and speeding up the checkout process.

Retailers also stand to benefit from digital receipts, detailed sales reports, and real-time inventory management from having this system in place. This efficient processing not only improves cash flow but also provides valuable data for managing stock levels and customer preferences.

Beyond the Golden-Quarter

As retailers prepare for the Golden Quarter and beyond, understanding and leveraging FinTech payment innovations can seriously pay dividends. By adopting technologies such as embedded finance, digital wallets, instant payments, and mobile payments, retailers can improve their operational efficiency, enhance customer experiences, and position themselves for future growth in a digital-first world. Indeed, in recent years marked by economic shocks, huge tech advancements – especially with AI – and increasingly unpredictable consumer behaviour, it is crucial for retailers to stay ahead of payment options.

Providing consumers with flexibility, choices, and ultimately, ways to manage their outgoings and spread the cost will be key. Retailers will need to take a view on which innovations align best with the changing expectations of their customers and who they partner with to help them remain competitive.

  • Embedded Finance