GENEVA, Switzerland – 29 JUNE 2022 – Three in five British adults (60%) have used in-app financial services as part of the checkout process when shopping online in the past 12 months, according to a new investigation of Temenos, the world’s first open platform for composable banking.
The availability of integrated financial services – financial services provided online by non-financial companies – has increased significantly in recent years. These integrated services include: using an electronic wallet such as PayPal or Google Pay (used by 42% of UK adults in the past 12 months); installment payment via a Buy Now Pay Later (BNPL) solution (17%); round up payment at checkout to donate to charity or transfer to personal investment (15%); take out insurance when buying a high-value product (13%); and take out a cashier loan to cover the cost of expensive items (6%).
Embedded financial services are particularly popular among younger generations, with four in five (80%) in the 18-34 age bracket having used one in the past year.
With a high proportion of customers using at least one of them at least once a month and citing attractive features such as speed, convenience, security and user-friendliness, the integrated finance market is growing rapidly. , creating new opportunities for banks, fintech lenders, banking-as-a-service providers and merchant brands.
The drivers and implications of integrated finance for banks and the entire banking ecosystem are explored in a Temenos white paper Open Banking and the Rise of Banking as a Service.
Kanika Hope, Chief Strategy Officer at Temenos, commented:
“From retailers to airlines, ride-sharing apps and coffee chains, brands are integrating financial services into their online and mobile offerings to increase revenue, build customer loyalty and better understand their customers. This survey shows that the use of these services is starting to grow, especially among Gen Zers looking for seamless online experiences that are integrated into their daily lives.This presents new opportunities for incumbent banks as well as for new entrants such as banking service providers.
The Temenos survey found that using an e-wallet was the most popular integrated financial service, with 42% of respondents having done so in the past year, rising to 51% for 18-34 year olds. . Among those who have paid using an electronic wallet, almost three-quarters (72%) do so at least once a month, with speed (66%) and security (40%) being considered by users as the most attractive factors.
Point-of-sale installment loans, particularly BNPL, are experiencing explosive growth in popularity and value. In 2021, online revenues through the BNPL increased by 45% compared to 2019. McKinsey estimates that fintechs have diverted up to $10 billion in annual revenue from banks in the last ~24 months thanks to offers of the BNPL. According to the Temenos survey, more than half of UK BNPL users (54%) say the quick-to-use nature of BNPL attracts them to the service, the most frequently cited benefit, followed by its user-friendliness (31 %), and that they recognize and trust the brand they are interacting with (30%).
However, with inflation and the rising cost of living, affordability and responsible lending are growing concerns, and legislation is imminent in the UK.
Earlier this year, Temenos launched the first AI-based BNPL service, helping banks create ethical lending programs by providing transparency in automated decisions and matching BNPL customers with appropriate credit offers based on their history. A global payments provider launched its Buy-Now-Pay-Later service on the Temenos Banking Cloud, growing to 22 million loan applications in just nine months.
 Survey commissioned by Temenos and conducted by Opinium between 29 April and 3 May 2022. The survey sample was 2,000 UK adults and responses were weighted to be nationally representative.