Research from Freedom Finance, a UK digital lending marketplace and embedded finance provider, has revealed the extent to which the UK’s most valuable retail brands are adopting financial services.
The analysis reveals three of the top ten most valuable retail brands in the UK already offer embedded finance services to customers, while Morrisons is the only retailer in the top 10 not to offer financial services of any sort.
When it comes to the top 15, only Ocado and Pets at Home joined Morrisons in not offering customers finance options. However, many of the finance options were limited to Buy-Now-Pay-Later (BNPL). None of the retail brands outside the top ten offered the range of finance available via a fully embedded lending offering.
| Top 15 Retail Brands1 | Offers financial service products | Full embedded finance (lending) offering |
| Tesco | YES | NO |
| Sainsbury’s | YES | NO |
| Ocado | NO | NO |
| ASDA | YES | YES |
| Next | YES (BNPL only) | NO |
| Morrisons | NO | NO |
| M&S | YES | NO |
| Co-Op | YES | YES |
| Very | YES | YES |
| Boots | YES (BNPL Opticians only) | NO |
| Waitrose | YES (via John Lewis) | NO |
| JD Sports | YES (BNPL only) | NO |
| Pets at Home | NO | NO |
| B&M | YES (BNPL only) | NO |
| Dunelm | YES (BNPL only) | NO |
Embedded finance has become increasingly popular in recent years as retailers and brands have sought to create a smoother online experience for customers while diversifying their income streams. It involves non-financial brands offering financial products to customers within their online offering, via website or app. In its simplest form, it is offering BNPL services via a single provider like PayPal or Klarna at the point of sale, but more sophisticated providers can offer a range of products from a wide panel of financial institutions via a fully embedded finance (lending) offering.
Recent research from Freedom Finance has revealed how rising interest rates and tightening lending criteria have made the need for access to a wide range of products and lenders more important than ever. The research revealed that as interest rates on overdrafts and credit cards have increased rapidly since the middle of last year, so have the number of people looking to consolidate more expensive, ongoing debt into lower-cost, fixed-term personal loans. While its latest Credit Monitor revealed that credit card rates are now at their highest level since December 1997.
Emma Steeley, CEO at Freedom Finance said that tightening credit conditions meant that a wide range of credit options was increasingly important for borrowers, lenders and brands.
She commented: “The boom in embedded finance has for a long time been linked to growth in BNPL seen during the pandemic lockdown, but the adoption of financial services by retail brands is far more sophisticated than that.
“The best retail brands want to offer their customers the most appropriate credit options available to them and an embedded finance platform with a wide panel of lenders is a user-friendly way to do that”.
Share