Financial news

The next three years are bright for embedded banking as 48 per cent of large businesses plan to offer the tech services despite only seven per cent of large European companies currently doing so. Understanding how many businesses are capitalising on embedded banking services, OpenPayd, the global Banking-as-a-Service (BaaS) platform publishes its whitepaper.

One in five (20 per cent) UK-based firms offer embedded banking services as of November 2023. However, this number is set to climb to 67 per cent in the next three years. In Germany, while only three per cent of firms currently offer embedded banking services, this will rise to 69 per cent in three years. Furthermore, OpenPayd has found that 50 per cent of Italian, 46 per cent of French and 39 per cent of Spanish companies all plan on offering embedded banking services in the next three years.

Critically, every firm surveyed had discussed the possibility when speaking to the BaaS platform, with many giving the tech’s implementation some serious thought. Fifty-seven per cent have expanded/upgraded their existing offering in the last two years. Meanwhile, 29 per cent are looking to expand their offering, despite the economic downturn.

European brands anticipate that the tech’s services will make a major contribution to year-on-year revenue growth. On average, organisations anticipate a two per cent revenue bump in the first year, ramping to 16 per cent growth in five years. In total, European firms expect embedded banking to generate €297billion in additional revenues over the next five years.

Path to successfully build a product

For nearly nine in 10 (89 per cent) companies planning their launches, collaborating with a BaaS provider is the favoured route for building embedded banking products. Almost two-thirds (65 per cent) of these companies also intend on building new, internal fintech teams to work alongside them.

“European businesses that have embraced embedded banking services are already seeing the result. They’re experiencing material revenue growth and setting the pace for adoption”, said Barry O’Sullivan, head of payments and banking infrastructure at OpenPayd.

“We’re also seeing a clear role emerging for BaaS providers as the enabler for the tech’s projects. That brings with it enormous opportunity and responsibility. It’s critical that BaaS providers are bringing the technology, the licences and the compliance oversight to ensure the success of their partners.”