In a competitive market and with consumer budgets remaining under pressure, leading brands are actively exploring ways to stand out in a crowded market. Reimagining retail is all about optimising the experience for the customer, understanding their needs and delivering value-added services at exactly the right point in the buyer’s journey. As well as supporting the immediate purchase, it’s about increasing long-term engagement and the potential for repeat spend that delivers value for both parties.
For retail brands, embedded finance is well-suited to addressing common pain points that may stop customers making purchases or cause them to drop out. It also offers a way to enhance the customer experience by offering the most appropriate financial services intelligently at the time of need.
Businesses should be looking for embedded finance solutions that align with their brands. Optimising for customer retention, purchase frequency and engagement could lead to a product set that includes savings accounts, credit cards, loyalty and reward programs. Driving checkout conversion may involve broadening payment method acceptance into digital wallet integration, buy-now-pay-later and instalment loans.
Reimagining retail is also about retailers helping customers get products in their hands in a way that’s safe and affordable for them and sustainable over the long term. Above all, it pays to think about the overall customer journey, ensuring all embedded finance options provide value for the customer and align with the retailer’s ambition for the customer experience.
Driving engagement
Customers looking to buy high-value items could benefit from increased financial options. For example: a garden centre providing in-house financing to support the purchase of new garden furniture; a department store offering integrated insurance on electrical goods; or a holiday company offering the ability to save and spread the payments for a dream holiday over a period of time.
In a highly competitive industry like travel – where customers are actively seeking out the best offers and rewards – an embedded savings offer that allows the customer to lock in a good deal for a small deposit upfront can help drive conversion rates and basket size value. A savings account could be embedded in the customer’s browsing journey, with the customer onboarded in minutes and incentivised to add deposits into the account. Where financial services are provided by a licenced banking provider, the customer has security knowing their deposits are covered by the FSCS in the UK, just like regular deposits. When they reach the savings goal and book the dream trip, the customer can also receive exclusive offers and loyalty points for the transaction.
In fashion, interesting use cases include a move towards more subscription-based services. The concept of your very own ‘personal shopper’ is a powerful one. Not only does this offer huge convenience, with the brand delivering chosen items directly to the customer’s home, but there’s also the opportunity for the service to be hyper-personalised – with the brand understanding the customer’s preferred styles, sizes, wardrobe needs and more.
Of course, in order to minimise the number of returns, the pressure remains on the brand to truly understand their customers’ preferences and pick items that they will love. The operational mechanisms that support this are key in terms of pooling all relevant data sets to deliver the optimum items to the customer, as well as managing the fulfilment process whereby customers can make returns and exchanges, and potentially buy additional items above a certain value at a discount rate. Providing embedded financial services to underpin this in a responsible and sustainable way is essential, and the trust element is huge.
Incentivising loyalty
Brands can incentivise customers to join their ‘top tier’ reward programmes, or to unlock offers or additional rewards based on increased spend, member status or loyalty. This could include advance access to VIP offers, Black Friday sales or the ability to purchase newly released items in advance. For the gaming community it could be about getting their hands on the latest game ahead of general release.
In the grocery space it’s interesting to see the emergence of apps that gamify the shopping experience – enabling customers to track their spend in real time to understand how much extra they might need to spend that month to unlock additional rewards. Such an experience, effectively creating a payment ecosystem is so much more interactive than earning points and subsequently waiting to receive a set of printed vouchers or tokens which the customer may subsequently misplace or simply fail to use in time.
Optimising for success
As the digital revolution continues its relentless trajectory in the retail industry, it’s important to think about the end-to-end customer experience, and whether you’re helping people shop with ease. While research from BCG and NatWest Boxed shows that embedded finance is fast becoming table stakes, the authenticity of the financial services you offer, and how these align with your brand remains paramount.
If you go the easy route and integrate a third party to offer services such as buy-now-pay-later on checkout then the finance partner owns that data and the customer relationship. Instead, if you offer that yourself with the right partner, you could own a lot more of that direct story with the consumer and gain access to a flow of data. Being aware of the overall response to an offer, how customers are using the service and any nuances based on the types of items and value of goods in the basket will help you better understand and fine tune your offering.
In reimagining retail it’s essential to think outside the box and be creative. Ultimately, it’s all about delivering compelling customer experiences that build long term relationships. Look at the customer journey, remove friction, find ways to boost value exchange and secure your competitive advantage.
For further details:
George Toumbev – chief commercial officer, NatWest Boxed:
George is the chief commercial officer of NatWest Boxed, a new banking-as-a-service business that enables brands and fintechs to offer financial services to their customers, securely and at scale.
George was previously COO at Mettle, responsible for operations, strategy, and planning – as well as the people agenda. He has more than 20 years’ experience in financial services across multiple functions including credit, risk, strategy, and operations. George began his career in investment banking as a full-stack developer, leading product delivery in equities and FX. After completing an MBA at London Business School, he worked as a management consultant, advising clients across Europe and Africa. Prior to Mettle, George held several leadership roles at NatWest including Head of Lending at Coutts.
