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Gen Z embrace the convenience of embedded financial services, data security concerns holding back the masses

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By Published On: October 24, 20220 Comments

FIS surveyed Australian consumers to track their use of embedded financial services and identify the hurdles in wider adoption. The key drivers behind this growing adoption are convenience, speed, and affordability. Gen Zs and Millennials lead the charge in adopting this innovative tech.

Recently released research by FIS suggests growing mainstream use of embedded financial services across Australian consumers. These services are yet to be embedded into our vernacular, with many consumers not even aware of their existence, instead they operate seamlessly as we make day to day virtual transactions. “There’s a quiet revolution occurring around the world when it comes to financial technology,” Nick Aronson, MD Australia & New Zealand at FIS claims, “where seamlessly integrated embedded experiences, like in-app purchasing and BNPL are completely changing the way consumers shop and pay—and the story is no different with Australian consumers.” These transactions, according to Aronson, “are rendered virtually invisible in the background via a single tap or click.”

1,000 consumers were interviewed across four different age groups from age 18-55+. Broken up into four instances of embedded finance, the survey covered payments, lending, insurance, and investing. Sixty percent of respondents reported to have purchased goods and services using in-app transactions, with 23 percent paying this way at least once a month. Forty-one percent of respondents used Buy Now, Pay Later (BNPL) services in the past year. Twenty-two percent had purchased insurance directly from a merchant at the point of checkout, however, the desire to engage with a traditional financial institution prevented other consumers from purchasing insurance via an embedded experience.

The key drivers behind this adoption are convenience and speed for uptake in embedded payments, insurance and investing, and affordability for embedded lending use. The research shows that digitally native Gen Zs and Millennials were the leading adopters of this tech. Twenty-three percent of Millennials and Gen Zs identified themselves as themselves as early adopters as compared to just 4 percent of those surveyed over the age of 55. “As we see younger generations embracing embedded financial experiences, this will continue to serve as a catalyst that changes how banks, non-banks and technology partners collaborate to create seamless customer purchase journeys.” FIS MD Nick Aronson said. “This will give rise to significant potential for new use cases and business models particularly in the investing and insurance space.”

Embedded financial services are a convenient way for consumers to make transactions seamlessly at the point of need. In light of recent data breaches, dwindling confidence in data security may be preventing wider use of these services. FIS found this concern ranks in the top three reasons for not engaging in embedded payments, lending, and investing. However, this data points toward growing use of these services among Australian consumers across different age groups, despite data security concerns and preference for traditional institutions. Future innovation should look to address these concerns within the emerging metaverse where the demand grows for seamless virtual transactions.

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About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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