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Post: Going Places: Comparing the Prospects for Embedded Finance in UK and European Transport



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By Andrea Ramoino

New research from Solaris reveals that embedded finance is flourishing in adoption through Europe. Will the UK transport industry follow suit and mirror the success seen throughout Europe? The benefits of greater brand engagement, customer experience and customer loyalty for embedded finance are clear, and the research already shows European customers are willing to use embedded financial services from transport and travel brands so long as those brands have been rated safe and reliable. Could embedded finance be the next big thing in UK transport and travel? 

Initial findings

Research conducted by Solaris, supported by Handelsblatt Research Institute and YouGov Deutschland GmbH found that embedded finance is flourishing throughout Europe. According to latest data, Italian consumers are most willing to try embedded finance services from transport providers, with 61.8% saying they are open to payment cards, accounts, or credit. Interestingly, Spain was the second strongest market, with 51.3% saying they would use at least one embedded financial product from a transport provider. Whilst Germany and France came in at 36.1% and 33.3% respectively. 

Embedded finance has been steadily gaining traction in recent years across Europe; the most obvious example being in BNPL, which has seen vast consumer uptake due to its ease of use and flexibility. Whilst its application in insurance and brand loyalty programmes has also gained traction, transport and travel has the potential to become the next sector to benefit from its potential. With the UK transport industry already exploring digital transformation and the rise of fintech, embedded finance could further unlock greater efficiency and convenience for transport users across the country.

Reasons for findings

Solaris’ research found that the higher respondents rated a transport and travel brand for safety and reliability, the greater the willingness to use their financial product. More strikingly, the study also found that respondents were willing to use embedded financial services from a travel brand they rated as being safe and reliable even if they’d never been a customer of that brand. It was enough that the brand was known to them. This highlights the importance of trust and credibility in building customer loyalty, which is something that European brands are capitalising on. For instance, Lufthansa’s rewards credit card, ‘Miles and More, has been a great success as it was the best-known provider-specific bonus program in Germany. In addition, 22% of Italian respondents would use a credit card from Easyjet and 21% of Spanish participants would use a payment card from AirEuropa. Whilst Europcar, the car hire company, also ranked high in both countries; with 25% of Italians and 21% of Spaniards saying they would use a Europcar credit card. 

Notably, the main reason consumers in Italy and Spain are the most open to using embedded finance products from transport providers seems to be their willingness to buy goods and services on credit. This is shown by 33% of Italians and 22% of Spaniards saying they would consider an embedded loan from Volkswagen Financial Service to finance a VW brand car. Meanwhile, only 13% of Germans and 11% of French survey participants would consider this option. Thus, a country’s culture towards credit also seems to play a role in the willingness to adopt embedded finance.

Benefits of Embedded Finance 

One of the key advantages of embedded finance is the ability to streamline the customer journey. By offering a range of services via a single platform, companies can eliminate the need for customers to navigate multiple apps or websites. This can significantly improve the user experience, reduce customer drop-off rates and increase brand loyalty. Lufthansa’s “Miles and More” bonus programme mentioned earlier is the perfect example of this. Lufthansa provides customers with credit cards, but customers can also receive travel cancellation and interruption insurance, comprehensive rental car insurance, and international travel health insurance via its gold subscription plan, in addition to earning bonus points whenever they use the card. This integrated approach creates a seamless experience for consumers, as all the different components work together seamlessly. This can make it easier for consumers to use and understand the products or services, leading to higher satisfaction and loyalty.

Another benefit of embedded finance is the ability to leverage customer data. Offering financial services can be a tempting tool for transport and travel carriers to grow their client relationships because of the greater understanding of their relationship with customers. By analysing customer behaviour and transactional data, companies can gain valuable insights into customer preferences and tailor their offerings accordingly. This can help to deepen customer engagement and drive loyalty, as well as inform product development and marketing strategies. 

In addition, embedded finance can provide new revenue streams for companies. By offering financial products and services, companies can generate additional revenue streams from interest, commission and fees, as well as cross-selling and up-selling opportunities. This can help to diversify revenue streams and reduce dependence on core products and services. 

The integration of financial services into transport and travel brands has been a hot topic in recent years, and for good reason. The convenience of being able to manage all aspects of one’s transportation and finances through a single platform has enormous appeal to consumers. Solaris’ research highlights the large potential for UK transport and travel brands to expand their offerings through embedded finance. However, this opportunity can only be fully realised if UK consumers trust their transport providers enough to use their financial products. As such, building trust must be a priority in order to implement embedded finance into the transport and travel industry.

This article was originally published on 21 May 2023.

About the Author

Andrea RamoinoAndrea Ramoino is Managing Director for Solaris e-money business in UK and EEA. He is responsible for growing Solaris’ payment business within both geographies. He is a product and marketing transformation expert with over 15 years’ experience across many industries including fintech, crypto, AI and SaaS. Andrea joined Solaris as a Chief Strategy Officer from Elliptic, a leading provider of compliance solutions for the crypto market, where he led significant growth as VP of Product.

Lora Helmin

Lora Helmin

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