Why retailers should consider embedded finance
The retail landscape is rapidly evolving, with businesses like Woolworths leading the charge by integrating financial services directly into their operations. This approach, known as embedded finance, is more than just a trend — it's a transformative strategy that offers significant benefits, from new revenue streams to enhanced customer loyalty and long-term growth.
Image supplied
Embedded finance refers to the seamless integration of financial products — like credit, insurance, and payments — into non-financial customer experiences.
Imagine purchasing a high-value item online and being able to access financing options without leaving the checkout page. This frictionless approach makes financial services feel like a natural extension of the brand, removing barriers and improving the overall customer experience.
For retailers, the benefits are clear. Embedded finance not only opens up new revenue opportunities but also increases conversion rates and strengthens customer retention.
According to a report by Plaid, 88% of companies that introduce embedded finance see increased customer engagement, and 85% report a boost in customer acquisition.
A customer-centric approach
In the latest episode of Precium’s women-focused audio series, Reclaiming Ambition, Kgomotso Rammutla, acting chief customer officer at Woolworths Financial Services (WFS), discusses how Woolworths has successfully adopted embedded finance to better serve its customers. Rammutla emphasises the importance of understanding customers as individuals with unique needs and desires, rather than just demographic data points.
"Do you really understand the problems and needs of your customers, or are you making assumptions based on your own experiences?" Rammutla asks. She highlights that embedded finance is only as effective as it is relevant to the customer.
By deeply understanding customers' financial behaviours, retailers can personalise their offerings and provide services that are not only convenient but also genuinely valuable.
Collaboration is key
Implementing embedded finance requires more than just a great idea—it demands collaboration across all departments. Rammutla stresses the importance of involving a diverse group of stakeholders in the implementation process to avoid potential pitfalls.
"Everyone struggles with end-side execution," she notes, pointing out that a lack of collaboration can lead to poor customer experiences and reputational risks.
WFS’s solution? Create ownership. Assign accountability to specific parts of the solution and foster a collective drive to see it succeed.
Expanding access and inclusion
Woolworths is not just using embedded finance to enhance customer experiences; it’s also leveraging this strategy to broaden its customer base.
With plans to invest R10bn in growth initiatives, including expanding its presence in South Africa's township markets, Woolworths aims to bridge the gap for the millions of South Africans who are excluded from traditional banking services.
Embedded finance plays a crucial role in this effort, enabling Woolworths to offer accessible financial services to those who need them most.
By reducing customer acquisition costs and utilising real-time data for accurate risk assessment, embedded finance helps create a more inclusive financial ecosystem.
Balancing revenue with experience
As the retail landscape continues to evolve, the integration of financial services into the shopping experience is no longer just a trend—it's a strategic necessity.
Embedded finance offers retailers an unprecedented opportunity to not only meet the changing expectations of their customers but to exceed them, creating seamless, personalised experiences that build loyalty and drive growth.
Retailers looking to stay competitive in today’s market should consider embedding finance into their operations as a strategic priority. The time to act is now, as the benefits extend far beyond simple transactional improvements to long-term customer loyalty and brand differentiation.
By embracing embedded finance, retailers can position themselves at the forefront of innovation, ensuring they are not just keeping pace with the market but leading it.
