Embedded Finance

How retailers are using embedded finance to drive deeper customer loyalty


Video highlights:

04:22 - Financial services role in retailers' services goals

09:22 - The underlying value behind Starbucks financial services loyalty model

11:40 - Finding opportunities to modernize existing financial infrastructure

14:10 - Promotional card programs

18:05 - Cost savings and program adoption by issuing virtual cards

19:30 - Offering a wallet that allows customers to pre-fund for future spending

23:00 - Save Now Buy Later (SNBL)

25:25 - Offering employees banking services to bolster benefits

28:30 - Why retailers are uniquely positioned to offer retail banking products and services

ICYMI: Live event summary 

How retailers are using embedded finance to drive deeper customer loyalty 

Tim Dardis, Alviere's VP of Strategy and Business Development joined Chris Walton and Anne Mezzenga, the founders of OmniTalk Retail, to talk about the opportunity embedded finance has to further evolve retailers' services goals and outlined different ways retailers can use embedded finance technology to increase customer engagement through financial services. 

Companies are always seeking new ways to engage with their customers. Over the past decade, retailers of all kinds have taken the leap into services as a way to bolster the appeal for the physical products they sell.

Examples include Best Buy offers Total Tech Plus that aim to help customers use and maintain the tech products they buy. Lowe's and Home Depot offer installation services for customers who purchase appliances. Sephora offers beauty classes to keep their customers engaged with new products and best practices for skin care, REI offers repair workshops and other classes to help customers maintain the gear customers buy, and the list goes on and on. 

As more retailers find their footing in services, the opportunity to rope in financial products and services into their customer engagement workflows is becoming a huge difference-maker for the ones who do it right. 

1. Modernize existing financial infrastructure

Opportunities to modernize the way common financial operations like payouts, reimbursements, refunds, etc. 

Products like virtual branded prepaid cards can get customers' funds to them quicker and for a lower cost than traditional methods like paper checks.

Learn more: Modernizing existing infrastructure

2. Promotional cards for new product adoption

Promotional cards are one of the best ways to incentivize new product adoption. Using embedded finance technology, retailers can issue virtual cards instantly and allow for spending anywhere which dramatically increases adoption of the program.

Features like just in time funding, capturing breakage, and zero-party customer spending data help retailers maximize the value of their promotional card program.

Learn more: The new way to issue prepaid promotional cards

3. In-house loyalty

Basic rewards programs for in-house spending used to be challenging to launch. Embedded finance enables retailers to add an account to their app that allows customers to pre-load funds into the retailers app for future spending.

The most popular example of this model include Starbucks, and is best for retailers with lower average transaction values or established repeat weekly and monthly customers.

4. Spend anywhere and get rewarded

The spend anywhere and get rewarded model follows the same foundation as the in-house loyalty program (above), but enables customers to use their branded card for every day spending, and get rewards at the retailer.

These types of programs can fund themselves as the retailer capture interchange on card spending and can push the interchange revenue back into the program to give the customer deeper discounts and rewards. 

5. Save Now Buy Later (SNBL)

Save Now, Buy Later (SNBL) is a short term savings account that allows customers to save up for a future purchase with the company and get discounts for using the account.

To illustrate how Save Now, Buy Later works for the consumers, consider a recently married couple who is preparing to buy their first home, and who has been told by their bank to not open any additional credit accounts or make any changes to their financial situation during the financing and closing process.

The couple knows that they’re going to be in need of appliances very soon, but they don’t readily have the thousands of dollars in cash to purchase all of their appliances. The couple picks out their appliances and saves them in their Home Depot account.

Home Depot could then calculate and present to the couple how much they’ll need to deposit into the account each week to save enough and purchase the appliances by the time they move into their new home.

The couple easily saves up for their new appliances, and then continues to use that account to save up for their first big home project - finishing their basement.

Read now: What is Save Now, Buy Later? What it is and how it works.

6. Full suite of banking products and services

Embedded finance enables retailers to offer accounts, cards, global money transfers, and other products and services that enable them to become their own retail bank.

For retailers who serve large customer demographics that don't have previous access to traditional banking opportunities, offering a full suite of banking services to their customers can be a massive value add to their services offerings. 

A popular example of this is Boost Mobile launching OmniMoney, a digital retail bank that allows customers to open accounts, get debit cards, and send money to Mexico through digital remittances. 

7. Enhancing value for employees through banking services

Retailers can use the same embedded finance tools they use for customer engagement for their employees.

Offering their employees a suite of banking products enables a retailer to offer their employees earned wage access, financial wellness opportunities, and unique incentives and rewards programs. It also allows the retailer to reduce payroll expenses, attract and retain talent, improve their cashflow, and more.

A popular example of offering employees banking services is Walmart's, Walmart One.

If you would like to talk with an expert to better understand how our financial technology works to bring these models to life, contact us today.

If you'd like to learn more about the different applications of next-generation loyalty programs utilizing embedded financial solutions, check out our lates ebook, with no email required to unlock exclusively for OmniTalk Retail event registrants.  

Exclusively for OmniTalk Retail live registrants: What's next for loyalty  programs in 2023  Read now



About OmniTalk Retail:

Omni Talk is meant to tell the truth. Its content does not come from pundits or journalists. It comes from real people with real experience in the business. Its “serious and sometimes comic musings” are meant to give an opinion on the past and future of retail. Some opinions may be right, some most certainly may be wrong — but, no matter what, they are meant to provoke curiosity about the retail industry that we all know and love, and, most importantly, they come from the heart, with nothing but the best of intentions.

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Written by Alviere