Intimate partnerships lie at the centre of embedded finance

Embedded finance may seem new but, as a panel at London Tech week revealed, some banks have been doing it for 50 years.

Joshua Fabian-Miller, managing director for credit at Currys, highlighted the company’s banking partner, BNP Paribas, as critical to the UK electronics retailer being able to offer customers credit products, and to scale its business in a compliant way.

Examining the rise of embedded finance during the panel “Beyond the bank – How APIs are powering the ‘embedded everything’ economy”, Fabian-Miller said these types of offerings were built on “quite intimate partnerships”. 

“As a brand, you’re inviting another company into your customer journey to engage with your customers. As a financial services provider, you’re trusting a third party to offer your products responsibly. That’s a big deal.

“Scaling responsibly means choosing partners who share our long-term vision, understand our customers, and bring complementary strengths,” he added. 

Currys started working with BNP Paribas Personal Finance in 2024 to build Currys flexpay. This credit product enables Currys customers to pay through fixed monthly payments or via a ‘buy now, pay later’ feature, and gives them exclusive access to low-rate and interest-free promotional credit offers on selected products. 

Currys flexpay was created in response to customer data indicating that more than 20% of consumer spending was made using credit. Purchases made using Currys flexpay now exceed traditional credit card purchases at the electronics merchandiser.

Non-financial platforms

Emerging as a term over the past few years, “embedded finance” refers to financial services — such as payments, loans, or other experiences, like insurance — that are accessed through non-financial platforms, for example, retailers. 

This frees the non-financial company from needing to obtain banking licences or directly manage the complex regulatory requirements. 

Regulation over the past few years, such as the second iteration of the Payment Services Directive (PSD2), has driven the recent growth in embedded finance partnerships. According to forecasts from McKinsey, revenues from embedded finance could surpass €100 billion in Europe by the end of the decade.

However, despite the regulatory encouragement, there are technical challenges. When dealing with know-your-customer (KYC), anti-money laundering (AML), fraud prevention, and other banking compliance requirements, integrating application programming interfaces (APIs) often involves significant operational and infrastructure complexity. 

50-year history

Despite the apparent newness of the term embedded finance, BNP Paribas Personal Finance UK was established over 50 years ago specifically to serve its non-financial partners. In addition to Currys, the bank subsidiary also partners with UK brands such as furniture retailer DFS and Marriott Bonvoy, the hotel chain’s loyalty programme.

According to Stephen Hunt, CEO of BNP Paribas Personal Finance UK, it was created to support retailers by providing their customers with a way to finance the purchase of their goods and services at the point of sale rather than after a transaction. 

Hunt echoed the view of Fabian-Miller at London Tech Week — which places partnership at the centre of any successful embedded finance offering — adding: “What is key is that both parties create a common strategy that is fully aligned and therefore embedded into the retail strategy.” 

These intimate relationships are key to protecting the brand and reputations of retail establishments, said Hunt. 

“However, financial services regulation, compliance, and conduct are huge, complex areas which are constantly evolving. As a regulated bank, we live and breathe these topics and can ensure that everything that we deliver, together with our retail partners, is set up to be compliant yet also sustainable. 

“While not taking away the responsibility of the retailer in this area, by working with a well-established specialist provider from a banking background, they can significantly benefit from a regulated bank’s expertise and better protect customers and deliver good outcomes.”