Fabrick Publishes Report on Embedded Finance Trends in Europe

In a recent study conducted by Forrester on behalf of Fabrick titled, “Embrace Embedded Finance for Seamless Payment Success: A Spotlight on Europe,” valuable insights were obtained regarding the state of Embedded Finance across Europe. The research, which spanned across the period of September 2023 to January 2024, surveyed 600 decision-makers to assess the landscape of Embedded Finance and the critical factors influencing the choice of payment/Embedded Finance solutions providers.

Firstly, the research reveals a strong inclination towards investment in payment acceptance solutions over the next 24 months. A notable 71% of surveyed organisations plan to either invest anew or increase their current investments in payment acceptance capabilities. Notably, they will prioritise payment orchestration solutions (75%), digital wallets (with an 80% priority for the fashion retail sector), loyalty systems (73%), digital cards, and multi-country embedded payment solutions (71%).

Amid economic fluctuations, impending regulatory changes, and evolving consumer payment habits, European businesses are actively seeking ways to manage the increasing complexity and costs associated with payments. The study found that 60% of respondents consider these complexities to be “challenging” or “highly challenging,” particularly regarding regulatory compliance (68%), technological innovation (63%), and the digitisation of payments (61%).

Furthermore, there is a recognised need among companies for advanced technology and expertise to navigate these challenges effectively. Many acknowledge a reliance on third-party providers of integrated financial services to deliver value to their operations. Notably, 76% of participants deemed it “fundamental” or “very important” for payment service providers to offer comprehensive End-to-End payment cycle coverage, including back-office processes.

Challenges of reconciling payments across various methods were reported by 66% of respondents, with specific difficulties noted among insurance companies (76%) and non-banking financial institutions (71%). Additionally, 66% of those surveyed across all sectors found it challenging to maintain a unified view of all payments across physical and digital touchpoints. The issue of interoperability for End-to-End processing between technologies was categorised as “challenging” or “extremely challenging” by 64% of respondents, complicating the visibility of real-time payment visibility. In light of the growth in cross-border e-commerce, the ability to accept multi-country embedded payments are prioritised by 71% of companies, with a significant 94% planning to increase their budget for this purpose. Overall, the study consolidates the strategic direction outlined in Fabrick’s plan for 2024-2026, including the merger with Axerve in February 2023 which enhanced its capabilities to provide integrated financial services, spanning from Payment Orchestra functionality to smart routing and Open Finance. Fabrick’s strategy also includes a focus on organic growth, strategic acquisitions, and expansion in key markets such as Germany, France, Spain, and the UK, aligning with its objectives to consolidate market presence and enhance its service portfolio of services.

Reflecting on the findings, Paolo Zaccardi, CEO of Fabrick, noted: “We are pleased to see strong market validation for our focus on End-to-End payment solutions. We strive to become a reference point for innovation at a pan-European level, meeting current demands and anticipating future needs in the Embedded Finance sector. This research confirms the industry’s shift towards integrated financial services. The trajectory of Fabrick’s journey shows that Embedded Finance in B2B projects effectively addresses players’ needs in managing payment flows and for invoice reconciliation. As such, we have concluded that embedded finance enables companies in any sector to integrate financial solutions via APIs, allowing them to offer payment, banking, and insurance services without the need for proprietary financial infrastructure.”