Adoption of embedded finance services is reaching mainstream use in Australia across generations and across use cases, new research from financial services technology leader, FIS.

Embedded finance is when consumers have tailored financial services delivered to them by non-financial companies. Consumers use embedded finance, most commonly, in the form of in-app payments, Buy Now, Pay Later (BNPL), spare change investing, or insurance.

FIS asked Australian consumers about their experience with four instances of embedded finance (payments, lending, insurance, and investing) in the past 12 months. Six in 10 (60%) said they have paid for goods and services within a brand’s app – embedded payments – with 23% saying they pay this way at least once a month.

Buy Now, Pay Later (BNPL) services – or embedded lending – continue to see steady growth with 41% saying they have used such offerings in the past 12 months. Almost one in four (22%) of respondents stated they have purchased insurance directly from a merchant – embedded insurance –such as for air travel. And 7% of respondents stated they used spare change investing frequently – or embedded investing – as part of an embedded finance experience.

Key drivers behind adoption showed convenience and speed for uptake in embedded payments, insurance and investing, while affordability ranked high for embedded lending use.

Younger generations said they are more open to new and innovative financial services experiences than older counterparts. 23% of Millennials and Gen Zs identified themselves as themselves as early adopters versus just 4% of Baby Boomers.

Based on findings in the FIS research, there are some hurdles to overcome that could facilitate greater adoption of embedded finance. Concerns over data security ranked as one of the top three reasons for not engaging in embedded payments, lending and investing.

The desire to engage from a traditional financial institution was the top reason consumers did not purchase insurance via an embedded experience and 43% of those that did not engage or do not plan to engage in spare change investing cited a lack of familiarity with such services to be their top reason.

“There’s a quiet revolution occurring around the world when it comes to financial technology, where seamlessly integrated embedded experiences, like in-app purchasing and BNPL are completely changing the way consumers shop and pay—and the story is no different with Australian consumers,” FIS managing director for Australia and New Zealand, Nick Aronson said.

“Embedded payments are most familiar, as shown by our survey. From private hire transportation to food delivery and weekly grocery shopping, their payments are rendered virtually invisible in the background via a single tap or click. As we see younger generations embracing embedded financial experiences, this will continue to serve as a catalyst that changes how banks, non-banks and technology partners collaborate to create seamless customer purchase journeys.”