By co-founder and CEO of AAZZUR, Philipp Buschmann
Luxury is a powerhouse sector that shows no sign of slowing down, this year the Luxury Goods market is projected to generate a revenue of US$368.90bn. Luxury and innovation have always gone hand in hand with balancing deep traditions. The possibilities don’t just stop at the production level. With embedded finance already making waves in other industries, luxury brands can too be empowered as they seek to change strategy and step into something new. While it can be a daunting prospect, I am here to tell you it’s not and how by adopting embedded finance, the industry can create a new legacy to last generations.
It Creates an Elevated Customer Experience
We know just how crucial the shopping experience is to luxury brands when they are marketing new products to customers. Making a bag purchase an event rather than just a simple endeavour cultivates that personalised aspect of shopping that few mainstream brands can achieve. The purpose of luxury is exclusiveness, and that is what embedded finance can offer. With integrated tools, luxury brands can bring plurality at the point of purchase, with financing options readily available as well as customised insurance packages. This is what I mean by an elevated customer experience, it is not just about what you are buying, but how you are buying it. Bespoke doesn’t just cover leather goods, it traverses to the buyer and shows a deeper appreciation for their custom, therefore ensuring loyalty and retaining the target market.
It Gives You an Edge
Fashion is competitive on the runway as designers set the tone for the following season and aim to influence emerging trends. Embedded finance can also be the tool used to influence people and make convenience synonymous with luxury. Trying to remain relevant and unique in the digital age is not as easy as it may seem, and solution providers know this. By adopting embedded finance, you can be a true innovator and make convenience your stroke of genius. Integrated payments are a core example of how it can be applied. Whether it’s implemented at checkout or to subscribers, having your own financial service can lead to fruitful opportunities to spur growth and drive revenue. Car brands like BMW have already made the switch, so what is stopping you from offering financial products to customers?
According to a report by Cornerstone Advisors, two-thirds of fashion aficionados would consider getting an investment account from a luxury brand that allowed them to easily invest in that company’s stock. Becoming a financial service does not just have to entail boring transactions and monitoring savings, for luxury brands it can be the ultimate signifier that they are brave and open to change and want their customers to have the best possible experience. Most brands have mobile apps, so the transition doesn’t need to be as dramatic. It was reported that, 68% of Coach enthusiasts indicated an interest in an investment account integrated into the brand’s mobile app that would let them invest in the brand’s stock, crypto, and other assets. The demand is there, companies just have to fulfil it.
It Increases Accessibility
Finance and fashion don’t have to be strangers. Embedded finance opens up the world of luxury to a wider audience, granting accessibility in a turbulent economy. Buy-Now-Pay-Later is a hallmark of embedded finance that has been around for years but has been given a new lease of life. Instalment plans are now catered to the individual with no lengthy paperwork. This streamlining removes the need to switch between different apps, therefore enabling a hassle- free experience. Flexibility is a luxury, and brands have the ability to make it a core offering.
It Enhances Authenticity
Counterfeit goods cost luxury brands billions and company leaders have been looking for solutions to avoid more catastrophic losses. This is where embedded finance comes in.
Embedded finance enhances authentication because it uses blockchain technology to create immutable records of transactions. Furthermore, luxury items can be tokenised with each physical item having a corresponding digital certificate stored on the blockchain. This innovation is a gamechanger for brands as digital IDs will make it easy to identify who the owner is and tackle fraud robustly. This can also be applied in purchases as verification can have an added layer of security, thus strengthening consumer loyalty and trust.
The opportunities are endless with embedded finance, whether it is to digitally transform, drive revenue, attract investment, increase customers, or be a leader in your industry. A 2023 Financial Services Global Market report revealed that the fintech market is expected to grow to over $37 billion in 2026. In an era which demands flexibility and a willingness to be creative through digital means, embedding financial services into your business is the way to go.
