Embedded Finance Market Forecasts to 2028 – Global Analysis By Solution (Embedded Banking, Embedded Insurance, Embedded Investments, Embedded Lending and Embedded Payment), Business Model (Business-to-business (B2B), Business-to-Customer (B2C), Business-t

Embedded Finance Market Forecasts to 2028 – Global Analysis By Solution (Embedded Banking, Embedded Insurance, Embedded Investments, Embedded Lending and Embedded Payment), Business Model (Business-to-business (B2B), Business-to-Customer (B2C), Business-to-business-to-business (B2B2B), Business-to-business-to-consumer (B2B2C)), End User and By Geography

According to Stratistics MRC, the Global Embedded Finance Market is accounted for $54.3 billion in 2022 and is expected to reach $149.5 billion by 2028 growing at a CAGR of 18.4% during the forecast period. The placement of a financial product in a nonfinancial customer experience, journey, or platform is known as embedded finance. Nonbanks have been providing financial services through private-label credit cards at retail chains, grocers, and airlines for many years. Sales financing for appliances at retailers and auto loans at dealerships are two additional prevalent examples of embedded finance. These kinds of agreements serve as a conduit for the banks that support them to communicate with end users. Fundamental modifications in business, consumer, and merchant behavior, as well as technological advancements, have made embedded finance possible.

According to the survey by Aion Bank in May 2022, around 74% of European retailers have rolled on the embedded finance offerings to their customers.

Market Dynamics:

Driver:

Increasing e-commerce services

Over the forecast period, it is anticipated that the growth in e-commerce and online shopping around the world will drive market growth. This is due to the incorporation of financial services into e-commerce platforms, which has allowed for seamless and practical customer experiences. The e-commerce businesses incorporate financial services, including payments, lending, and insurance. For instance, a number of e-commerce sites, including Amazon.com and Wix e-commerce, offer their customers the option to pay later using a buy now option. As a result, the embedded finance industry is anticipated to soar.

Restraint:

Slow adoption of new technology in banks

There are obstacles that might prevent embedded finance from expanding in the future. Key enablers for embedded finance include open banking, BaaS, and payment APIs. While all of these have progressed to the point where embedded finance is economically viable, this is not true for all markets, so embedded finance's prospects are not guaranteed. Furthermore, financial institutions like banks are notorious for being among the last to adopt new technology, and this is still true today with many banks still relying on antiquated systems. For banks, embedded finance means working with non-fintech companies and taking on a less significant role for the end user, which will be very challenging for them to accept.

Opportunity:

Inclusion of AI in lending platforms

Vendors of embedded finance solutions are integrating their offerings and personalizing them for customers. The Internet of Things (IoT) integration with embedded payment options, machine learning for embedded investment programs, and AI integration into lending platforms are all examples of this. The end-user experience is improved by these features, which also continuously alter market trends. The adoption of embedded financial practices across industries is being driven by the use of cloud-based platforms to streamline numerous complex operations, which is also driving demand for embedded financial services.

Threat:

Risk of taking on too many loans

As credit becomes more widely available, consumers might feel compelled to take out more, smaller loans. When a consumer has multiple ones, the payments for these can add up over time. In that case, they might end up with more debt than they anticipated and stop making payments. A quick Google search reveals that borrowers worry that embedded finance will affect their overall credit score, and as embedded finance becomes more widely available, the market will also need to address the problem of related debt defaulting. Such aspects hinder the market's expansion.

Covid-19 Impact

The COVID-19 pandemic had a favorable effect on the development of the embedded finance sector. Traditional banking services have been impacted by social distance rules and norms, which has increased demand for online banking services. For instance, nearly 60% of the surveyed fintech firms reported the launch of new products and services, according to a global study titled COVID-19 FinTech Market Rapid Assessment. Additionally, the growth of e-commerce and online shopping patterns throughout and after the COVID-19 pandemic has sped up the adoption of embedded finance solutions, supporting the market's expansion.

The investment banks & investment segment is expected to be the largest during the forecast period

During the forecast period, the investment banks and investment segment is anticipated to account for the largest share. Rising start-ups and the demand for large investments are the driving forces behind the expansion of this market. Sales of embedded finance solutions are rising as a result of rising demand for these investment services and the integration of embedded fintech services, which is propelling the segment's growth.

The embedded lending segment is expected to have the highest CAGR during the forecast period

Over the forecast period, it is anticipated that the embedded lending segment will grow at the highest rate. The rising need for simple and quick access to funds can be blamed for the rapid expansion of embedded lending. Nearly 45% of loans may be repaid in non-financial circumstances over the course of the next five years, according to the Future of Customer Experience in Embedded Lending survey, which was conducted in December 2022 among 350 senior executives from the global lending industry. Furthermore, 93% of respondents thought that embedding lending would result in simple loan applications. Therefore, over the course of the forecast period, the aforementioned factors are expected to fuel the segment's growth.

Region with largest share:

In 2022, the market was dominated by the North American region, which had a revenue share of over 26.0% and is expected to be dominant throughout the forecast period. The region's market is anticipated to grow as a result of the presence of major market players. In order to hasten the adoption of embedded finance, startups in the region are also taking part in fundraising activities. American-based small and medium-sized businesses are having trouble getting bank loans. As a result, more companies are looking for alternative sources of funding. Additionally, a rise in funding activities is anticipated to support the creation of novel products and technologies in the North American region.

Region with highest CAGR:

Over the forecast period, the Asia-Pacific region is expected to experience the highest growth. The initiatives taken by various market players are responsible for the growth of the Asia-Pacific region. For instance, the launch of the embedded finance hub in Singapore was announced by audit, tax, and advisory services provider KPMG Services Pte. Ltd. in October 2022. By providing assistance to businesses and financial institutions, the launch of the embedded finance hub aimed to hasten the adoption of embedded finance services throughout the nation. Additionally, the expansion of the embedded finance sector in the Asia-Pacific region is encouraged by the region's expanding e-commerce market.

Key players in the market

Some of the key players profiled in the Embedded Finance Market include Banxware, Cross River ban, Cybrid Technology Inc., Finastra, Finix, Fluenccy Pty Limited, Flywire, Fortis Payment Systems, LLC, Lendflow, OpenPayd, PAYRIX, Railsbank, Stripe, Inc., Transcard Payments, Walnut Insurance Inc. and Zopa Bank Limited.

Key Developments:

In May 2023, Decentro, a leading financial infrastructure company, has launched Flow and Fabric, two complete end-to-end payments and embedded banking stacks, to help businesses with a smooth onboarding experience and management of financial products. The new modules have been introduced to offer a full-stack experience to Decentro's growing customer base.

In April 2023, Maast has introduced embedded finance solutions for software providers and vendors to help them attract new clients, improve revenue per customer, and enhance existing customer relationships.

In March 2023, Antworks Money, an Indian Neo Banking Platform has signed an Agreement with Swedish Software company Vopy, which supplies technology for embedded finance solutions. The agreement means that the partners together will build an embedded finance platform for the Indian business community.

Types Covered:
• Embedded Banking
• Embedded Insurance
• Embedded Investments
• Embedded Lending
• Embedded Payment

Business Models Covered:
• Business-to-business (B2B)
• Business-to-Customer (B2C)
• Business-to-business-to-business (B2B2B)
• Business-to-business-to-consumer (B2B2C)

End Users Covered:
• Loans Associations
• Brokerage Firms
• Healthcare
• Insurance
• Investment Banks & Investment
• Logistics
• Manufacturing
• Mortgage
• Retail
• Travel & Entertainment

Regions Covered:
• North America
o US
o Canada
o Mexico
• Europe
o Germany
o UK
o Italy
o France
o Spain
o Rest of Europe
• Asia Pacific
o Japan
o China
o India
o Australia
o New Zealand
o South Korea
o Rest of Asia Pacific
• South America
o Argentina
o Brazil
o Chile
o Rest of South America
• Middle East & Africa
o Saudi Arabia
o UAE
o Qatar
o South Africa
o Rest of Middle East & Africa

What our report offers:
- Market share assessments for the regional and country-level segments
- Strategic recommendations for the new entrants
- Covers Market data for the years 2020, 2021, 2022, 2025, and 2028
- Market Trends (Drivers, Constraints, Opportunities, Threats, Challenges, Investment Opportunities, and recommendations)
- Strategic recommendations in key business segments based on the market estimations
- Competitive landscaping mapping the key common trends
- Company profiling with detailed strategies, financials, and recent developments
- Supply chain trends mapping the latest technological advancements