Embedded finance is no longer just a buzzword, it is rapidly transforming the way businesses and consumers engage with financial services.
By seamlessly integrating payments, lending, insurance, and banking into everyday platforms, we streamline transactions, improve customer experiences, and open new revenue channels for businesses across industries.
This article explores the rise of embedded finance, highlights key use cases across industries, and details how businesses can leverage embedded finance to drive growth and customer loyalty.
What is embedded finance?
Embedded finance refers to the direct integration of financial services into non-financial platforms or services. This allows consumers to access everything from payments and loans to insurance and investments without leaving the apps they use every day. Imagine being able to book a ride, buy travel insurance, and receive a loan all in one seamless transaction.
Integrating financial services directly into the platform simplifies the process for consumers, making financial transactions faster and more intuitive.
growing market
Embedded finance isn’t just growing, it’s growing fast. Experts predict that the global embedded finance market could reach $7 trillion over the next decade. Advances in APIs, the rise of e-commerce, and changes in consumer behavior are all accelerating this trend.
In 2020, the embedded finance market generated $22.5 billion in revenue and is expected to soar to $384.8 billion by 2029. The rapid growth of this sector presents a huge opportunity for companies to leverage financial services as part of their core services.
Practical example of embedded finance
Embedded payments: Platforms like Uber and Amazon allow customers to seamlessly pay within the app, providing a frictionless user experience. Embedded financing: Buy now, pay later (BNPL) services like Klarna allow users to split payments at checkout without leaving your site, increasing sales and customer satisfaction. Embedded insurance: Consumers can buy insurance right when they need it, such as when purchasing a plane ticket or a new car, streamlining the process and increasing coverage uptake. Embedded Banking: Lyft and Shopify offer branded debit accounts that allow users to access their earnings and pay for services instantly. Embedded investing: Platforms like Robinhood and Cash App integrate investing into their core services, democratizing access to financial markets.
Why embedded finance is important for businesses
Embedded finance opens up new revenue streams and enhances customer engagement. For businesses, it simplifies transactions, fosters customer loyalty, and provides rich insights into user behavior.
By integrating financial services, businesses can provide personalized experiences and build long-term relationships with users.
According to a report from Plaid, 88% of businesses using embedded finance report increased customer engagement, and 85% say it helps them acquire new customers. This powerful tool not only improves customer retention but also helps your company stay competitive.
The future of embedded finance
The potential for embedded finance extends far beyond today’s industries. Experts predict that it will play an important role in fields such as healthcare, education, and real estate in the coming years.
As more businesses adopt embedded finance, new ways will be created to serve the unbanked and make financial services more accessible to everyone.
Embedded finance will continue to reshape industries, democratize financial tools, and make it easier for people around the world to access the financial services they need, where they need it.
final thoughts
The rise of embedded finance is changing the way businesses interact with customers and the way consumers access financial services. As growth continues, companies that embrace embedded finance will unlock new revenue streams, strengthen customer loyalty, and stand out in the competitive landscape.
From seamless payments to personalized insurance, embedded finance is revolutionizing the way we think about financial services, and businesses that embrace embedded finance are poised for success.
