The potential for embedded finance: insights on the megatrend from new study

By Gaia Lamperti

If you have bought something online, booked a cab via a rideshare app or invested in the stock market via a money management platform, then good chances are that you have used embedded finance. The trend is maturing quickly and has already taken over the FinTech industry, as well as non-financial sectors, with unprecedented benefits for consumers.

Over 60% of industry experts believe that embedded finance has radically improved the customer experience by reducing the time spent engaging with financial products and services, and almost half of them think that it is actually non-financial consumer brands reaping the most benefits.

These insights were drawn from a Currencycloud study on the current state of embedded finance in conjunction with FXC Intelligence. The research culminated with the publication of the payments company’s latest report ‘Follow the money: embedded finance today & tomorrow.’ The report explored several key areas of embedded finance, such as the main geographies involved, key players, global trends, and its potential for further growth, revolutionising consumer and business’ experience alike.

“Embedded finance is already part of our daily lives. We’re all familiar with how Uber takes payments without fuss, to the point where standing in the rain at a cashpoint to pay for a cab seems positively antiquated. But this report shows the sky’s the limit when it comes to clever ways to blend finance into other processes,” Steve Lemon, Co-Founder at Currenycloud, told IBS Intelligence when commenting on the report’s findings.

As well as the overall prospects for the spread of embedded finance, the report also provides a detailed overview of how today a brand with no previous finance experience can become a major player in the financial space in a matter of months, through partnerships with the right providers. “More than just ridesharing or buy-now-pay-later, there are whole sectors like healthcare and education where we’ve barely scratched the surface,” Lemon added. “Embedded finance lets us rethink our relationship with money in a way that makes things more secure and convenient for consumers and end-users while offering businesses a bounty of growth opportunities”.

The FXC Intelligence and Currencycloud report features insights gathered from interviews with several key leaders in the FinTech industry who have played a key role in driving the growth of embedded finance globally. Among the findings, the study showed how Asia Pacific is leading the way, followed by Europe and North America, highlighting how different levels of embedded finance adoptions primarily depend on the interplay between existing financial infrastructures and social practices within different countries which can create nuanced opportunities for brands.

The main factors driving the uptake on a global scale include consumer demand, additional revenue streams, opportunities to offer new products, and the availability of innovative supporting technologies like BaaS. Yet, according to the report, “it has by no means reached its full potential. Companies are only beginning to discover how embedded finance can be fitted into their business models, and what possibilities are open to them.”

No doubts then that embedded finance’s future looks prosperous, as we continue to witness new industries embracing the trend, the emergence of super app companies, and the development of increasingly efficient and easy-to-implement technologies to support adoption.

“Embedded finance is challenging the status quo of financial services like few technologies before it and transforming how we as consumers think about and access banking, payments and beyond,” commented Daniel Webber, CEO at financial data company FXC Intelligence. “From apps with built-in payments to buy now, pay later at checkout, we’re already starting to see the impact of embedded finance in our daily lives, but there’s far more to come, expect significant transformation of finance over the next few years.”