Embedded Finance Market

[255 Pages Report] The embedded finance market is estimated to be worth USD 115.8 billion in 2024. It is projected to reach USD 251.5 billion by 2029 at a Compound Annual Growth Rate (CAGR) of 16.8% during the forecast period. The embedded finance market is expected to surge substantially in the coming years due to the growing advancement and integration of non-financial platforms with flexible access to financial services.

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Embedded Finance Market Trends

Driver: Digitization of financial services

Technology is empowering the movement towards digital solutions across the financial services market and enabling banking, lending, insurance, payments, and other services to be incorporated into everyday apps. This change helps to carry out the current financial operations instantly and delivers individual services to customers. For instance, Cake by VPBank and GoTyme Bank in Southeast Asia are both strong examples of firms that have successfully incorporated the embedded finance model and made use of new technologies to integrate more value-added services, which would ultimately cater to customers’ needs and financial access. In the United States, the embedded finance market has also been forecasted to grow highly, with Nasdaq attributing this to the digital transformation of many industries. Mobile banking applications and online payment portals served as perfect examples of how integration with the digital world helps to bring financial services closer to consumers and make them more readily acceptable.

Restraint: Data privacy concerns

The threat arises with the facility of providing financial services as it requires the safeguarding of users’ data. There is a genuine fear of data confidentiality and integrity as businesses must guarantee that they respect data protection policy and avoid data leakage, compromising customer trust. Other regulations include the General Data Protection Regulation (GDPR), which applies to the European Union, and the California Consumer Privacy Act (CCPA), which applies to the United States, which makes it mandatory for organizations to employ appropriate measures to protect data and offer users more visibility on the use made of their data.

Opportunity: Financial Inclusion

Embedded Finance is advantageous to the community because it can deliver financial services to the unserved due to banking constraints using popular tools such as mobile applications that offer businesses the ability to provide financial services to consumers who may otherwise not have access to these services and thus become active participants in the economy. For instance, starting with micro-credit or saving products within mobile money can offer a financial product to people in rural or low-income settings who cannot afford a bank.

Challenge: Cybersecurity risks

Incorporating financial services in diverse applications raises the vulnerability of such attacks and break-ins. Having secure financial data security is a must for business organizations, and employing it can be a difficult and expensive procedure. It may comprise hacking, phishing, and data compromise, which could lead to financial and legal consequences and reputational loss. The risks related to cybersecurity can be managed using better protocols, constant surveillance, and staff education.

Ecosystem Of Embedded Finance Market

The prominent players in the embedded finance market include Stripe, Inc. (US), PayPal Holdings, Inc. (US), Amazon.com, Inc. (US), Plaid, Inc. (US), Klarna Bank AB (Sweden), FIS (US), Visa Inc. (US), Cross River Bank (US), Zeta Services Inc. (US), Marqeta, Inc. (US), Wise Payments Limited (UK), Goldman Sachs (UK), JPMorgan Chase & Co. (US), Alipay+ (China),  and so on. These companies have been operating in the market for several years and possess a diversified product portfolio and state-of-the-art technologies with a well-established geographic footprint.

Based on the business model, the B2C model is expected to hold a higher growth rate during the forecast period

Looking at the future of the embedded finance market up to 2029, it is predicted that B2C business models have the potential to register a higher growth rate for various reasons. The availability of financial services on B2C platforms brings transactional convenience to consumers by performing operations in familiar portals. Evaluating payment options, loans, and insurance directly into these platforms makes the use more accessible and enhances engagement. Large amounts of consumer data also facilitate the customization of financial products, which boosts the uptake of such commodities and loyalty among patrons. Legal requirements are another factor uniquely addressed through robust B2C frameworks, which are fundamental to the buildup of consumer confidence. These partnerships help such platforms to remain innovative and add more financial utilities to their offerings, thereby signifying even higher growth prospects for B2C models within the embedded finance space in the forecasting period.

By type, embedded payments are estimated to have the largest market size during the forecast period

Among all the types of embedded finance, the embedded payments segment is likely to account for the largest market share during the forecast period due to their integration into non-financial platforms making customers’ experience and convenience much better. This integration removes the friction of a direct transaction, increases user engagement, and targets the ever-increasing demand for digital transactions worldwide. With more applications gaining ground and integrating into different industries, such as e-business and digital trade markets, the market size for embedded payments is set to expand significantly, thereby redefining the future of financial transactions and services.

North America is expected to register the largest market share during the forecast period. 

The largest market share throughout 2029 is expected from North America due to its well-established technological structure in conventional and emerging digital services and government support for innovations while maintaining the consumers’ protection. There are many opportunities for partnerships and collaborations because the region is already developed and has a highly concentrated financial business ecosystem with several banks, financial institutions, and fintech companies. This is complemented by increasingly heavy investments in venture capital and private equity, which continues to encourage development and expansion. Secondly, North American consumers expect their financial solutions to be all-encompassing and must be integrated into multiple applications. The region continues to develop and create new innovative use cases like digital wallets and the BNPL sector, which confirms its position as the global leader in embedded finance.

Market Players:

The major players in the embedded finance market are Stripe, Inc. (US), PayPal Holdings, Inc. (US), Amazon.com, Inc. (US), Plaid, Inc. (US), Klarna Bank AB (Sweden), FIS (US), Visa Inc. (US), Cross River Bank (US), Zeta Services Inc. (US), Marqeta, Inc. (US), Wise Payments Limited (UK), Goldman Sachs (UK), JPMorgan Chase & Co. (US), Alipay+ (China), Unit Finance Inc. (US), Solaris SE (Germany), Parafin, Inc. (US), Belvo (Mexico), Kasko Ltd. (UK), Tint Technologies Inc. (US), Mezu, Inc. (US), Fortis Payment Systems (US), Additiv AG (Switzerland), Galileo Financial Technologies, LLC (US), Trevipay (US). These players have adopted various growth strategies, such as partnerships, agreements and collaborations, new product launches and enhancements, and acquisitions to expand their passenger information system market footprint.

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Scope of the Report

This research report categorizes the embedded finance market to forecast revenues and analyze trends in each of the following submarkets:

Based on Type:

• Embedded Payments
• Embedded Lending
• Embedded Insurance
• Embedded Investment/Wealth Management           
• Other Types

Based on the business model:

• B2B
• B2C

Based on Industry:

• Retail & eCommerce
• Healthcare
• Education
• Telecom
• Transportation, Mobility, and Logistics
• Travel & Hospitality
• Other Industries

By Region:

• North America
  • United States (US)
  • Canada
• Europe
  • United Kingdom (UK)
  • Germany
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Australia & New Zealand
  • South Korea      
  • Rest of Asia Pacific
• Middle East & Africa
  • GCC Countries
  • Kingdom of Saudi Arabia (KSA)
  • United Arab Emirates (UAE)
  • Rest of GCC Countries
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America

Recent Development

• In June 2024, Capital One joined forces with payment powerhouses Stripe and Adyen to introduce a free fraud reduction product.
• In February 2024, Klarna launched ‘Sign in with Klarna’ to offer consumers a smoother shopping experience with increased control over their data.

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