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Since you’re here, you might have already heard claims that embedded finance is the next evolution in fintech, and you can’t keep your business going without it. The truth is, in fintech, embedded finance is offering banking services wherever users are—in retail apps, ride-hailing platforms, or even payroll systems. It’s something you can’t afford to overlook.
Table of Contents
- What Is Embedded Finance? Fintech & More
- Why Embedded Finance Is the Next Evolution in FinTech?
- Embedded Finance: The Next Evolution in Fintech? Market Momentum & Predictions
- Let’s Sum it Up. The Role of Banks & FinTech
Let’s define embedded finance to help you understand it better and decide whether it’s something your business needs. Why embedded finance is the next evolution in fintech?
What Is Embedded Finance? Fintech & More
In fintech, embedded finance means weaving financial services (banking, lending, insurance, payments, or investments) right into non-financial apps through APIs. For example, it could enable a customer to get a loan, pay for groceries, or secure insurance instantly, all within the same app they are already using.
It flips the traditional model on its head. It might not be a groundbreaking discovery, but consider it something that is slowly but surely becoming a standard. Soon, your clients won’t be willing to use three different apps instead of one. And if you don’t invest in embedded finance solutions today, you’ll fall way behind your competitors.
From a customer perspective, thanks to APIs and the ubiquity of smartphones, they can now access financial tools within apps they already trust. That’s how companies can earn new revenue while deepening customer loyalty.
Why Embedded Finance Is the Next Evolution in FinTech?
Embedded finance removes friction by keeping users in-app. No redirects to external sites or additional log-ins. Just smooth, integrated experiences. Many specialists note that it’s a tool to bring services directly to users instead of selling or offering them separately.
Non-financial companies earn through transaction fees, financing charges, and cross-selling. For instance, retailers offering buy-now-pay-later options experience higher checkout conversions and additional earnings.
Embedded finance extends financial services into emerging markets. In places with high smartphone use, platforms can bring banking services to previously unbanked populations. Keep in mind one thing: with embedded finance solutions, APIs are the backbone. They let regulated banks and fintechs integrate banking services into any app, whether for retail, logistics, healthcare, or real estate.
Embedded Finance: The Next Evolution in Fintech? Market Momentum & Predictions
Let’s talk numbers! How do we expect embedded finance to enroll? Will the increase in popularity be linear or stop soon? Is it something you have to invest in?
- McKinsey forecasts embedded finance could account for €100 billion revenues in Europe by 2030, up from €30 billion in 2023 (source).
- Accenture estimates that the global embedded finance market will reach $230 billion by 2030, growing at ~16% CAGR (source).
- Globally, non-financial companies that embed financial services are expected to exceed 65 % by 2025 (source).
For us, the conclusion here is: embedded finance isn’t something niche, as it’s reshaping how finance is distributed.
You should read: Enhancing Financial Services Through Case Management.
Who’s Embracing Embedded Finance?
As embedded finance gains recognition, it’s no longer just big tech or retail that’s reaping the benefits. Organizations worldwide, including those in the telecommunications, travel, mobility, real estate, and logistics sectors, are integrating finance into their offerings. Even B2B platforms continue to introduce embedded payments and invoice financing.
Let’s Sum it Up. The Role of Banks & FinTech
Do you see embedded finance as a threat to direct customer engagement? Don’t – instead, respond strategically by offering BaaS. Don’t hesitate to partner with platforms! According to PWC, banks can become platform enablers, not just service providers.
Fintechs, meanwhile, are delivering the technology compliance layers, such as API platforms. There’s more (risk services, identity checks, modular banking stacks), but API should always be your go-to.
Ailleron is here to help you design, integrate, and scale embedded banking services with confidence! Let’s talk.
