Embedded finance changes the way we think about banking by making financial services a part of everyday activities, products, and interactions that aren’t related to money or finance.

This radical approach made it easier for people to get financial access by making services a part of their daily lives.

Embedded finance makes operations easier by combining banking, payments, lending, and insurance into areas like e-commerce, retail, and mobility. This makes things more convenient and improves the user experience.

This trend presents the fintech industry with a lucrative opportunity to broaden its prospects, reach new customer segments, and promote innovation through the established infrastructure and user engagement of non-financial platforms.

With embedded finance gaining momentum, it promises to redefine how individuals engage with financial services, cultivating a more inclusive and accessible financial landscape.

How Embedded Finance Works 

Using Application Programming Interfaces (APIs) and partnerships between fintech, tech, and other businesses, embedded finance mainly incorporates financial services and products into platforms directly.

For example, users of ride-hailing apps such as Uber and Ola may be able to conveniently pay for their rides using a bank account or digital wallet linked to these apps.

Likewise, buyers may be able to obtain immediate financing or installment payment plans through e-commerce platforms at the point of sale, eliminating the need to go to a different banking website or app.

Its Benefits for the Fintech Industry 

Embedded finance gives greater access to financial services by expanding the financial products and services market by integrating them into non-financial platforms.

This financial regularization increases financial inclusion and gives marginalized groups access to necessary lending, payment, and banking services.

A survey conducted by Accenture found that 76% of consumers are interested in using financial services offered by non-bank providers, highlighting the growing demand for embedded finance solutions.

Also, by integrating financial services directly into their current platforms, embedded finance helps companies provide a smooth and frictionless consumer experience.

This facilitates a more convenient and satisfied user experience by simplifying the user journey and lowering transactional discord.

Research by Deloitte suggests that embedding financial services into non-financial platforms could increase customer lifetime value by up to 30% for businesses across various industries.

Growth Trends

As technology advances and consumer preferences shift toward digital-first experiences, embedded finance has enormous growth potential.

A McKinsey report projects that by 2030, the global embedded finance market will grow to a value of USD 7 trillion. The need for embedded financial services is predicted to grow rapidly as more industries adopt digital transformation.

Both established fintech companies and startups are putting more effort into growing their service offerings, integrating financial capabilities into their platforms, and generating new revenue streams.

Overall, embedded finance presents an enormous opportunity for innovation, cooperation, and expansion in the fintech space.

Businesses will expand access to financial services, improve customer experiences, and generate more value for industry stakeholders and consumers by integrating financial services into non-financial platforms seamlessly.

Fintech businesses that adopt this paradigm shift and keep an eye on the embedded finance ecosystem could gain a competitive advantage and help mold the financial landscape of the digital era.