Embedded finance is making it easier to make purchases, take out loans, open bank accounts, buy insurance, and more.
Broadly, these solutions integrate financial tools into non-financial services. Building them into digital experiences ensures consumers and partners remain there for every part of the customer journey.
The benefits are drawing businesses across industries to integrate financial tools into their platforms. For instance, banking-as-a-service (BaaS) platforms, which help companies offer features including account opening and deposits, will draw $36B in global revenue in 2024 from account and card fees. That figure is set to grow 2.5x by 2028 to reach $94B, per Juniper Research.
But embedded finance players also face regulatory headwinds. In the US, banks that provide BaaS to fintech partners accounted for 13.5% of severe enforcement actions — a 4-year high — in 2023. Facing the possibility of regulatory blowback, some partner banks are ending their BaaS relationships, leading to bankruptcies like that of Synapse in April 2024. Meanwhile, consumer protection agencies continue to discuss regulating the BNPL players integrating financing at the point of sale.
Nonetheless, as businesses and consumers continue to adopt digital banking and commerce, embedded finance solutions are becoming table stakes. In the market map below, we identify 92 tech vendors building embedded banking and payments solutions across 9 different categories.
Please click to enlarge.
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