Embedded Finance Market Expected to Reach $570.9 Billion by 2033

According to a new report published by Allied Market Research, titled, “Embedded Finance Market, by Type, (Embedded Payment, Embedded Lending, Embedded Investment, and Embedded Insurance) By industry vertical (Retail and E-commerce, Transportation and Logistics, Healthcare, Media and Entertainment, and Others): Global Opportunity Analysis and Industry Forecast, 2024–2033." The embedded finance market was valued at $82.7 billion in 2023, and is estimated to reach $570.9 billion by 2033, growing at a CAGR of 21.3% from 2024 to 2033.

Embedded finance means incorporating financial capabilities directly into the customer experience of various businesses or platforms, such as e-commerce websites, social media platforms, or mobile apps. Embedded finance allows any individual to access and use financial services, such as payments, loans, or insurance, without leaving the platform or app, which is already using it. It brings financial services closer to the customers, making them more convenient and accessible in everyday activities in embedded finance industry. 

Furthermore, major market players have undertaken various strategies to increase the competition and offer enhanced services to their customers. For instance, in November 2023, Finastra collaborated with Jifiti to deliver next-generation white-labeled embedded finance to global financial institutions. This collaboration will give all financial institutions in the Finastra BaaS (Banking as a Service) ecosystem access to embedded finance capabilities. 

Banks will be able to offer loans to customers through retailers at the time of sale, improving the digital customer experience and giving end users more options. Similarly, in January 2023, Yes Bank, an Indian banking company, partnered with Falcon, a banking-as-a-service company, to enter into the embedded finance market. This partnership aims to improve the customer banking experience of the customer by offering customized financial solutions to its clients leveraging Falcon’s state-of-the-art technological infrastructure. Therefore, such strategies are expected to boost the growth of the embedded finance market in the upcoming years.

By industry vertical, the retail & e-commerce segment attained the highest embedded finance market size in 2023. This is because it not only simplifies the buying process but also enables consumers to make larger purchases and pay overtime, boosting sales for businesses. Furthermore, embedded finance facilitates personalized offers and rewards based on customer behavior and preferences, enhancing customer loyalty and engagement. 

Thus, with embedded finance, retailers and e-commerce platforms unlock new revenue streams, improve customer satisfaction, and drive overall growth in the ever-evolving digital landscape. However, the media & entertainment segment is considered to be the fastest growing segment during the forecast period. This is because the integration of microtransactions and digital currencies into media platforms has the potential to revolutionize content monetization models. 

Moreover, consumers participate in micro-investing in their favorite movies, TV shows, or music, creating new revenue streams for content creators. Hence, all such trends of the embedded finance market in the media and entertainment sector presents exciting prospects for innovative business models, enhanced user experiences, and increased revenue generation.

Region wise, Europe attained the highest embedded finance market share in 2023. This is because regulatory bodies in North America are actively considering policies and regulations to foster innovation and competition in the embedded finance space. Thus, they are aiming to strike a balance between consumer protection and enabling partnerships between financial and non-financial entities. Hence, such continuous innovation from fintech firms fuels the growth of embedded finance in the North America region. However, the Asia-Pacific region is considered to be the fastest growing region during the forecast period. This is attributed to the fact that Asia-Pacific region witnessing significant digital transformation across various sectors, including finance. 

Also, the increasing adoption of smartphones, internet connectivity, and digital payment platforms has created a favorable environment for embedded finance solutions. Hence, as more businesses integrate financial services into their existing platforms, the demand for embedded finance market trends offerings has surged.   

The adoption of advanced technologies in risk assessment and management has revolutionized the commercial property insurance industry in Germany. Insurers are increasingly leveraging technologies such as artificial intelligence (AI), the Internet of Things (IoT), and big data analytics to enhance their underwriting processes and offer more tailored insurance solutions. For instance, in June 2023, Allianz introduced an AI-powered risk assessment tool that can analyze vast amounts of data to provide more accurate and personalized insurance quotes. This innovation not only improves efficiency but also helps insurers better understand and mitigate risks. By offering more precise and customized insurance products, companies can attract a broader range of clients, thereby driving the embedded finance market growth.

Key Findings of The Study:

• By Type, the embedded payment segment dominated the embedded finance in 2023.

• By Industry vertical, the retail & e-commerce segment dominated embedded finance in 2023

The report analyzes the profiles of key players operating in embedded finance market analysis such as Block, Inc., Cybrid Technology Inc, Fortis Payment Systems, LLC (“Fortis”), Finastra International Limited, FinBox, Lendflow, PAYRIX, PayPal Holdings, Inc, Stripe, and Zopa Bank Limited. These players have adopted various strategies to increase their market penetration and strengthen their position in the embedded finance industry.