The era of seamless integration of financial services into everyday experiences is here. Welcome to the world of embedded finance. At its core, it’s a concept that promises to revolutionize not just the finance industry, but virtually all consumer-centric sectors. From buying a cup of coffee to purchasing a car, the finance part of the transaction is becoming invisible, quick, and efficient.
The global embedded finance market size is expected to reach $7.5 Trillion by 2030, with a whopping CAGR of 40.8% during the forecast period. Also, 75% of revenue in the global banking and payments industry, worth over $230 billion, is expected to come from embedded finance by 2025.
An Overview of Embedded Finance
Embedded finance represents a paradigm shift from the traditional financial model, enabling companies to offer financial products as a part of their customer journey. By integrating financial services directly into their existing platforms, businesses can extend their reach, increase customer stickiness, and grow revenues.
Exciting Examples of Embedded Finance
Companies across different sectors are rapidly capitalizing on the opportunities offered by embedded finance. Here are some exciting examples:
- Solar Loans & Leases for Providers of Solar Panels & Batteries: Embedded finance is turning green, literally. Companies are now able to offer their customers affordable, customized financial products, empowering them to make environmentally conscious decisions. By leveraging the power of Loan Origination Systems, these businesses are making clean energy accessible to everyone.
- Affordable SME & Consumer Credit Products: Community-focused lenders are leveraging embedded finance to provide affordable credit products to SMEs and consumers. They have created an end-to-end digital journey for their customers, from loan origination to loan management, which has not only made credit accessible but also streamlined the lending process. For instance, one lender reduced their application abandon rate from 90% to 10% by leveraging embedded finance.
- Medical Procedure Financing: Embedded finance is helping healthcare providers offer their patients financing options for their treatments. This has not only improved patient satisfaction but also delivered 7-figure growth for the providers.
- Telecom Industry: A fascinating example comes from the telecom industry where Globe Telecom extended affordable credit products to millions of its prepaid mobile customers. By integrating financial services directly into their existing platform, Globe Telecom was able to create a seamless and intuitive customer experience.
As we delve deeper into this realm of finance, we discover that embedded finance isn’t merely a trend. It is rather an inevitability, a transformational force that is reshaping the financial landscape at an unprecedented pace. The projected market size of the embedded finance industry, which is expected to reach $7.2 trillion by 2030 globally, is a testament to the massive potential and the boundless opportunities that embedded finance holds.
As technology continues to evolve and consumer expectations continue to rise, embedded finance will undoubtedly become an integral part of our lives. It’s time to embrace this shift and explore the exciting opportunities it offers. Happy embedding!