Is the use of embedded finance about to skyrocket?


Research by financial firm Bain has found that the transaction value of embedded finance is set to double to $7trn by 2026.

According to Finextra, the research forecasts ‘huge revenue opportunities’ – up to $51bn in 2026 – for software platforms and the enabling infrastructure providers that power the embedded offerings.

Bain suggested that payments and lending will continue to be the two biggest segments of embedded finance, with consumer payments expected to reach $3.5trn by 2026.

Embedded finance-driven business lending is also expected to grow, with projections suggesting a five-fold increase over the next five years.

The research also found that digital-first organisations – especially platform businesses – are best placed to take advantage of the embedded finance sector’s expansion.

Bain & Company associate partner Adam Davis said, “Embedded finance has quietly become a significant part of the way consumers and businesses make payments and access funding.

“In the years to come, it will have a transformative effect on the relationship we have with our finances, removing friction from the sector and making financial services more contextual, accessible and helpful.”

A study earlier this year by composable banking platform Temenos has found that three in five – 60% – of UK adults use embedded finance services when shopping online.

The study identified that the availability of embedded finance services has grown substantially over the past few years.

These include the use of an e-wallet, which has increased by 42% of UK adults over the past year, the use of BNPL solutions has climbed by 17%, rounding up the payment at checkout to donate to a charity or transfer to a personal investment has increased by 15%, purchasing insurance when buying a high-value product has gone up by 13% and taking out a loan at checkout to cover the cost of expensive items climbed 6%.

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