Embedded finance refers to integrated financial services within companies that are not traditional banks. In the next ten years, the value of the embedded finance market for online commerce could rise to USD 3.5 trillion worldwide. This is predicted by cloud banking provider Mambu in a study. According to the study, 49 percent of the embedded finance market would be in online commerce.
Three trends for embedded finance
According to the study, the embedded finance industry could thus grow to a value of seven trillion US dollars worldwide by 2030. Three developments would contribute to this, according to the authors of the study:
- Flexible payment options on the rise: Companies would increasingly use flexible payment options such as “Buy Now, Pay Later” to expand their offerings, increase sales and streamline the checkout process.
- Growing popularity of credit intermediation at point-of-sale: The volume of installment-based flexible payments and instant credit options has increased significantly over the past five years. For 2021, the study authors expect a 20 percent increase and strong demand for short-term credit.
- Digital wallets will become mainstream: As more and more people would use their cell phones to make purchases online, the study authors predict that 51 percent of e-commerce payments will be made via digital wallets by 2024.
Customers are ready for embedded finance
Customers are also showing interest in embedded finance: a survey of 3,000 consumers found that 86 percent of respondents would be interested in buying groceries in a store without a cashier. 81 percent could well imagine taking out health insurance via an app. Around 50 percent of those surveyed would also be willing to pay a small surcharge for this mobile access.
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Source: https://www.der-bank-blog.de/wachstumsmarkt-embedded-finance/studien/37684885/
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