Embedded Finance Market Size, Share, By Type (Embedded Payment, Embedded Lending, Embedded Investment, Embedded Banking, and Others), By End-User (Retail and E-commerce, Transportation and Logistics, Healthcare, Media and Entertainment, and Others) - Trends, Analysis, and Forecast till 2035

• The embedded finance market size was valued at USD 132.4 billion in 2024.
• The target market is anticipated to grow at a size of USD 570.4 billion by 2035.
• The market is growing at a CAGR of 17.4%.

Embedded finance refers to the seamless integration of financial services into non-financial platforms, application, or ecosystems. The target market's expansion is fueled by the expanding digital economy and the emergence of fintech technology. It is anticipated that as this focused market develops further, the financial services industry will change becoming more accessible and included into regular customer interactions.  

For instance, In October 2024, HSBC launched its new jointly owned venture SemFi by HSBC, which aims to deliver Seamless Embedded Finance solutions to business clients. The new technology business is a collaboration between Tradeshift, a B2B global trading network, and HSBC. HSBC payment, trade, and finance solutions will be integrated by SemFi into a variety of e-commerce and marketplace platforms, including Tradeshift's own business-to-business network.

Key Takeaways:

• North America holds a significant share of the target market, which accounts for approximately 35%, as the regulatory environment is progressively adapting to facilitate innovation allowing some major companies to integrate financial services seamlessly into their platforms. 
• Europe is projected to be the fastest-growing market in the coming years as this region focuses on open banking and digital payment solutions.
• Consumer convenience is increased and friction is decreased with embedded finance's streamlined, one-stop shop experience.

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Key Drivers of Target Market:

Rising Demand for Convenience to Accelerate Target Market Growth

There is a growing expectation among consumers for seamless financial transaction integrated into their everyday applications. This demand encourages businesses to embed financial services directly into their platforms, which improves customer satisfaction and loyalty.

• For instance, in November 2024, according to recent research report by Forrester Research, Inc., now-a-days convenience is considered as a need by consumers rather than a luxury. Financial transactions are also expected to be easy, whether a customer chooses to use integrated insurance choices when making an online purchase or applies for a loan through a vehicle dealership.

Financial Inclusion Initiatives to Encourage Target Market Expansion

Governments and organizations are focusing on financial inclusion driving the embedded finance solutions that provide easier access to financial products for underserved populations. For instance, India’s embedded finance sector is projected to grow rapidly, supported by initiatives aimed at integrating financial services into everyday transactions.

• For instance, according to recent research report by VC Innovations, in September 2024, through its ability to reach clients requiring new ways to save, construct a retirement portfolio, make payments, move funds, or lend money, embedded finance not only makes the entire customer journey more seamless but also advances financial inclusion. Banks and other financial institutions need to use their resources and products to spread the word about financial inclusion, just as the Olympics with its global platform unite athletes and sports.     

Restraints:

Data Security Concerns to Hamper the Target Market Growth

Several individual’s trade and transfer financial information, making it at risk to cybersecurity threats, further impeding the embedded finance market growth. Furthermore, non-financial platforms security frameworks are not as strong as those of banking platforms, which makes the entire ecosystem vulnerable to hacks involving sensitive data.

For instance, according to Verizon recent research study, the article highlights that 15% of data hacks faced by organizations were due to a third party vendor, a 68% increase from last year.

• Counterbalance Statements: While there are data security concerns, many companies are proactively addressing these issues by implementing advanced security measures such as encryption, tokenization, and multi factor authentication.

Opportunities & Market Trends:

Expanding API Ecosystems to Provide Opportunities in the Future

The focused market share is witnessing a boom in API technology, which facilitates the integration of financial services into various non-financial platforms. 

• For instance, in August 2024, The Fintech API Accelerator Platform, an agile, adaptable embedded finance API and integration solution, was launched by Sensedia. It enable fintechs to quickly scale their ecosystem strategy and integrate AI products and open banking/finance capabilities into their services to boost income.

The embedded finance market is classified into type, end-user, and region.

Type:

Embedded finance market is segmented into embedded payment, embedded lending, embedded investment, embedded banking, and others. The embedded payment segment is anticipated to hold the dominant embedded finance market share as the increasing consumer demand for convenient and efficient payment options further solidifies the leading position of embedded payments.

• For instance, in October 2024, Worldline, a global leader in payment services and Online Payment Platform, a leading specialized payment provider for platforms and marketplaces announced the launch of their innovative Embedded Payments solution in Europe. This collaboration provides businesses with a suite of payment capabilities that are uniquely designed to address the complex needs of platforms and marketplaces.   

End-User:

Embedded finance market is divided into retail and e-commerce, transportation and logistics, healthcare, media and entertainment, and others based on end-user. Target market share is dominated by retail and e-commerce, since this sector keeps expanding due to companies using integrated financing to provide credit products and customized incentives that increase sales and client loyalty.

Region:

North America: This region holds the largest share of the target market due to its robust financial infrastructure, widespread fintech, and increasing integration of financial services into everyday platforms.

• For instance, in October 2024, Dream Payments unveiled DreamPay, a modern API & Embedded Payments Platform. DreamPay enable North America's leading financial institutions, insurers, healthcare providers, and software platforms to seamlessly integrate payment services directly into their customer experiences, software applications, and business workflows removing the complexity of building and maintaining payment systems in-house.

Europe: This region also leads the focused market share as it is driven by increased digitalization and integration of financial services into non-financial platforms. For instance, the European Union’s digital finance strategy and initiatives, such as PSD2 (Payment Services Directive 2) encourage innovation. Regulations support open banking, enabling fintech firms to offer tailored embedded financial solutions.

Embedded Finance Market Report Scope:

Segmentation:

By Type:

• Embedded Payment
• Embedded Lending
• Embedded Investment
• Embedded Banking
• Others

By End-User:

• Retail and E-Commerce
• Transportation and Logistics
• Healthcare
• Media and Entertainment
• Others

 By Region:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Russia
  • Italy
  • Spain
  • Netherland
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Australia
  • Indonesia
  • Malaysia
  • South Korea
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • Israel
  • South Africa
  • Rest of Middle East & Africa

The key players operating in the embedded finance market include Robert Bosch GmbH, DENSO Corporation, Vitesco Technologies and others. Major players are leveraging partnerships, innovation and strategic expansions to strengthen their positions in this dynamic environment.  

For instance, in July 2024, Fifth Third Bank announced a collaborative agreement between Newline by Fifth Third, a leading embedded payments provider and Stripe, a financial infrastructure platform that enable businesses to seamlessly incorporate financial services in their products. Together, Newline and Stripe expands embedded financial services for Stripe’s platform users and their customers.

List of Key Players in the Market:

• Stripe, Inc.
• PayPal Holdings, Inc.
• Plaid, Inc.
• Marqeta, Inc.
• Cross River Bank
• Bond
• Finix
• Flywire
• OpenPayd
• Zopa Bank Limited
• Klarna Bank AB
• Alviere
• Railsr
• Lendflow
• Fortis Payment Systems, LLC

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• In October 2024, Digital bank and fintech provider Green Dot has launched an embedded finance brand and platform of services. In addition to offering FDIC-insured banking products and solutions, Arc will provide Green Dot Bank with strong direct integration and regulatory and compliance knowledge.
• In October 2024, Liberis, a leading global embedded finance platform, is expanding its capabilities with the launch of a new multi-product platform, which will deliver hyper-personalised financial solutions to small and medium-sized enterprises (SMEs). The growing need for embedded finance solutions from SMEs and merchants is what is driving this new platform.
• In October 2024, Z?m Rails, a Canadian fintech, expands its North American reach by partnering with payments giant Fiserv to provide embedded financial solutions to US businesses. Through the partnership, the U.S. companies will be able to provide embedded finance capabilities to their clients directly. Via this relationship, Fiserv will be positioned as the main transaction processor for Z?m Rails' payments gateway, enabling Z?m Rails to leverage Fiserv's embedded financial capabilities.
• In July 2024, Marqeta, the global modern card issuing platform that enable embedded finance solutions for the world’s innovators, announced a new customer, Swiss4, providing real-time and personalized digital payment services for their customers. This is a component of Swiss4's newly released app, the first of its kind in Switzerland, which blends financial services with management of affluent lifestyles. 
• In May 2024, FIS has launched an embedded finance platform designed for use by financial institutions, businesses, and software developers. The new "Atelio by FIS" platform may assist any business with deposit collection, money transfers, card issuance, invoice sending, fraud prevention, cash flow forecasting, and better understanding of consumer behavior.

Analyst View:

Embedded finance market is expected to develop significantly as it continues to transform conventional financial services and upend sectors globally. Additionally, companies are increasingly using embedded finance as customer expectations shift into more individualised, real-time, and seamless financial services, which will accelerate the target market growth in the upcoming years.

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