The embedded finance market is projected to expand its roots at a strong CAGR of 16.5% during the forecast period. The market is likely to hold a revenue of USD 63.2 billion in 2023 while it is anticipated to cross a value of USD 291.3 billion by 2033.
Rising number of fintech brands expanding their roots in the insurance market, enhancing innovative platforms building contextual insurance products and services. This accelerates the growth of the embedded finance market in new market spaces. The digital lending sector flourishes and transforms as digitization increases in the corporate structure.
Fintech companies are evolving and introducing new technologies to enhance the customer experience. The Indian insurance industry has also helped in booming the embedded finance market, easing the complex processes through cutting-edge fintech. This leads to high sales of embedded finance solutions while vendors focus on making these solutions flexible so that they can be integrated with other cutting-edge technologies. This raises the demand for embedded finance solutions worldwide.
| Attributes | Details |
|---|---|
| Embedded Finance Market CAGR (2023 to 2033) | 16.5% |
| Embedded Finance Market Size (2023) | USD 63.2 billion |
| Embedded Finance Market Size (2033) | USD 291.3 billion |
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Concepts like UPIs, consumer lending, SME lending, and insurance are helping the embedded finance market grow. These concepts are also expected to push the market upward in the forecast period, digitizing multiple sectors from finance to retail.
The key factors driving the growth of the embedded finance market are growing digitization in multiple spaces, acceptance of UPI payments, and increased consumer and SME lending.
Embedded finance can be known as financial services that are not integrated with banks.
The use of these services has increased lately due to the transformation of each sector and the fourth industrial revolution, also known as Industry 4.0. Covid-19 has also pushed the cashless economy and increased the consumption of embedded finance.
SME lending is another growing sector, accelerating the growth of the embedded finance market worldwide. Small and medium-sized enterprises seek financial aid to expand their distribution channels and supply chains; especially the covid-19 has impacted these SMEs adversely. To recover from the damage, these small and medium enterprises seek financial help, a loan against a business, or any other type of loan. This pushes the sales of embedded finance solutions and services.
Multiple investment schemes drawn up by governments and private players are also spreading awareness among people about alternative investment plans. Apart from this, the digitization of multiple sectors leads to cashless transactions, fueling the sales of embedded finance services. For instance,
Cashless transactions have skyrocketed in India due to covid-19 and demonetization. The UPI payments are now used largely, integrating with multiple platforms like Paytm, Google Pay, and Phone Pay. Low-cost EMIs are another important factor that drives the sales of consumer lending.
The B2B operations integrate with fintech services to improve financial management, increasing the sales of embedded finance solutions. Another key factor that pushes the market growth is the high penetration of the internet and 4G/5G services in developed and developing regions.
The only restraint to the market is the unavailability of the internet, including the incompetency of the workforce. New risks involving financial transactions that lead up to fraud and malicious activities are also hindering the growth of the embedded finance market.
| Countries | Revenue Share % (2022) |
|---|---|
| The United States | 22.3% |
| Germany | 12.3% |
| Japan | 7.1% |
| Australia | 3.2% |
| North America | 32.5% |
| Europe | 25.4% |
| Countries | CAGR % (2023 to 2033) |
|---|---|
| China | 17.7% |
| India | 19.5% |
| The United Kingdom | 16.3% |
The embedded finance market is divided into regions such as North America, Latin America, Asia Pacific, the Middle East and Africa (MEA), and Europe. The foremost market is the United States, thriving at a CAGR of 16.1% between 2023 and 2033. The United States held a market share of 22.3% in 2002 while North America region held a market share of 32.5
The region is expected to hold a market revenue of USD 89.1 billion by the end of 2033. Factors behind this region's high sales of embedded finance solutions and services are increased investment, payment, and loan digitization. Apart from this, China is the second high-growth market for embedded finance market, thriving at a CAGR of 15.8% and might hold a value of USD 17 billion by 2032.
Japan region is estimated to hold USD 13.8 billion by the end of 2033 as it thrives on a promising CAGR of 14.7% between 2023 and 2033. The United Kingdom also grows along with Japan and the forecasted value is USD 10.5 billion (2033) at a CAGR of 15.3% between 2023 and 2033.
Principal Consultant
| Category | By Type |
|---|---|
| Leading Segment | Embedded Banking |
| Market Share (2022) | 32.1% |
| Category | By End User Type |
|---|---|
| Leading Segment | Investment Banks and Investment Companies |
| Market Share (2022) | 27.2% |
The embedded finance market is categorized by type and end user. These categories are further divided into small segments that expand their channels in multiple market spaces. These segments perform differently in multiple markets as they have a stronghold in multiple regions.
The type category is segmented into embedded banking, embedded insurance, embedded investments, embedded lending, and embedded payments. The end user category is segmented into loan associations, investment banks & investments companies, brokerage firms, insurance companies, and mortgage companies.
By type, the FMI study finds that the embedded banking type has a high sales potential through 2033. The adoption of embedded held a market share of 32.1% in 2022. Its growth is attributed to the rapid digitization of banking services and private banks, enhancing and transforming the customer experience.
In the future, sales of embedded banking services are estimated to grow in proportion to the need for easy processes and smooth transactions. This pushes the sales of embedded finance systems in new markets.
By the end, the user, investment banks & investment companies segment is the big segment in the embedded finance market and is expected to hold a notable portion in the forecast period. The segment held a market share of 27.2% in 2022.
Factors behind the growth of this segment are rising start-ups and demand for high investments. The increased consumption through investment services and integration of embedded fintech services is increasing the sales of embedded finance solutions.
The competitive landscape of embedded finance is diversified and makes the market exclusive for new players. Companies also collaborate and merge with other companies, which enhances operability. The vendors focus on expanding their supply chain and distribution channels.
Market Developments
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Use of digital currencies, open banking APIs, and the creation of comprehensive financial ecosystems.
The rise of embedded payments, and the expansion of fintech partnerships.
The market is expected to reach USD 291.3 billion by 2033.
Industries such as e-commerce, ride-sharing, and digital banking are leading in the market.
India is witnessing significant growth, with a CAGR of 19.5% through 2033.
1. Executive Summary 2. Market Overview 3. Market Background 4. Global Market Analysis 2018 to 2022 and Forecast, 2023 to 2033 5. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Type 5.1. Banking 5.2. Insurance 5.3. Investments 5.4. Lending 5.5. Payment 6. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By End User 6.1. Loans Associations 6.2. Investment Banks & Investment Companies 6.3. Brokerage Firms 6.4. Insurance Companies 6.5. Mortgage Companies 7. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Region 7.1. North America 7.2. Latin America 7.3. Europe 7.4. South Asia 7.5. East Asia 7.6. Oceania 7.7. MEA 8. North America Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 9. Latin America Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 10. Europe Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 11. South Asia Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 12. East Asia Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 13. Oceania Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 14. MEA Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 15. Key Countries Market Analysis 16. Market Structure Analysis 17. Competition Analysis 17.1. Stripe, Inc. 17.2. PAYRIX 17.3. Cybrid Technology Inc. 17.4. Walnut Insurance Inc. 17.5. Lendflow 17.6. Finastra 17.7. Zopa Bank Limited 17.8. Fortis Payment Systems, LLC 17.9. Transcard Payments 17.10. Fluenccy Pty Limited 18. Assumptions & Acronyms Used 19. Research Methodology
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