Juniper Research defines embedded finance as: “Any use case where financial services, such as banking, insurance or lending, is integrated into non-financial user experiences.”
User experiences in this sense will “commonly mean eCommerce checkouts, for example, where payment options are embedded to avoid having to re-enter details, or where options like insurance are embedded within the checkout process.” However, there are “many use cases for embedded finance, which will be examined throughout this report.”
Embedded finance can “be split into several different areas, all of which use APIs (Application Programming Interfaces) to enable the integration of financial services into a third-party platform.”
As noted by Juniper Research:
“Like all embedded solutions, established companies can utilize their trusted
corporate identity to give their credit alternative payment solution an increased
success rate, as consumers see it as reliable and trustworthy. Firms are able to
leverage their existing customer base to launch an additional revenue stream.”
Juniper Research added:
“Offering an own-brand BNPL payment option improves the overall customer
experience which will result in increased customer retention and loyalty. Additionally, using an embedded BNPL solution enables merchants to maintain control over payments made by their customers, as well as ensuring they only engage with their brand.”
Juniper Research also mentioned:
“Since 2022, the eCommerce market has experienced a vast amount of growth, with processes improving as the market develops. Online platforms have become more appealing for consumers to shop from, as delivery times have been shortened, free returns have become standard and payment processing has improved. With consumers, this heavily incentivized them to spend from the comfort of their own homes, and therefore increased eCommerce use is certainly a trend that will continue.”
Around the world, regulations and take-up of embedded finance is very “varied but it
is very promising that generally most markets are at least considering embedded
finance initiatives.”
Additionally, Open Banking will “continue to become more prominent, and the increased requirement and ease of sharing data will of course boost the take-up of embedded finance solutions.”
As the take-up of embedded finance develops, it is “likely that regulation will increase in line with each segment,” the Juniper Research team concluded.