Since 2020, the embedded finance market has experienced rapid growth. The COVID initiative proved to be a significant accelerator for the growth of e-commerce, financial digitalization, and shifting consumer expectations. In addition, when it comes to winning over customers’ trust in financial services, fintech firms have been keeping up with and even surpassing traditional banks. The combination of all these factors has greatly increased the prospects for embedded finance.
The adoption of embedded financing in emerging markets is projected to increase in 2023. Embedded finance might give consumers who were previously marginalised in the traditional financial system more leverage, led by inclusive fintech businesses. Similar to developed markets, emerging markets might provide a less constrained setting, with cheaper costs and a wider client base, encouraging innovation even more.
In order to facilitate the adoption of embedded finance, traditional financial institutions, such as banks and payment providers, may create more extensive partnerships with fintech firms. As a result, there may be a situation where banks supply the necessary infrastructure and payment fintechs add greater inclusivity to personalise services for various business models, thereby unlocking greater potential.
Last but not least, there will be a lot more focus on technology capabilities and operational readiness to address any present issues like risk and compliance management in embedded finance systems. All industries will experience multiplier effects from technologies like cloud computing and AI machine learning, which will also help their ability to adopt embedded finance.