Embedded finance: Connecting the dots

As financial products integrate into user journeys, what are the implications for the various stakeholders?


The internet now plays a far more central role in people’s lives. What started as a space for entertainment, information, and social connection today serves as a platform for accessing essential goods and services, and conducting our work lives - a transition accelerated by the pandemic. As a natural segue, consumers, especially those who are younger and digitally native, expect every part of the offline experience to be replicated and if possible improved upon on the web.

This includes access to the entire range of financial services such as cashless payments, credit lines, loans, and insurance in any digital environment the consumer happens to be in

Enter embedded finance. Non-finance companies, keenly aware of consumer expectations,  have begun to partner with traditional financial companies and fintechs to provide their customers and stakeholders seamless access to financial services on their digital platforms.

The best-known examples are China’s super apps, WeChat and Alipay. Both function as single windows where a user can discover and transact with local businesses as well as big brands, and access a diverse set of services such as ride-hailing, mobile recharging and wealth management.

Big tech firms such as Alphabet and Amazon have entered the fray. Southeast Asia’s Grab and Gojek aspire to grow into super apps for their region. In India, embedded payments introduced to formalise the economy have been widely adopted, and embedded Buy Now Pay Later is gaining in popularity. In Europe, 55% of non-finance businesses say they will offer embedded finance services within the next two years and worldwide, VC investments in embedded finance doubled to USD 4.2 billion compared to the previous year, as of September 2021.

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