Embedded Finance Trends: 7 Trends for the Year Ahead

The demand for embedded finance is on the rise in the business-to-business (B2B) landscape, transforming the way B2B companies buy and sell while creating new opportunities for fintech, corporate buyers, suppliers (especially SMBs), and non-financial institutions. With the embedded finance payments market projected to reach $1.91 trillion by 2028, embedded finance is going to become the norm for companies, with any business with a large user base adding in financial services as an offering or risk being left behind. With that in mind, let's take a look at what embedded finance is, exactly, and some embedded finance trends industry insiders are seeing.

What Is Embedded Finance?

Embedded finance enables companies who are not financial institutions to include financial services or financial products in their digital products. It makes buying faster and easier for customers, while providing opportunities for businesses to streamline backend processes and generate more revenue. Having banking services built-in to online shopping transactions is business as usual for B2C – think about the experience on websites like Amazon and eBay. Buyers in the B2C ecosystem have many options when it comes to payments – credit card, PayPal, Google Pay, Apple Wallet, among others – as well as a plethora of B2C BNPL options appearing in just about every ecommerce checkout flow. Now, it’s becoming the same way for the B2B sector as expectations around the online purchasing experience shift.

Benefits of Embedded Finance

One in three B2B buyers purchase at least half of their products on business-to-business marketplaces. As this space continues to grow, those in the industry more clearly see the benefits of embedded finance and reasons why they should implement financial offerings in their check-out process.

Increased stickiness

In early iterations of B2B marketplaces, placing orders digitally was common, but the payment was handled offline. Excluding the payment process from the online buying experience decreases stickiness and value. Handling payments offline makes it more complicated for the buyer to complete the transaction, reducing the likelihood they will follow through and decreasing platform stickiness. One of the major advantages of an embedded payment model is increased platform stickiness, which results in higher volume and totals of transactions.