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Welcome to 2023 - the year of the embedded finance boom

Fintech for Humans

If 2022 was the year embedded finance became a hot topic, 2023 will be the year it booms and takes centre stage as one of the biggest forces shaping the global financial ecosystem.

In almost every industry, the opportunities for embedded finance are immense. By definition, embedded finance is the seamless integration of financial services into the processes and offerings of traditionally non-financial service companies. Think ride-hailing services, coffee shop apps offering one-click payments, or the ability to insure high-value items at check-out on your favourite e-commerce store.

Embedded finance reimagines the entire customer experience

But at its heart, embedded finance reimagines the entire customer experience and applies across a broad range of financial services over and above payments, like loans, investments, and insurance. The beauty of embedded finance is that it streamlines financial processes and paves the way for companies to close the gap between themselves and their customers – putting more power and choice in the hands of consumers.

Trends to watch out for in 2023:

Embedded Payments

Thanks to a combination of growing online sales and vastly improved API solutions, the embedded marketplace is taking off. A report by Juniper Research suggests that the value of the embedded finance market, which was at USD$43 billion in 2021, will grow to a whopping $138 billion in 2026. If current trends continue, predictions are that 74% of digital consumer payments globally will be conducted via platforms owned by nonfinancial institutions by 2030. Cutting-edge embedded finance solutions are being developed at a rapid pace which is good news for businesses and consumers.

The rise of neobanks

Far from being a futuristic concept from The Matrix film franchise, neobanking is actually already a reality. Neobanks are simply banks that operate exclusively online without the need for physical branches. Transactions, as well as communication between customers and bank representatives, all take place virtually. There are plenty of advantages to this: lower physical costs means more time and effort goes into delivering a secure, high-quality experience with lower fees for customers.

Online card payment

Trust gets redefined with blockchain

The ways in which trust is established between parties in a financial transaction or agreement are shifting. In a multi-layered and increasingly complex global financial system, trust in anti-fraud and payment verification services, and trust that the parties managing, processing, and storing our financial information are doing so correctly, is crucial.

Debates about decentralisation and how best to apply trustless systems are likely to continue in 2023. Blockchain, or the process of storing data or running programs that are spread across multiple computers in ways that cannot be altered inappropriately, will undoubtedly play a role in how financial services are conceptualised and delivered to consumers.

Open banking to make lending better and faster

Because open banking enables third-party developers to build applications and services around financial institutions, there is room for far greater levels of transparency for account holders in almost every industry. This is a win-win for both lenders and customers who need access to credit. Within an open banking framework, lenders are able to get a more complete, and therefore accurate, picture of a borrower’s financial situation. With a better understanding of their own finances, customers can make more well-informed decisions. According to a report by Credit Kudos, 87% of lenders say they plan to adopt open banking within the next two years, bringing the concept into the mainstream of financial services.


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