Embedded finance is set to be worth $3.5 trillion to the global retail sector, according to a new report titled ‘Embedded Finance: Who will win the battle for the next digital revolution?’. The research from cloud banking platform Mambu forecasts that the retail sector will account for 49% of the embedded finance market within the next ten years.
Retail lending alone represents almost a third (29%) of the embedded finance opportunity, with the digitalisation of retail services set to drive increased adoption of digital wallets and flexible finance options, such as point of sale lending and ‘Buy Now Pay Later’ services.
The report, which identifies expected sector uptake of embedded finance over the next decade, also illustrates growth opportunities in the healthcare and education sectors. Healthcare is forecast to account for 17% of the market, or $1.2 trillion, following a recent influx of tech companies that offer health-related payments and insurance.
Meanwhile, emerging opportunities in the education sector could see it account for 7% of the market, or $500 billion. This is driven by a booming education-tech industry and growing demand for lending amid record levels of student debt.
Mambu’s own research confirms that consumer demand for embedded finance is high in these key sectors. A survey of 3,000 consumers, carried out as part of the report, shows that 86% would be interested in purchasing groceries from a cashier-less store. Meanwhile 60% would prefer to take out a student loan directly from their academic institution rather than a bank.
In addition, 81% of consumers would be interested in purchasing health insurance via an app and, of these, almost half would be willing to pay a small premium for this mobile accessibility. The findings reflect the rise of ‘anywhere finance’ during the pandemic and the ability of digitally-enabled sectors to respond more quickly to changing consumer needs.
Eugene Danilkis, CEO at Mambu said: “We’re moving towards a ‘fourth industrial revolution’ where financial institutions need to take strategic decisions to fully capture the opportunities offered by embedded finance. One of our customers, ZestMoney, already offers its 6 million customers in India the ability to pay in installments, without the need for a credit or debit card. This allows them to leverage the banking infrastructure to acquire customers from different verticals while, at the same time, offering the hyper-personalised products that customers want.
“The report illustrates the size of the opportunity within grasp, but it means financial institutions like banks must think, act and be tech-empowered like fintechs. For banks to compete effectively, they must also invest in technology to build and enhance their own digital offerings.”
With the embedded finance industry set to be $7 trillion globally by 2030, the report from Mambu with commentary from AWS also highlights three key trends that will drive this growth:
To learn more about the report, visit this link.
Log in to access complimentary passes or discounts and access exclusive content as part of your membership. An auto-login link will be sent directly to your email.
We use an auto-login link to ensure optimum security for your members hub. Simply enter your professional work e-mail address into the input area and you’ll receive a link to directly access your account.
Instead of using passwords, we e-mail you a link to log in to the site. This allows us to automatically verify you and apply member benefits based on your e-mail domain name.
Please click the button below which relates to the issue you’re having.
Sometimes our e-mails end up in spam. Make sure to check your spam folder for e-mails from The Payments Association
Most modern e-mail clients now separate e-mails into different tabs. For example, Outlook has an “Other” tab, and Gmail has tabs for different types of e-mails, such as promotional.
For security reasons the link will expire after 60 minutes. Try submitting the login form again and wait a few seconds for the e-mail to arrive.
The link will only work one time – once it’s been clicked, the link won’t log you in again. Instead, you’ll need to go back to the login screen and generate a new link.
Make sure you’re clicking the link on the most recent e-mail that’s been sent to you. We recommend deleting the e-mail once you’ve clicked the link.
Some security systems will automatically click on links in e-mails to check for phishing, malware, viruses and other malicious threats. If these have been clicked, it won’t work when you try to click on the link.
For security reasons, e-mail address changes can only be complete by your Member Engagement Manager. Please contact the team directly for further help.
