![]() ![]() Demand will grow because the proposition promises to improve customer experiences and financial access, along with providing cost-reduction and risk-reduction benefits to companies throughout the value chain. We found that embedded finance already accounted for $2.6 trillion, or nearly 5% of total US financial transactions, in 2021, and by 2026 it will exceed $7 trillion, or over 10% of total US transaction value. Consisting of over 50 interviews with industry practitioners, market experts, and analysts, as well as a synthesis of published data, this research also draws on our collective experience working with software platforms, enabling firms, and license and regulatory services providers. To that end, we set out to quantify the size, growth profile, and economics of the key offerings powering the rise of embedded finance, focusing on the US market. Yet despite the rapid growth of embedded financial services, there has not been much quantitative exploration of the industry’s dynamics. End users increasingly prefer the convenience of using payments, lending, insurance, and other financial services embedded in their day-to-day software, rather than accessing standalone services from traditional financial institutions. These offerings are supported by an army of well-funded fintech enablers, which help platforms deliver products and services. Several platform archetypes have emerged, including e-commerce (such as Shopify), food delivery services and rideshare apps (Uber, DoorDash), and wellness (Mindbody). In 2019, we wrote about the burgeoning movement of fintech from a business model unto itself to a key ingredient in the software platform stack-the “fourth platform.” Since then, the transition has been swift and unrelenting. The rise of embedded finance marks a new era, not only for banking transactions but also for how consumers and businesses build and manage relationships with financial services more broadly. A completely new proposition for financial services customers
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