Embedded Finance is about to accelerate and change financial services as we know it.

We all thought 2021 was a good year for embedded finance, but 2022 is about to blow last year out of the water. 2021 was about getting to grips with embedded finance and understanding how this flourishing sector can benefit different businesses and users. Those that have dived straight in are already reaping the benefits and all the momentum of the past year is going to accelerate in the next 12 months, changing the financial services industry as we know it and creating a more collaborative ecosystem.

We predict the following will take place in 2022 due to embedded finance opportunities:

  • Mass cross-vertical adoption

  • Increased collaboration and partnerships

  • Revenue growth and additional revenue streams

Mass cross-vertical adoption

Embedded finance makes sense. It enables any business to serve their customers better by providing additional services where they need them. This is becoming more apparent as those taking advantage of embedded finance see monetary and wider user satisfaction benefits. In order to compete, we predict 2022 will see more and more businesses adopting embedded finance capabilities.

More businesses will opt to embed additional financial products that suit their offering, and there will also be a shift in which type of product is being integrated. Payments have occupied a lot of the embedded finance space, closely followed by credit in the form of buy now pay later (BNPL). These forms of embedded finance have gained popularity with retailers looking to ease consumer transactions. In 2022, we will see more businesses opting to implement embedded finance with financial products, not just payments, where it makes sense to do so.

The embedding of insurance products started to develop last year and will continue to grow; for instance, we have seen car companies adding integrated insurance options to the user journey. This could then be bundled with some form of rewards scheme when the user tops up at certain petrol stations, for example. There really is no limit to which businesses can embed which financial products and this year will see increasingly creative uses of embedded finance across a range of verticals.

Increased collaboration and partnerships

A key component of embedded finance that will develop as adoption increases is partnerships. Every day new partnerships are announced through the industry media, often collaborating in order to develop a new product or service. We predict that this year, embedded finance will bring about partnerships focussed on delivering existing products to users in new and innovative ways. Large tech companies will associate with start-ups that hold a monopoly on their niche as it is more valuable to use other’s expertise than compete against them. Instead of debating between buy or build, businesses will choose to embed.

Revenue growth

As the number of businesses using embedded finance increases, so will the revenue gained from integrations. For both those embedding and services being embedded, 2022 will see a large increase in revenue through these additional streams. Some of our partners had massive growth in 2021, with up to 30% of their revenue coming from embedded finance journeys. Such statistics are likely to increase further in 2022 with more dependency on partnerships and embedded finance. An added benefit is that service providers are not limited to one partner when using embedded finance. For example, an estate agent may embed the services of a mortgage provider and then a separate home insurance provider. Similarly, that mortgage provider may be embedded in the applications of five estate agents. This enables businesses to continually expand their product offering, user base and therefore revenue.

2022 is the year of embedded finance. Last year the sector was emerging and testing the waters; now, it is making a splash. We are particularly excited to see what this year will bring at mmob, and we hope you are too.

Interested in adding an additional financial product to your offering through seamless embedded finance? Get in touch through the form below:

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