Interesting Embedded Finance Trends for 2023 and Beyond

Over the past few years, embedded finance has become one of the fastest-growing areas within FinTech. Also known as Banking as a Service (BaaS), this tech innovation lets businesses integrate financial services within their products. An option for the same as cash installment payments when purchasing an item provides one example of this approach. Needless to say, the market for embedded finance services continues to quickly expand, creating meaningful opportunities for technology providers. So let’s take a look at a few of the top BaaS trends for 2023 and beyond. Use this information to gain a better understanding of the concept and its impact on the business world.

What Finance Trends Are There in 2023?

The Growth of Digital-Only Neobanks

A new type of digital-only bank – without any physical branches – continues to grow in relevance in the financial world. These neo banks actually provide an example of embedded finance within another financial business. As such, many tech pundits consider the rapid growth of digital-only banking to be an important BaaS trend. A recent study forecasts the amount of neobanks to triple by the end of this year. The number of consumers using these services is also expected to reach 300 million. As more users trust conducting financial transactions from a smartphone, expect this digital-only banking trend to continue.

Increased Integration of Financial Services in Online Retail

The BaaS example described earlier involved an online retailer embedding a credit offering within their sales process. Notably, this tactic serves to generate sales, attracting customers searching for an easier way to afford “big ticket” purchases. Not surprisingly, these online credit services remain one of the most popular use cases for embedded finance. In addition to installment credit offerings, other Internet retailers support different digital payment services, like PayPal and others. Expect this trend to grow as companies drive sales by providing different payment options to current and future customers.

Blockchain and AI Facilitate The Increased Adoption of Embedded Finance

Distributed ledger technology – better known as blockchain – makes a great partner for FinTech shops developing BaaS solutions. In short, it makes it easier to verify and record online financial transactions, especially those from an embedded service. Additionally, AI and machine learning provide an improved ability to perform real-time credit analysis for new customers. Expect an improved online shopping experience because of both tech innovations, leading to higher sales.