Embedded finance, one of the leading thematics of the year, sees high investments

Embedded finance, one of the leading thematics of the year, sees high investments

Embedded finance, one of the leading thematics of the year, sees high investments

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Existing market players or new entrants foraying into niche opportunities, the main motive of brands and businesses has always been to bolster their core product offerings by integrating financial services, thereby enhancing the customer experience. This has led embedded finance to take center stage for any non-financial player, for which embedded finance start-ups are attracting the eyes of investors. For instance,

  • In May 2022, Modulr, an embedded payments platform, raised US$108million (£83milllion) in series C funding led by General Atlantic. This platform provides embedded payments across a range of vertical markets, helping businesses to manage the difficulties of payment network membership. Specifically, Modulr helps businesses to build payments directly into their own platforms without the need to build complicated payment systems. Modulr had been successfully delivering payments infrastructure for key players of several industries such as Revolut, Wagestream, Sage, BrightPay and many more. Since this platform has already attracted a substantial customer base, it will use the funding to expand its business geographically, capturing new market verticals in the United Kingdom and Europe. In addition, the platform will be expanding the use of Account-to-Account payments and Open Banking payments and providing actionable data insights for current and future customers.
  • Similarly, in February 2022, London-based embedded finance start-up, Weavr, also raised US$40 million in a Series A funding round. Along with other investors, venture capital giant Tiger Global led the funding round. The platform, which entered the embedded finance space in 2020, makes businesses grow digitally and thus saw experienced fast adoption of its payment and banking solutions among businesses and industries.

Now, Weavr will use the fresh capital to expand its business in Europe. Since it already operates across all Eurozone countries and in the United Kingdom, it intends to capture more markets by adding more capabilities to its platform and partnering with more companies.

  • Another United Kingdom-based embedded finance network mmob raised US$ 6 million (£5 million) funding from a group of angel investors in March 2022. The firms will utilize the fresh fund to make advancements for the development of their technology platform, capture new markets, including Malaysia and empower the business. Notably, the platform provides tech infrastructure to consumer-facing fintechs through the rapid integration and delivery of relevant products and services, meeting their customers’ financial needs. PensionBee, Uinsure, Superscript, So-Sure, Anorak, Cuckoo, and iwoca are some of the clients of the platform.
  • In July 2021, Toqio also announced a seed round of US$ 8 million (€8 million) from Seaya Ventures, Speedinvest and SIX FinTech Ventures to expand its financial SaaS platform. The company enables the business to quickly launch financial solutions, removing the need to build and manage complex software solutions through its platform and marketplace. Toqio, which has customers across Europe, including Spanish bank Crealsa, business banking service Wamo in Malta and alternative business lender Just Cash Flow in the United Kingdom, plans to capture more customers in newer markets.
  • Due to the high expectation of the growing field, these embedded finance start-ups are attracting investors’ attention. Embedded finance occurs when financial services are embedded within a non-traditional financial services area, such as banking services within a ridesharing app etc. These embedded finance infrastructure providers, called enablers, also known as pipes, are taking care of the entire backend process, including incorporations of customized banking application programming interfaces (APIs), bank partnerships, compliance, security, and even co-create products. With companies across industries like insurance, grocery, logistics, and ecommerce looking to launch their customized embedded financial services, there is a higher probability of an uptick in the next four to five years. 

However, the sector is still in its budding stage with a handful number of pipes in the space. Even with the few players in the space, the sector saw a significant amount of money invested by venture capitalists. Several VCs have placed embedded finance as their top priority for investments. In comparison, other VCs remain skeptical over the sustainability of their business models and efficiency, thereby taking a selective funding approach.

To know more and gain a deeper understanding of the embedded finance market in the United Kingdom, click here.

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