Firms are forging strategic alliances to develop and build innovative embedded financial services in 2023

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The embedded finance market has grown significantly over the last few years. There are several factors driving the growth of the embedded finance market. One of the main drivers is the increasing adoption of digital technologies, which has created new opportunities for businesses to integrate financial services into their products and services.

Another driver of growth is the increasing demand for personalized and integrated financial services. Consumers today expect seamless and convenient access to financial services, and embedding these services into other products and services can help meet this demand. This is especially true for younger generations, who are more likely to use mobile apps and digital services for their financial needs.

To capitalize on the growing embedded finance market, many players are entering into strategic partnerships to accelerate their growth in the segment in 2023. With these alliances allowing firms to leverage each other's strengths and expertise to create new and innovative financial products and services, PayNXT360 expects an increasing number of collaborations to emerge worldwide in 2023.

• In March 2023, Pay.com, a UK-based automated payment platform, has formed a new partnership with Cross River Bank, a provider of technology infrastructure and embedded financial solutions. This partnership aims to expand Pay.com's automated payment platform into the United States and create new opportunities for growth.

By teaming up with Cross River Bank, Pay.com will be able to leverage the bank's expertise in technology infrastructure and embedded financial solutions to enhance its payment platform and expand its reach in the United States market. The partnership will enable Pay.com to offer its automated payment platform to a wider range of businesses and customers, creating new opportunities for growth and revenue.

In the United States, LoanStar Technologies, the fintech firm that enables merchants and service providers to offer point-of-sale consumer loans, partnered with Seattle Bank, a digitally-driven local bank, to offer embedded banking services. This partnership will allow consumers to access loans directly from Seattle Bank via merchants, for high-value transactions.

In India, Antworks Money announced a strategic collaboration with Vopy, a Sweden-based firm that provides technology for embedded finance solutions in March 2023. The strategic partnership between the two firms is aimed at developing embedded finance platform catering to the business community in India. With the platform launch, projected in August 2023, Vopy is targeting higher revenue growth in the embedded finance space.

• The revenue model, for Vopy, from the embedded finance platform consists of monthly fee per users and part of net interest income when lending, among other things.

With embedded finance industry growing at a rapid rate across Asia, Vopy has chosen India as its base for regional operations. This indicates that Vopy will seek business and strategic collaboration opportunities in more Asian countries from the short to medium-term perspective.

These strategic collaborations, in the global market, are also driving the competitive landscape in the embedded finance sector. The competitiveness is also driven by firms that are raising venture capital and private equity funding to accelerate innovation and growth in the segment.

• In March 2023, Monite, an embedded finance platform, announced that the firm had raised US$10 million in seed funding round, which was led by Third Prime and included participation from S16, Audeo Ventures, and Long Run Capital. The investment follows US$5 million round, which was led by Point72 Ventures in early 2022, and brings the total capital raised by Monite to US$10 million.

Monite has developed a solution that enables businesses to consolidate their bank accounts and streamline financial processes such as invoicing, expenses, and payments in a single location. With the B2B payments market projected to record a robust growth over the next five years, Monite is well-positioned to capture the growing market from the demand perspective.

From the short to medium-term perspective, PayNXT360 expects more such innovative embedded finance solution providers to raise funding rounds from venture capital and private equity players. This will further accelerate innovation and competitive landscape in the global embedded finance market.

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