In November 2022 Visa has commissioned a study which revealed that embedded finance will unlock USD 242 billion in revenue by 2025 across SMBs and consumer segments in APAC. Embedded finance, or the integration of financial services into non-financial platforms, brings significant possibilities for innovation and business growth within Asia Pacific (APAC), from improving the customer experience to enabling seamless access to financial services for consumers and businesses, on everyday digital platforms.

Lending is set to emerge as the top use case for embedded finance (USD 141 billion), followed by deposits (USD 56 billion) and payments (USD 41 billion). SMB lending alone will comprise majority of the opportunity within embedded lending, unlocking more than USD 115 billion of addressable market value. Officials from Visa said that embedded finance represents a transformative opportunity for financial service and technology providers as well as software and digital providers in Asia Pacific.

Financial institutions are not only taking notice, they are investing in building a new and differentiated embedded finance experience today across verticals such as embedded issuing, lending, and payments. Visa will continue to expand its offerings and partner with banks, fintechs, platform providers, and merchants across the value chain, ensuring cost-efficiency while capturing growth opportunities and driving innovation. Enhancing overall customer experience through seamless integration of financial services Customer expectations for relevant and user-friendly financial services have resulted in traditional banks, merchants and platforms embracing the embedded finance space to stay competitive.

Setting up core banking products within non-financial platforms enables businesses to enhance the customer journey by providing supplementary products or services that may not have been previously accessible to customers. For instance, banks can embed their services into popular non-financial platforms such as ride-sharing, messaging or business software applications. This accelerates expansion into new customer segments beyond those accessible via their traditional banking channels and is also an alternate distribution network that drives scale and a more cost-effective acquisition strategy for banks.

Additionally, merchants and business-facing platforms can leverage embedded finance solutions to offer customers more seamless experiences – eliminating the need for customers to navigate to external channels to complete payments or sign up for new financial services separately. Navigating challenges on the path to growth and innovation While a dynamic market opportunity exists, industry players must adeptly navigate this burgeoning space in light of growing responsibilities in areas such as data privacy, regulatory requirements, and drop in brand saliency and differentiation. Navigation through these areas are critical to maximising the valuable opportunities presented by embedded finance.

.