A report by Stripe and Finch Capital has found that VC investments in embedded finance doubled between 2020 and 2021 across Europe and North America.
Totaling $6.7 billion, the report outlines that the European market is now catching up to North America, with over $1 billion of VC investments into embedded finance in 2021 alone (excluding Klarna).
The research conducted by Finch explores the significance of the embedded finance trend is bearing across the financial services industry today. Integrating products and services into non-financial platforms, embedded finance embodies the melding of payments into online experiences with as little friction as possible – catering to increasingly demanding digital users.
Stripe states that the company uses embedded finance to improve user experience and business development in various industries, including travel and hospitality, retail and ecommerce, and healthcare. These industries are investing heavily in embedded finance solutions to improve user experiences, grow valuations, and uncover new revenue streams.
The report predicts that B2B2C and B2B2B business models are where embedded finance will have the most impact, particularly in across Payroll API services, credit collection, and embedded investing solutions.
The report emphasises that embedded finance backed by APIs indicates a period of rapid growth, and fosters the development of new digital companies by pioneering financial inclusion, providing “one-stop” shop solutions, reaching out to undeserved markets, and improving customer experience.
More and more companies are adding embedded finance solutions into their services, and industry experts are acutely aware of the impact embedded finance may bring.