Juniper Research says embedded finance occurs when financial services are embedded within non-traditional financial services areas, such as banking services within a ridesharing app, or insurance services within an eCommerce checkout process.
The researcher puts the value of the embedded finance market will exceed $138 billion in 2026, from just $43 billion in 2021. The market value includes insurance premiums, transaction revenue and licencing costs.
This extraordinary growth of over 215% will be driven by the increasing availability of APIs from financial services vendors. It predicts that the easy integration of these APIs will lower the barriers to entry for financial services and create a significant new revenue opportunity for providers of embedded finance.
The new research, Embedded Finance: Key Trends, Segment Opportunities & Market Forecasts 2021-2026, found that revenue from buy now pay later services, which embed lending seamlessly in the eCommerce checkout process, will account for just over 50% of the embedded finance market in 2026.
Research author Nick Maynard explains that embedded lending at the point of sale is a massive opportunity for leaders such as Klarna or Afterpay, but it is also an opportunity for banks.
“As open APIs proliferate, we expect banks to take a significant interest in the market; leveraging their existing user relationships and trusted brands to create compelling propositions,” he continued.
Compelling new distribution mode
The research also found that embedded insurance holds promise as a compelling way to boost the uptake of insurance for high-value products with eCommerce users.
The research identified that by bringing insurance directly into the checkout process and pairing it with the individual high‑value item, product insurance becomes a compelling proposition.
The research found that this integration and greater use by high-end eCommerce retailers will see global embedded insurance premiums grow to over $10 billion in 2026, from just $3.8 billion in 2021.