The target market for embedded finance is $33 trillion, with the actual figure for 2022 being $663 billion, meaning there is room for 500-fold growth. As the market grows, negative aspects such as defaults in the lending sector have surfaced, and European and American regulatory authorities have entered a new stage of strengthening monitoring and enforcement.
Embedded finance has expanded beyond banking functions such as payments, loans, and deposits, and in recent years there has been an increase in pilot projects and case studies in new fields such as insurance and investment. In the United States, households with an annual median income below $45,000 are in the red, and there is a need to improve financial literacy, including by experiencing asset formation through investment.
Industries with a high need for integration include institutional investors who hold the nation's financial assets (banks, health insurance associations, pension institutions, corporate savings plans, etc.), but innovation is expected in consumer services (super apps, shopping, etc.) where investments can be naturally integrated into the customer journey.
As "investment" is the newest field within embedded finance, there are few players entering the market. In the future, it is expected to expand to players in adjacent industries, with traditional robo-advisors offering white-label finished products and DIY APIs, and customer loyalty platform providers entering the market.
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