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Embedded finance payment volume is set to cross the EUR 6 trillion milestone globally by 2025

The latest publication from Hamburg-based market research company yStats.com titled “Global Embedded Finance Market 2024” shares insights into the recent trends and developments of the Embedded Finance, encompassing embedded payments and embedded banking as major segments of this transformative sector.

AI is driving enhanced customer experiences in the embedded finance sector

Embedded finance, encompassing various sectors, is witnessing rapid adoption, presenting a transformative shift in the way financial services are accessed and delivered globally. Despite the promising trajectory, the sector faces barriers rooted in uncertainty. Challenges such as risks associated with departing from established business models, apprehensions about self-competition, and the complexities of collaborations stand as obstacles to widespread adoption. Yet, these challenges also present opportunities for innovation, with technology playing a crucial role in shaping the future of embedded finance.

Artificial Intelligence (AI) emerges as a game-changer within the embedded finance sector, offering enhanced customer experiences, robust risk management, and effective fraud detection. Major platforms globally are already leveraging AI to streamline operations. However, the integration of AI introduces its own set of challenges, including transparency issues, security concerns, and risks on legal, operational, and reputational fronts.

The U.S. leads the global revenue race in embedded finance

The global embedded finance market is set to exceed EUR 6 trillion in payments by 2025, with the U.S. alone generating over EUR 20 billion in 2022. Fintech platforms envision a non-financial future, with around three-quarters expecting most financial products offered outside traditional channels. Consumer retail leads sector support at 95%, followed by telecom and healthcare. Regionally, Europe eyes significant growth, targeting more than EUR 150 billion by 2028, while the Asia-Pacific region aims for more than double that number by 2024.