Embedded finance: transforming financing for SMEs

In today’s digital economy, consumers are increasingly demanding seamless payment experiences across all business interactions.

Embedded finance, which is the integration of financial services into non-financial companies’ platforms and ecosystems via application programming interfaces (APIs), has emerged as a critical technology solution, catering to the evolving financial needs of small and medium-sized enterprises¹ (SMEs).

Read our latest Market Trends report on embedded finance to learn more about:

• the embedded finance value chain
• the benefits for SMEs
• opportunities for financial institutions

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SMEs form the backbone of the global economy, representing:

• 90% of all businesses²
• 70% of employment²
• 50% of GDP worldwide²

However, they can encounter barriers to accessing financial services.

Embedded finance services offer SMEs innovative solutions to traditional financial hurdles, including:

• Access to credit
• Access to cross-border commerce
• Evolving security and privacy requirements

Embedded finance is transforming how companies engage SMEs

The embedded finance market has been on a growth trajectory. Between 2022 and 2023, there was a:

• 25% increase in global embedded finance revenue³
• 17% increase in total transaction value of embedded payments³

This growth is not only reshaping the consumer landscape but also presenting significant opportunities to engage SMEs. Indeed, there is growing acceptance of these solutions:

• 65% of SMEs in the US partner with fintech companies outside their primary financial institution to meet their financial needs⁴
• 47% of SMEs in high income countries would be willing to pay the same or more for embedded finance compared to traditional banks⁵