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Embedded finance: transforming financing for SMEs

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By: Giuseppe Racanelli and Royston Menezes

Published: February 23, 2024 | Updated: August 01, 2024

Read time: 1 minutes

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:

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 illustration 1
Embedded Finance illustration 2

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:

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:

 

1SMEs are enterprises whose size falls below a certain threshold. While limits vary by country and industry, the OECD, IMF and EU typically define them as enterprises with less than 250 full time employees.
2UN. ‘Micro-, Small and Medium-sized Enterprises Day - 27 June,’ 2023.
3Juniper Research. 'Embedded Finance: Key Trends, Segment Analysis & Market Forecasts 2022-2027,' 2022.
4Insider Intelligence. ‘Small businesses owners—especially millennials and Gen Zers— aren’t getting the value they want from their banks,’ 2023. 5Accenture. ‘Embedded finance for SMEs: The ultimate collaboration of banks and digital platforms,’ 2021.

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