Finance

Embedded Finance: Another Buzz Phrase or a Real Opportunity for the FinTech Sector?

Published

2 years ago

July 6, 2023

The FinTech industry is picking up speed, and is changing our understanding about financial services and their uses in many fields. One of the reasons for this change is embedded finance. This technology is subtly and significantly transforming entire sectors,
as well as creating new opportunities. A study by Juniper Research revealed that the worldwide revenue generated from embedded financial services will surpass $183 billion by 2027. This impressive figure demonstrates significant growth from its 2022 value
of approximately $65 billion – a remarkable increase of 182%. The report highlighted the fact that the primary catalyst behind this expansion is the integration of embedded finance solutions by non-financial enterprises, who are keen to enhance their product
offerings. According to the CEO of Bond, Mr Roy Ng, consumers are now seeking to incorporate financial services seamlessly into their everyday lives, and they are no longer satisfied with limiting their options to traditional banks. Will FinTech be able to
take advantage of this trend?

Exciting possibilities for non-financial enterprises

The research conducted on a sample of 2,555 adult Americans, titled “The Flywheel Effect: How Embedded Finance Can Help Brands Generate Millions in Revenue and Increase Customer Loyalty?”, revealed a significant demand for financial products offered by non-financial
companies, particularly among individuals who are brand loyalists and frequent users of those specific products. For example, among gamers who consider the PlayStation to be their favourite brand, a staggering 79% expressed interest in a credit card that offers
rewards for in-game purchases. Furthermore, a significant 75% of all the gamers displayed interest in an in-game account that would allow them to deposit money and utilise it for purchasing and selling virtual in-game items, as well as earning rewards for
their game achievements and progression. Similarly, a substantial majority of fashion enthusiasts expressed their openness to obtaining an investment account offered by a luxury brand. Such an account would provide them with the convenience of easily investing
in the brand’s stock and other assets.

Another intriguing finding from the research, known as “The Flywheel Effect”, is that consumers who directly access financial services from specific brands report an increase in their spending with those brands, compared to their pre-financial service usage.

Embedded finance has already resulted in numerous success stories among non-financial enterprises. For example, Toast, a company that specialises in providing restaurants with point-of-sale hardware, has formed a strategic partnership with WebBank. The aim
of this collaboration is to offer loans ranging from $5,000 to $250,000 to Toast’s clients. These loans can then be utilised by the restaurant owners for various business purposes.

When purchasing a car online from Tesla, customers have the opportunity to secure a cost-effective loan directly from the car seller. Tesla Motors Ltd, which operated as a broker in the UK, provides this financing option.

In addition, Amazon offers the EMI (Easy Monthly Instalments) service to its buyers, providing a convenient financing option. Customers can easily request, acquire and repay loans directly on the platform, while browsing and purchasing products. This embedded
finance feature allows consumers to enjoy greater flexibility in their payment options, making it more accessible for them to manage their expenses and to make purchases on Amazon.

Emerging trends in embedded finance

From my perspective, embedded finance is poised to become the standard in the financial services sector, while reshaping our interactions with financial offerings for the foreseeable future. Let’s delve into three noteworthy trends that deserve our further
attention.

– Buy Now, Pay Later (BNPL)

BNPL serves as a method for individuals to purchase goods on credit and defer the payment to a later date. This payment method significantly enhances the accessibility to online shopping and e-commerce platforms.

By using BNPL as an embedded finance product, businesses can obtain a competitive edge by capturing missed sales opportunities and extending their invoice payments, thereby improving their cash flow management.

According to globaldata.com, BNPL is estimated to reach $309.2 billion in 2023, displaying a compound annual growth rate (CAGR) of 25.5% during the forecast period. The accelerated growth of online payments, driven by the increasing consumer preference for
online shopping, is a key factor contributing to the expanding BNPL market.

– APIs

APIs have not only facilitated exchanges of data among the various stakeholders engaged in financial transactions, including banks, third-party providers, websites and consumers, but have also revolutionised the process of developing financial apps and services.
This has resulted in faster, simpler and more cost-effective solutions than ever before.

As stated by Nordic APIs, open banking stood out as a prominent and highly-discussed topic within the API industry in 2021. The forecast suggests that a substantial number of users – specifically, over 132.2 million – will have embraced open banking by the
year 2024.

– Digital Wallets

A digital wallet empowers the user to conveniently store, manage and conduct electronic transactions with ease. Its versatility can be extended to various applications, such as facilitating in-house banking for businesses, powering crowdfunding platforms,
or facilitating transactions in online and e-commerce marketplaces without leaving the platform.

Ekmel Cilingir, Chairman of the Supervisory Board of European Merchant Bank

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Finance

Trump puts tariffs on hold: What he still plans to pass on Day 1

Published

5 hours ago

January 20, 2025

Press Room

Trump puts tariffs on hold: What he still plans to pass on Day 1

President Donald Trump has officially been sworn back into office for his second term on Monday, January 20. Trump has a slew of policies and executive orders he seeks to enact on his first day back in office following his inauguration ceremony. A hot talking point on the campaign trail and the time since his election victory, Trump announced his plans to put his tariff proposals on hold for now.

Yahoo Finance senior columnist Rick Newman and Washington correspondent Ben Werschkul join the show to discuss the executive actions Trump is still planning upon his return to the Oval Office.

Read up on Yahoo Finance’s Guide to Trump 2.0 and what the incoming administration still plans to pass.

Watch President Donald Trump’s 2025 Inauguration ceremony, while staying up to date with all the market news and economic data covered by Yahoo Finance.

This post was written by Luke Carberry Mogan.

Finance

IAEA Profile: Balancing Numbers and Dreams – A Career in Finance and Accounting

Published

13 hours ago

January 20, 2025

Press Room

The IAEA profiles employees to provide insight into the variety of career paths that support the Agency’s mission of Atoms for Peace and Development and to inspire and encourage readers, particularly women, to pursue careers in STEM (science, technology, engineering and mathematics) or STEM-adjacent fields. Read more profiles of women at the IAEA.     

Hailing from Kinshasa, the capital of the Democratic Republic of Congo, Carmen Kibonge has taken a path shaped by a passion for numbers, a supportive family and a commitment to make a difference, which eventually led her to the IAEA.

Kibonge was raised in a family that encouraged educational aspirations for both girls and boys, which is not always the case in her central African home country, where economic constraints often lead families to prioritize the education of boys. “In my family, it was expected that a girl would go to school. I know I was privileged, and I really appreciated the access to education,” she reflects. She was also inspired by her mother, an HR manager who was one of the few women in her community to pursue higher education.

From an early age, Kibonge was captivated by mathematics and loved “cracking numbers”. Because of her mental arithmetic skills, her nickname at school was Ordi, after the French word for computer. But maths was not part of her original career aspirations. When she contemplated her future, a desire to help others and the work of international organizations in low and middle income countries like her own led her to consider a career in medicine. Her dream of becoming a paediatrician, however, shifted when she was confronted with the sight of blood in biology class. Nevertheless, the seed of wanting to work internationally had been planted. “I wanted to help people, not just in my country, but globally,” she says.

Kibonge decided to pursue higher education in Austria, motivated by stories from friends who had lived there, as well as her love of classical music. Following her passion for numbers, she enrolled at the University of Vienna to study business administration with a focus on finance and accounting. Meanwhile, she supported herself by giving maths lessons.

The move to Vienna was not without its challenges, as Kibonge had to first learn German before starting her degree programme. She dedicated the first two semesters to intensive language study. “Those early days in Vienna were really challenging, but I really put my mind to it,” she recalls. “If you really want something, you can manage it.” Living in the city of classical music had its upsides though, and she often attended performances at the opera and philharmonic, impressed by how accessible they were even for students of modest means.

Finance

South Korea braces for Trump’s policies with biggest-ever export finance support

Published

21 hours ago

January 19, 2025

Press Room

South Korea braces for Trump’s policies with biggest-ever export finance support

SEOUL (Reuters) – South Korea pledged on Monday a record amount of financing support for exporters to mitigate any negative impact from changes in U.S. trade policies as Donald Trump was poised to be sworn in for his second presidency.

The government plans to provide 360 trillion won ($247.74 billion) worth of policy financing to exporting companies through state-run banks and institutions this year, according to a statement released by the finance ministry.

“There are concerns that external uncertainty will be heightened under the incoming U.S. administration and adversely affect exports,” the ministry said.

The ministry said it would also boost insurance support to guard against foreign exchange volatility to 1.4 trillion won this year, from 1.2 trillion won last year, and spending on government projects, such as trade fairs and delegations, to 2.9 trillion won from 2.1 trillion won.

Sectors particularly under threat of new U.S. policies are semiconductors and rechargeable batteries, the ministry said, whereas defence, nuclear energy and shipbuilding sectors are seen as more promising because of room for cooperation with the United States.

U.S. President-elect Trump, who takes office later on Monday, has pledged to impose stiff tariffs on major trading partners, such as Mexico, Canada and China, which are also expected to affect South Korean companies running factories in those countries.

Economists say there are worries that the Trump administration will introduce trade policies against South Korea too, after Asia’s fourth-largest economy earned a record-high surplus of $55.7 billion in trade with the U.S. in 2024, up 25.4% from 2023.

The Korea International Trade Association, South Korea’s biggest group of exporting companies, projects export growth to slow to 1.8% this year. Last year, South Korea’s exports rose 8.1% to a record high of $683.7 billion, as sales to the U.S. rose 10.4%.

($1 = 1,453.1500 won)

(Reporting by Jihoon Lee; Editing by Shri Navaratnam)