Embedded finance will unlock US$242 billion in revenue opportunity across Asia Pacific by 2025 across small businesses (SMBs) and consumer segments, according to the latest Visa study. Embedded Finance, or the integration of financial services into non-financial platforms, brings significant possibilities for innovation and business growth within Asia Pacific, from improving the customer experience to enabling seamless access to financial services for consumers and businesses, on everyday digital platforms.
Embedded finance for SMEs: Financial fusion revolution
Lending is set to emerge as the top use case for embedded finance (US$141 billion), followed by deposits (US$56 billion) and payments (US$41 billion). SMB lending alone will comprise the majority of the opportunity within embedded lending, unlocking more than US$115 billion of addressable market value.
"Embedded finance represents a transformative opportunity for financial service and technology providers as well as software and digital providers in Asia Pacific. Financial institutions are not only taking notice, they are investing in building a new and differentiated Embedded Finance experience today across verticals such as embedded issuing, lending and payments," said TR Ramachandran, Head of Products and Solutions, Asia Pacific, Visa. "We will continue to expand our offerings and partner with banks, fintechs, platform providers and merchants across the value chain, ensuring cost-efficiency while capturing growth opportunities and driving innovation. Together, we can pave the way for sustainable growth and shape what's next for consumers and businesses in the embedded finance space."
Bringing embedded finance to life
Most recently, Visa announced a partnership with SAP to embed payments into the SAP ecosystem through SAP Business Technology Platform (SAP BTP), enabling further automation and efficiency of business-to-business (B2B) payments for businesses in Asia Pacific. Visa estimates that opportunities to digitise B2B payment flows today represent more than US$50 trillion across Asia Pacific.
"Over the next few years, we foresee that financial institutions will need to redefine their go-to-market strategy to meet evolving customer needs and tap into the massive market opportunity provided by Embedded Finance," said Prateek Sanghi, Head of Visa Consulting and Analytics, Asia Pacific, Visa. "For banks and businesses to stay competitive in this new era of financial services, they must strike the right partnerships to drive scale while building best-in-class solutions for customers and businesses."
With Visa's robust capabilities and strategic partnerships, all participants of the Embedded Finance ecosystem, from banks, non-financial institutions, fintechs, merchants to solution providers, have access to a comprehensive suite of financial solutions to support their diverse needs to capitalise on the rapid growth of embedded finance in Asia Pacific.
