Buy now pay later key as embedded finance space sees major growth

The value of the embedded finance market will exceed $138 billion in 2026, up from $43 billion in 2021, according to Juniper Research.

This involves financial services being embedded within non-traditional financial services areas, such as an e-commerce checkout process.

The aforementioned growth will be driven by the increasing availability of APIs from financial services vendors.

The easy integration of these APIs will lower the barriers to entry for financial services and create a significant new revenue opportunity for providers of embedded finance.

Buy now pay later

Revenue from buy now pay later services will account for just over 50% of the embedded finance market in 2026.

Juniper Research’s Nick Maynard says: “Embedded lending at Point of Sale is a massive opportunity for leaders such as Klarna or Afterpay, but it is also an opportunity for banks.”

“As open APIs proliferate, we expect banks to take a significant interest in the market; leveraging their existing user relationships and trusted brands to create compelling propositions.’

A compelling new distribution mode

Juniper Research also says that embedded insurance holds promise as a compelling way to boost the uptake of insurance for high-value products with e-commerce users.

By bringing insurance directly into the checkout process and pairing it with the individual high value item, product insurance becomes a potent proposition.

This integration and greater use by high-end e-commerce retailers will see global embedded insurance premiums grow to over $10 billion in 2026, from $3.8 billion in 2021.

Railsbank

Embedded finance venture Railsbank recently raised $70 million in a funding round led by Anthos Capital.

The likes of Central Capital, Cohen and Company and Chris Adelsbach’s new fund Outrun Ventures, along with existing investors, also participated.

Railsbank, which last raised money ($37 million) in November of last year, will use the funds to expand its products across Europe, Asia Pacific and North America.

The venture’s platform is used by customers such as FinTechs, telcos, supermarkets and consumer brands.