June 13, 2023

Could embedded finance help reverse the fintech slowdown?

Despite the slowdown in fintech, embedded finance is still projected to grow and attract huge investments in the coming years

Aruni Sunil

5 min read

Sponsored by

Ryan O'Holleran, head of enterprise sales EMEA at Airwallex

Fintech has taken home the biggest slice of venture capital funding in Europe every year since Sifted began reporting on tech back in 2018. But funding figures for 2023 so far suggest it may struggle to hold onto its lead this year. The sector raised just $2bn in the first quarter of 2023 — a massive 83% drop from this time last year. 

At the same time, reports show that the embedded finance industry is expected to reach £2.1tn by 2026 — and 50% of all banking revenue growth will come from embedded finance products in the near future. So will it be fintech’s saving grace — and what can we expect from the sector in the near future? We asked the experts.

A growing market

Jessica Chiu, VP of strategic partnerships for North America at Airwallex, a global payments and financial platform for businesses, says that embedded finance is already ubiquitous. Consumers likely encounter it every day without necessarily realising it, “whether it’s paying for a rideshare or food delivery from directly within an app, using a ‘pay in four’ to shop instead of going to a bank for a loan, or tapping on ‘protect your trip’ insurance when booking a car rental or flight”.


“I look at it as like a new aspect of fintech that's being created,” adds Ryan O'Holleran, head of enterprise sales at Airwallex. “When Uber first launched the Uber debit card, that was about bringing brand affinity and loyalty to their customers. 

“Now you're seeing marketplaces offer wallets to try and bring that customer spend directly on the platform. The goal is to increase customer loyalty by offering rewards and incentives via financial services.”

Chiu is excited by the possibility of embedded finance opening up access to financial services for “underbanked and underserved” customers. 

“If there are more entry points for the traditionally underbanked consumer to open digital bank accounts or wallets, get faster access to their funds or paychecks and participate in investing, these are all positive things for society as a whole,” she says.

Barak Hirchson, founder of mrkter — the first finops platform dedicated for marketers which also offers embedded finance solutions to their clients — agrees. 

He says that the next frontier in embedded finance could well be its democratisation, making these financial tools available not just to businesses, but also to micro-companies and individuals. Using embedded finance, mrkter offers specialised solutions for advertisers and publishers. 

Embedded, added value

O'Holleran says that the ultimate goal with embedded finance is to move money quickly and efficiently across borders and without having to rely on external partners. 

Hirchson adds that embedded finance can also lead to operational efficiencies for companies by automating manual financial operations, allowing businesses to save time and resources.

“For example, if I'm a seller on a clothing marketplace, why can't I convert my funds on that marketplace from euros to pounds, and pay out to somebody in the UK? Or if I’m a B2B SaaS company, and I'm using Shopify, for example, why can't I pay out my suppliers directly from this platform? There’s going to be a lot of shifts bringing more of these experiences and operations directly on platforms,” O'Holleran says.

Hirchson says that embedded finance solutions simplify transactions not just for companies, but for end customers too. “For customers, the primary advantage is the convenience and seamless user experience it provides. Instead of navigating multiple platforms to access different financial services, customers can manage everything within one platform.”


Chiu is looking forward to newer applications of embedded finance which will make consumers’ lives even easier. “One very non-tech but delightful use case I see more and more as we’re coming out of the pandemic is 'Pay by QR code' in the West," she says.

“It seems like a basic use case but I’m excited to see more applications like this emerge that generally make people’s lives easier by stitching together financial use cases even in an offline, physical world — it saves me from lines, waiting time and the need to carry cards or cash.”

Hurdles to growth

As a sector that’s still nascent, there are challenges facing the embedded finance sector.

O'Holleran says that a key challenge that companies face when providing embedded finance solutions is picking the right partners. "The last thing you want to do as a startup that's building a new embedded finance solution is to go back and rebuild your entire financial stack because you chose the wrong partner," he says.

It’s crucial to evaluate and pick partners that are the right fit for your goals in the long term and offer a truly global solution that allows you to scale seamlessly, he adds. The partner should be fully regulated with global licences and be compliant with the local laws and regulations of the countries in which you currently operate in or want to expand into over time.

“It's important to think of not just your one-year plan, but your next two, three or four-year plan and where you want to expand to as a business. The right partner will be able to scale alongside you as you grow.”

When it comes to regulation, O'Holleran and Chiu both say it can foster innovation and growth in the right direction and is key for customer data protection. 

“I see regulation as a double-edged sword,” says Chiu. “Yes, it can slow down innovation, but on the other hand, you have PSD2 facilitating open banking in the EU and likely regulation soon to come in the US as well, which will catalyse embedded finance use cases and break down more walls.”

She says that another challenge is disrupting consumer habits, especially when it’s for large fund amounts or important life or business transactions, where “seamless access or something ‘embedded’ into a flow may not be enough to get the user to adopt”. 

As the sector matures, it will be interesting to see “who emerge as winners and for which use cases, and if the unit economics of many existing players can prove to be sustainable and profitable”, she adds.

Aruni Sunil

Aruni Sunil is a writer at Sifted. Follow her on Twitter and LinkedIn