#EmbeddedFinance embeddedpayments embeddedinsurance PayNXT360

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Embedded finance is changing the face of financial services in Southeast Asia in 2023

Embedded finance is a rapidly emerging trend that is revolutionizing the conventional banking and financial services industry in Southeast Asia. With a vast majority of the population lacking access to banking services, embedded finance possesses the potential to foster financial inclusion while providing unparalleled convenience and efficiency to consumers across the region. As the benefits of embedded finance are getting recognized more widely across the region, traditional banking institutions are facing stiff competition from new-age digital banks and fintech firms that are backed by venture capital and private equity firms.

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Strategic alliances continue to drive embedded insurance industry growth globally

Over the last two years, the embedded insurance segment has emerged as a high-growth area for providers. The demand has resulted in the availability of embedded insurance offerings across business verticals. From retail to travel and even pet care, the embedded insurance industry is rapidly expanding its presence. Amid the growing demand for embedded insurance, firms have continued to forge strategic alliances with businesses across industry verticals in Q1 2023.

In February 2023, Bunq, the neobank, announced that the firm had entered into a strategic collaboration with Companjon, the Irish insurtech firm. Under the alliance, Bunq will provide its users with embedded insurance services. The collaboration will offer an extended warranty and purchase protection to all Bunq Easy Green customers when they make specific purchases using the Bunq card.

Since it acquired TriCount in 2022, Bunq has become the second-largest neobank in Europe and is only behind Revolut. Consequently, the partnership with Bunq will enable Companjon to accelerate its growth and the adoption of its embedded insurance policies. In Europe, the embedded insurance competitive landscape is growing at a rapid rate, with many such strategic collaborations.

Qover, another embedded insurance provider, announced that the firm entered into a collaboration with a European business finance solution provider Qonto. Through its API-driven approach, Qover provides insurance services to fast-growing businesses in Europe. Some of its partners include Revolut, Rewire, and Monese. As of February 2023, the firm claims to protect over 800,000 people across the region. The card insurance service launched with Qonto will enable Qover to further extend its reach among Europeans.

The demand for embedded insurance products is also projected to grow rapidly in the Indian market, especially in the travel segment. Consequently, global players have been seen expanding their presence in the region.

Cover Genius, the leading global embedded insurance provider, partnered with MakeMyTrip, the leading travel booking platform in India. The integration, which was completed in February 2023, will enable MakeMyTrip to provide its customer with flexible and convenient travel protection. Cover Genius completed the API integration with Trip Money, the fintech arm of MakeMyTrip, to provide embedded insurance policies through XCover, the insurance distribution platform.

Along with global players, domestic firms are also seeking to capitalize on the growing demand for embedded insurance services in the travel industry in India. Tata AIG General Insurance Company, for instance, partnered with AIX Connect, the budget airline, to offer embedded insurance policies for domestic air travelers in the country.

In another strategic alliance in the Indian market, Symbo India announced a partnership with delivery platform Borzo. The collaboration will enable Symbo India to benefit from a strong network of 50,000 gig delivery partners. In addition to reaching out to a growing fleet of gig delivery workers in India, the strategic alliance will also enable the firm to expand its B2B footprint.

In the pet care segment as well, the embedded insurance industry is seen expanding its footprint. For instance,

In January 2023, Fletch Technologies, which connects digital ecosystems with relevant marketplaces, announced a strategic collaboration with FirstVet, the on-demand video consultation for pet parents. The platform has over a million users and provides more than 50,000 consultations every month globally. The collaboration will enable users to decide which insurance provider works best for their needs.

The space is projected to gain further traction among embedded insurance providers from the short to medium-term perspective in the global market. As more and more consumers seek convenient access and flexible solution, the demand for embedded insurance is projected to grow significantly over the next five years. Consequently, PayNXT360 expects more embedded insurance providers to expand their global and regional footprint through strategic alliances with businesses across different industry verticals. This will keep driving the competitive landscape as well as the growth of the embedded finance industry from the short to medium-term perspective.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Embedded insurance firms are raising capital to further disrupt the insurance market

Insurance providers are driving revenue growth by embedding products into the checkout process of their retail partners. Firms such as Next Insurance have reported that embedded insurance is generating 20% of its total revenue, while Hippo claimed that 50% of its business comes from embedded partnerships. With its capabilities to offer a faster and more personalized experience, the demand among consumers has surged over the last few years and the trend is projected to further continue over the next five years, as embedded insurance disrupts the traditional insurance business model. To capitalize on the growth of the embedded insurance sector, firms are raising funding from private equity and venture capital firms.

In December 2022, Walnut Insurance announced that the firm had raised US$4 million in a seed funding round, which was led by ATB Financial and NAventures. The firm provides the needed infrastructure for embedded insurance, thereby assisting its partner to offer products to millions of customers. Walnut Insurance has also partnered with Neo Financial, one of the leading fintech firms in Canada, to help the firm tap into the multi-billion-dollar domestic insurance market.

With its API-driven approach, PayNXT360 expects Walnut Insurance to forge more such strategic alliances with fintech firms, among others, to disrupt the traditional insurance market in Canada. The trend of forging alliances with merchants and firms across industry verticals is projected to increase dramatically around the world. This is another reason why insurtech firms are raising funding rounds.

In December 2022, Oyster, an embedded insurance firm, announced a US$3.6 million funding round in a seed funding round. The capital round was led by New Stack Ventures and included participation from Conversion Capital and Global Founders Capital, among others. The firm is planning to use the capital to further onboard more merchants and fuel the growth of its point-of-sale insurance platform. Some of its partners include The New Wheel, Bulls Bikes, Zooz Bikes, and Jewels by Grace, among others.

Along with bikes, Oyster also provides insurance products for jewelry, collectibles, and electronics. While Oyster is differentiating its embedded insurance services by offering low-priced policies, others players such as Superscript are targeting small businesses and high-growth tech firms to drive their growth in the space.

In January 2023, Superscript also announced that the firm had raised €51 million as it seeks to disrupt the insurance market in the B2B space. The firm is planning to use the Series B round, which was led by BHL UK, to expand its offering and drive geographical expansion.

In between its Series A and Series B rounds, the firm reported growth of 5x in its customer base. Some of its major partners include Amazon Business and Virgin Money Bank. Going forward, the firm is also planning to focus on its existing embedded insurance partnership capabilities.

Vertical Insure, Neat, and Cover Genius, are among the other embedded insurance players that have raised funding rounds from private equity and venture capital firms in Q4 2022. As the market continues to grow, amid the growing demand for embedded insurance products from consumers, PayNXT360 expects these firms to raise further capital from the short to medium-term perspective.

Furthermore, PayNXT360 also expects embedded insurance firms to forge more strategic alliances with players in the travel sector. Globally, there is a pent-up travel demand, as travelers head out with their friends and families after two-year hiatus induced by the global pandemic outbreak. Moreover, with corporate travel picking up pace in Q4 2022 and expected to record further growth in 2023, offering embedded insurance policies with travel partners can become a major revenue growth driver for these firms around the world from the short to medium-term perspective.

Cover Genius, for instance, has a strong list of partners in the travel sector, including Booking.com and more. With its global presence in the travel market, PayNXT360 expects Cover Genius to record strong growth in its revenue over the next three to four quarters, as it will benefit from the pent-up travel demand, along with the demand for embedded insurance policies, among travelers.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Amazon takes another step into the world of embedded finance

From social media platforms to e-commerce giants, every business is entrenching itself in the world of financial services. With the world becoming increasingly digital and consumers demanding seamless shopping and payments experience, more platforms are embedding financial products into their service offerings. In November 2022, Twitter, now owned by Elon Musk, announced a potential launch of a payment solution on the micro-blogging platform. This time it is Amazon, the global giant in the e-commerce industry, that has announced another step into the world of embedded finance.

In November 2022, Amazon announced that the firm had entered into a strategic alliance with Parafin, a financial services firm based in the United States. Under the collaboration, Amazon is offering cash advances to the merchants selling on its e-commerce marketplace.

Notably, merchants, small and large, can access credit between US$500 to US$10 million to scale and grow their businesses. For merchants, access to credit comes without fixed terms, stringent credit checks, zero ate fees, or any dreaded paperwork. The e-commerce giant is offering cash advances to sellers on a flexible payment schedule which is based on a fixed percentage of gross merchandise sales until the entire credit is repaid.

While the merchants are not required to make any minimum payments, pay interest, or offer collateral, they do have to pay a fixed capital fee on the cash advance received from Amazon. In the initial stage, the firm has made the financing solution available for select businesses, Amazon is expected to roll out the service to hundreds of thousands of sellers in the country by early 2023. However, for merchants to benefit from the cash advance program launched by Amazon, they must be selling on the e-commerce marketplace for at least three months.

For a long time now, the e-commerce behemoth is pursuing business outside the retail category to accelerate the growth of its business, and embedded finance has thus become a major part of its business model. Besides the cash advance program, Amazon also announced a collaboration with Venmo in the United States and the launch of an Insurance Store for its customers in the United Kingdom.

In October 2022, Amazon announced a strategic alliance with Venmo, the mobile wallet service owned by PayPal. Under the partnership, Amazon will integrate the payment service offered by Venmo at checkout, thereby allowing customers to complete their purchases without leaving the platform. This collaboration is significant as Venmo users make two times more purchases compared to an average online shopper in the United States.

In October 2022, Amazon entered into a strategic collaboration with three major insurers to launch an embedded insurance service in the European market. Notably, the Insurance Store allows customers to compare insurance policies and prices from different providers, while also allowing them to buy policies without having to leave the e-commerce platform. For the launch of the service, Amazon partnered with Ageas UK, Co-op, and LV= General Insurance.

Notably, the firm also developed an Amazon Standard of Cover. It provides consumers with coverage for the most common home insurance claims. Going forward, the firm is also expected to partner with more insurance providers in the United Kingdom, thereby offering customers a complete insurance service on the e-commerce platform.

Amazon is banking on various sets of financial services, lending, payment, and insurance, to drive its revenue growth. Among all the different aspects of financial services, lending is a bigger play for the e-commerce behemoth, and the cash advances program is the perfect match for its lending play.

Along with its cash advance program for merchants, Amazon also offers term loans for sellers, which are non-revolving loans offered in a lump sum. Under the program, sellers are required to make monthly principal and interest repayments. In the other program, the interest-only loan service, offered by Amazon sellers is required to make interest payments until an agreed-upon date. Furthermore, a business line of credit is another service offered by Amazon, which is provided in partnership with Marcus by Goldman Sachs.

Notably, the growth in its third-party sellers, who accounted for 58% of the total sales on Amazon in Q3 2022, means that the lending play can be a huge growth driver for the e-commerce behemoth over the next three to four years. Offering working capital to sellers on flexible terms will not only drive growth for merchants but for Amazon as well, as merchants will be able to drive more order volume for the e-commerce giant. Consequently, PayNXT360 expects Amazon to keep launching such innovative lending programs for its merchant base from the short to medium-term perspective, while also expanding its footprint into other areas of embedded finance, such as payments and insurance.

To know more and gain a deeper understanding of the United States Embedded Finance market, click here.

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The future is embedded, and Twitter has laid out its vision for a payments system

The financial services industry has experienced rapid growth due to the advent of emerging technology solutions and regulatory policies. Further accelerated by the global pandemic outbreak, digital payments have gained increasing traction among consumers, forcing businesses to innovate and delve into the world of financial services. The growing market for digital payments has also offered businesses an opportunity to drive incremental revenue per user. Notably, more and more players are responding to this opportunity. For instance,

In November 2022, Elon Musk, the new owner of Twitter, announced his detailed vision to launch a payment solution on the social networking platform. In a live-streamed meeting with Twitter advertisers, Elon Musk suggested that Twitter will offer embedded payment services in the future, thereby enabling users to send and receive money on the platform. Furthermore, users will be able to withdraw their money to an authenticated bank account. To make the service more attractive for users, Elon Musk also proposed a high-yield money market account, thereby encouraging users to move their money to Twitter.

The announcement from Elon Musk, regarding the embedded payment offering, comes weeks after the social media platform filed registration paperwork, which will allow Twitter to process payments. However, the embedded payment offering is still some distance away, as the firm is initially focusing on making changes to its technology architecture, which is part of its strategy to support better video quality.

Notably, the firm is working on a Paywalled Video feature, which will allow creators to monetize their content on the platform. The launch of this feature means that Twitter will be competing directly with video-sharing social media platforms such as TikTok and Instagram. On the other hand, the proposed idea of offering a high-yield money savings account to its users will put Twitter in direct competition with Apple.

In October 2022, Apple announced that the firm is planning to launch new savings account for its Apple Card users, thereby allowing them to set up and manage savings directly from their Apple Wallet. Notably, Apple partnered with Goldman Sachs to launch the savings account facility.

The challenge that Elon Musk is going to face with the launch of these services is that there is very little differentiation to offer. Like Apple, Twitter is also planning to have a high-yield savings account. Another challenge that Twitter might face is the fact that not many businesses have been able to drive incremental revenue through the launch of an embedded payments solution. Facebook is a prime example of this.

In China, WeChat has successfully implemented embedded payment services and has driven significant revenue through it. However, the monopoly created by WeChat in China has played a major role in the success of its embedded payment facility. But Twitter does not have any such leverage at its disposal. There is a lot of competition in the video-sharing and embedded payments space in the United States. Furthermore, the growing competition from neo-banks around the world, means the road to embedded finance is not going to be an easy one for Twitter and Elon Musk.

While the roadmap to drive profitability through embedded payment services is a difficult one for Twitter but building an ecosystem of services can help Elon Musk in offering more value to its users, thereby driving long-term loyalty and revenue for the firm. For instance,

Once the creators start accumulating money through their followers, Twitter might prompt them to move their money to the platform. To encourage users to do this, Elon also suggested an incentive offering to get them started with the embedded payment services. Notably, the incentive offer can also be stretched to other users, to lure more users to move their money to Twitter. From the short to medium-term perspective, there is a greater possibility that Twitter might announce the launch of a few more services for its users. For instance, a streaming and ticket booking service, who knows, the opportunities are wide open for Twitter with Elon running the show.

Of course, it is still early to predict where Twitter wants to be over the next three to four years, and a lot of announcements made by Elon Musk might get completely abandoned over the next few quarters. However, the announcements from Elon Musk suggests that Twitter is seeking to combine payments, entertainment, and social network, all together, which is in line with his larger plan to turn the social media platform into an everything app, called X. While the future of payment is embedded and more players are expected to adopt a similar strategy over the next few years, the competitive landscape is expected to become even tougher for these firms to leverage on the growing shift to digital payments among consumers.

To know more and gain a deeper understanding of the embedded finance industry in the United States, click here.

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Embedded financial products for improved SMB performance are crowding the market

Since embedded finance is drastically changing the way businesses make transactions and maintain working capital, smaller and medium-sized businesses (SMBs), are utilizing the opportunity to offer financial services to expand their business and drive growth. Consequently, several fintech platforms are launching products for these SMBs and in turn generating new revenue streams. For instance,

In October 2022, Adyen, a global fintech platform, introduced two unique embedded financial products - Capital and Accounts in the United States and European markets. Since there has been an increasing need for embedded financial services by several SMBs, Adyen brought these products to provide SMB users with the utmost financial experiences. Notably, Adyen launched financial products which include cash advances, business bank accounts, etc. specifically for all the platform and marketplace businesses in these regions.

Adyen, in partnership with Boston Consulting Group, conducted a study that revealed that more than 60% of SMBs are interested in such embedded financial services. Importantly, more than 50% of the platform users are eagerly waiting to switch financial services providers for a better-integrated business processes solution. The main objective behind the switch is the underperformance or low performance of SMBs. The traditional financial services had always been suffocated by reactive approaches, lack of vertical knowledge, slow approvals, and many more, leading to the underperformance of SMBs.

Dutch fintech, Adyen came up with the product Capital since more than 90% of SMBs revealed that they are interested in cash advance solutions. Since it would be helpful for SMBs if their loans are being pre-approved, Adyen designed Capital to enable platforms to offer business financing based on historic payment data. Additionally, more than 70% SMBs give importance to an integrated bank account experience and thus Adyen designed an Accounts product to help users to run their finances and get access to funds instantly. Consequently, Adyen’s products will help in completing the offering by enabling the users to spend their capital on various platform-branded payment cards.

Thus, post-adoption of Adyen’s products, platforms will be able to tap the growing user demand by embedding financial services via a single integration. PayNXT360 anticipates, through its investment in banking licenses and industry-leading technology, it will be able to capture significant market share over the next four to six quarters in the region.

In October 2022, B2B payments platform Plastiq also entered into the embedded finance space, with its Plastiq Connect embedded finance product. This product especially offers a user interface (UI) that can be embedded in platforms and requires very less development time. Now, with this new product, several platforms will be able to provide multiple payment methods and disbursement options to their customers. This will ease out the payment process to be made by business customers to their suppliers at the same time get paid by their customers.

Notably, Plastiq Connect is designed on a buyer-funded model of credit card acceptance, which removes the requirement of a traditional supplier-funded one. Consequently, Plastiq will help several businesses to utilize working capital, and explore newer lines of credit together with the deployment of digital bill pay and accounts payable (AP). Thus, SMBs will now be able to use the existing credit cards to pay their suppliers and vendors who otherwise might not have accepted those cards. Without worrying about the approval of bank loans or loans from other sources, SMBs can now easily get access to short-term working capital.

It is seen that the businesses which are trying to enter the financial services market are spending huge amounts on buying financial services technology. Plastiq Connect, on the other hand, is providing an avenue for these businesses to see growth through partnerships with products Plastiq Connect. Consequently, PayNXT360 expects, as newer innovative products will be launched, more partnerships and collaborations with these embedded platforms will be witnessed in the market.

Similarly, several fintech firms are launching unique tools to facilitate the adoption of embedded finance products for SMBs. For instance, a Nigerian fintech firm, Vella Finance, launched a new user interface and new products in October 2022, for its platform to enable easy cross-border payments for SMBs in Africa.

These new products include Global Pay, and Vella Boost, which will help these businesses with alternative payment solutions. Consequently, Vella designed its product Vella Boost which provides fintech-as-a-Service (FaaS) solutions thereby enabling SMBs to become crypto-enabled to manage the embedded finance offerings, wallets, and other payments much better. Additionally, this tool also enables these businesses to invest funds that are not being used otherwise. On the other hand, the other product, Global Pay helps several SMBs to send money to their partners in around 80 countries.

With the rising usage of cryptocurrency, Vella strategized to narrow TradFi with DeFi and bring cryptocurrency rails into the market to provide these SMBs with alternative payment solutions. Since working-age adult entrepreneurs are more in number in Africa as compared to any other continent in the world, PayNXT360 anticipates because of these new products, Vella will see strong adoption over the next few quarters in the region.

To boost SMB offerings, several embedded banking solutions providers are partnering up with traditional banks. For instance, in October 2022, embedded banking solutions provider, BankiFi entered into a partnership with Florida-based Axiom Bank. Under this partnership, the bank, with the help of embedded banking services will be able to offer improved business finance tracking and management solutions to its SMB customers. This, in turn, will help the bank to capture more SMB customers across the country.

Since BankiFi’s Open Cash Management platform can get integrated with major accounting software in the United States, such as QuickBooks, Xero, and many more, BankiFi’s product is expected to attract many partnerships and collaborations. Notably, BankiFi’s embedded finance platform offers solutions in the form of collection, reconciliation of invoice payments, etc. very swiftly and efficiently. Moreover, it also provides automation of data integration, business insights, and many more which many banks are unable to offer this support effectively. Consequently, traditional banks, which are witnessing a reduced need in recent times, are strategizing to partner with embedded platforms to attract more SMB customers. Specifically, it is the first collaboration of BankiFi in the North American region and PayNXT360 expects this will help SMBs, based out of the United States to boost their businesses over the longer run.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Real estate is banking on embedded finance to explore new business opportunities

Newer sectors are harnessing the power of embedded finance to provide a better customer experience at the same time explore new business models to improve their bottom line. Importantly, real estate is one such sector that has been seeking immense attention from embedded finance platforms over the last four to eight quarters to see growth. For instance,

In October 2022, India-based tech platform for property and real estate, Housing.com announced entering into collaboration with an insurtech platform Riskcovry, to launch an innovative service called 'Rent Protect Cover.' Riskcovry offers a powerful unified API that enables any organization to distribute insurance anywhere, over multiple channels, instantly. Through this collaboration, the prop-tech platform plunged into the insurance distribution business, offering an array of insurance benefits to its buyers at a very reasonable premium.

This insurance cover will take care of more than 12 critical illnesses worth approximately US$2,430 together with an accident plan worth approximately US$1,216, and also medical expenses worth approximately US$729 in case of accidental hospitalization. Though one can pay the insurance premium monthly, the tenure of the insurance policy will be mostly annual. Consequently, the benefit claim can be used by the customers to pay rental dues over the coming months.

The premium of the insurance will particularly be embedded into the workflow channel of rent payments for Housing.com’s customers under the ‘Pay on Credit' section. To be specific, this ‘Pay on Credit’ is part of Housing EDGE, a full stack rental & allied services platform under Housing.com. In the year 2020, the ‘Pay on Credit’ service was launched and it captured around 100K users within two years of its launch.

Housing.com, together with Proptiger.com, and Makaan.com, have been strategizing on elevating consumer experience with full-stack services in the residential real estate space, as well as meeting the needs of home buyers, renters, and other allied service providers. As timely rental payments have always troubled the property owners and any unforeseen situation may lead to default and delay in rental income. Through this insurance, the platform is aiming to deliver a service that bridges the trust gap, between the property owner and tenant communities.

PayNXT360 expects that this embedded insurance service will smoothen by bundling the insurance purchase within the rent payment experience, capturing a significant number of customers over the next four to six quarters.

Another partnership was formed in the embedded finance space particularly in the commercial real estate sector in May 2022. Cross River Bank, which is a tech platform specifically for embedded financial solutions announced that its Commercial Real Estate department partnered with a tech-driven commercial real estate lending platform, Erithmitic d/b/a Bridgeton Capital. Notably, Erithmitic d/b/a Bridgeton Capital had been operating in the Commercial Real Estate (CRE) field with the help of AI/ML to provide an end-to-end CRE marketplace for CRE loans in the United States.

Under this partnership, all the borrowers and the sellers will now be able to access credit opportunities across wider geographies and also enable Cross River Bank to enter several newer markets in the country. In other words, this partnership will help in overcoming inefficiencies in the CRE space by integrating Cross River's technology infrastructure and regulatory expertise with that of Bridgeton's AI and machine learning support. Notably, both companies intend to focus on offering one to two years interest-only bridge loans on multifamily and commercial properties of around US$5-US$50 million across the country. Furthermore, it is important to mention here that a multifamily bridge loan is a type of financial tool used by commercial property owners to narrow the time difference between the time to get the loan and the time to execute the plan with the property.

Consequently, PayNXT360 projects that together both platforms will be able to solve the issues of processing and underwriting loans, thereby providing the commercial real estate market with a more efficient solution to accessing capital.

Innovative embedded finance platforms are propping up in the African region to solve the housing issues and thus are attracting the eyes of investors. For instance, in October 2022, a prop-tech start-up based out of Nigeria, Spleet, raised around US$2.6 million in a seed funding round to expand its residential rent management and rent financing products. This funding round was led by MaC Venture Capital along with other investors-both new and existing.

Though the start-up started as a marketplace where tenants could meet landlords and pay their rent monthly, later it pivoted to a full-fledged embedded finance platform. It now enables tenants to rent properties and pay rent monthly, at the same time allowing the landlords to receive the rent yearly.

Lagos, one of the smallest states in Nigeria has a severe real estate deficit problem and it receives a huge number of visitors daily, thereby pushing the internal migration rates higher leading to a constant high demand for houses in the region. This proves residential rent management and rent financing products will always remain in high demand in the region. Moreover, Spleet’s platform receives rental payments of around US$1,500 a month, a price that is out of reach for most Nigerians. Furthermore, Nigeria does not even have a unified credit scoring system, which has led to high rates of non-performing loans (NPL) and for this very reason, Spleet entered the market with its product. Notably, the platform went for several partnerships to channel loan recovery and wants to build products for those in the residential rent ecosystem.

Now, with the fresh capital, Spleet aims to add more services to its product, such as a service that receives rent payments on behalf of the landlords. Additionally, it also wants to build a tool for landlords and real estate agents to cross-check the background of the tenants before handing over the lease agreement; and also, a reasonable interest rate for accessing rental loan products. With more than US$1 million in annual recurring revenue, PayNXT360 expects this model to bring more revenue to Spleet over the long run.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Innovative insurtechs are providing impetus to the growth of embedded insurance space globally

With the rise in digitization, real-time bundling and sale of insurance at the time of purchase of a product or service have seen high demand and thus, embedded insurance start-ups have been gaining traction around the globe over the last few quarters. Consequently, new innovative products are observed in this space which is constantly evolving and insurtechs play a significant role in the innovation of the emerging product. This space also caught the eyes of several investors who also want to get a share of the growing market. For instance,

In September 2022, an embedded insurance startup, Hakuna, raised around US$3.9 million in a seed funding round led by Earlybird along with other investors such as Visionaries Club, Discovery Ventures, etc. This fresh capital will help the Munich-headquartered startup to develop its insurance product and expand its business internationally.

Hakuna, which provides access to insurance products for online merchants big or small, has catered to only the top 1% of the industry. Notably, the product can be integrated by any leading e-commerce platform such as Shopify, Shopware, Magento, and BigCommerce. Since the e-commerce space is constantly growing; the firm’s product is seeing increased demand. As retailers are adopting digital processes, newer demands from consumers looking for more convenience also need to be met. Now consumers not only demand access to products, but they demand added value and support. This is where Hakuna enters with its embedded protection plans along with extended warranties on the products purchased online.

Hakuna, which already partnered with established merchants such as Watchmaster, Office Partner, etc. is expected to further increase its client base over the next four to six quarters.

In July 2022, another German insurtech, Element, raised around €21.4 million in a Series B funding round led by pension fund VZB which will be utilized by the startup to expand its business. Apart from this, the platform also plans to include new product offerings in its portfolio. This digital insurance company specifically enables its partners to embed insurance products into their system at any stage while taking care of the regulatory aspects also. Apart from this, the platform also provides Property and Casualty solutions as well as claims settlement services for its partners.

Until now, Element had acquired 200,000 customers with its products such as cloud failure insurance, real estate purchase guarantee, etc., and reached sales of €10.4 million in 2021. Importantly, the platform has been witnessing over 65% increase in revenue and it plans to grow it further to reach 100% in 2022.

In August 2022, India-based insurtech start-up, MetaMorphoSys raised US$3 million in a funding round. This funding round was led by Capital 2B along with other angel investors and will be utilized by the platform to further develop and scale its platform, and expand internationally. Notably, several insurance companies took the help of this platform to launch their products, strengthen their sales force and identify fraud in their business. Moreover, MetaMorphoSys helped in optimizing the value chain starting from customer acquisition to customer engagement, together with embedded insurance to the insurance companies.

MetaMorphoSys through its APIs also streamlines its customers’ experience from onboarding to servicing to processing while the platform itself gets integrated with these traditional insurance companies. Notably, the platform is so designed that it can handle multiline insurance products starting from retail and group businesses connected to traditional models as well as SaaS platforms. MetaMorphoSys’s product also includes sales analytics, a product configurator, together with a recommendation engine. PayNXT360 anticipates that the platform which successfully acquired several insurance companies based in Hong Kong, Singapore, Indonesia, and Vietnam, will capture more international clients through its unique platform.

Another India-based embedded platform for insurance sales, Zopper raised US$75 million in a funding round led by Creaegis in September 2022. This insurance-focused SaaS platform primarily offers end-to-end tech solutions to insurers and also supports several businesses both business-to-business (B2B) and business-to-consumer (B2C) to sell various types of insurance products. It distributes these insurance products through the ‘ecosystem partners' which range from e-commerce portals selling several products to travel sites selling air flight tickets and many more.

Notably, Zopper helps insurance companies to reach out to these ecosystem partners at zero marginal cost through its proprietary embedded insurance API product. Consequently, it enables these insurance companies to manage risk better, streamline partners as well as manage customer interaction, claim settlement, and ease out transactions.

Zopper’s embedded platform has a unique model which helps the insurance companies to derive profit and thus PayNXT360 expects this innovative platform to see increased adoption amongst the insurance companies over the next three to four years.

In July 2022, Mulberri, an embedded business insurance platform particularly for professional employer organizations (PEOs) and brokers, announced to raise US$4 million in a seed funding round. Since the process of managing business insurance is very complicated as well as slow, Mulberri introduced this tech-driven platform that optimizes the whole system.

It brings efficiency to business workflows, fastens up client acquisition, and also provides risk analytics by combining with other systems such as HRIS, Payroll, etc. Its platform specifically helps PEOs and brokers to make intelligent data-driven decisions. Since it provides smart submission intake, data-driven insurance management solutions, and automated quote and binds services, it empowers each one of the critical parties, helping through automation and intelligent data-driven decisions.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Embedded finance is revolutionizing the healthcare system globally

Embedded finance, which initially started as an experimental technology, has forayed into most sectors. Buy Now Pay Later (BNPL) platforms, and other financial technology companies have long banked on this tech to make transactions seamless between the buyer and the merchant. Though initially, this innovation was restricted to retail and related sectors, now many sectors have crowded the space. Over the last few quarters, most embedded finance platforms have considered healthcare a lucrative field. Thus, new unique healthcare finance products are being brought into the market by these platforms to drive increased revenue.    

With the rising number health-conscious population in India, more embedded finance platforms are partnering with healthcare organizations to cater to the increasing demand for affordable healthcare expenses. For instance,

In August 2022, SaveIN, an India-based embedded finance platform particularly for healthcare, partnered with Orthosquare, a dental chain operating in India, to provide BNPL loans for the patients. Specifically, SaveIN is targeting to offer its care now, pay later (CNPL) product to around 100 dental clinics' patients of Orthosquare in India. Through this partnership, Orthosquare, which is a non-financial entity, will now be able to provide interest-free loans to thousands of dental patients in the country.

SaveIN entered the dental market since there lays a probability of earning high revenue, particularly in India, as recently Indians have been seen to get involved in an array of dental care procedures, beautification treatments, implants, and many more. Consequently, SaveIN is making these treatments cheaper and accessible to Orthosquare patients through their deferred payment product.

Orthosquare, which has been consistently providing services to around half a million patients in India, realized that dental expenses are not covered in maximum insurance plans. This, in turn, creates a huge out-of-pocket cost for the patients; thus, the clinic chain strategized to partner with SaveIN to provide interest from BNPL loans.

This embedded finance platform, SaveIN, which has successfully become the go-to platform for most of the healthcare organizations of the country, intends to expand its business and provide deferred payment offerings to around 5000 healthcare outlets in India. Consequently, PayNXT360 expects this kind of partnership to increase over the longer run, boosting the affordability of the patients through interest-free loans and creating India's largest integrated healthcare ecosystem.

Similarly, in September 2022, another embedded-finance platform, QubeHealth, announced to enter into a partnership with a wellness startup, Nova Benefits, to introduce an employee health benefits product in the Indian market. This full-coverage health product will include pre-approved medical financing, health insurance, and a full-fledged marketplace, particularly for corporates and their employees.

Majority of the Indian consumers are either uninsured or underinsured. This is where QubeHealth entered to fill the gap with its innovative embedded finance product. Specifically, the platform is creating a payment method facilitating medical loans on tap, enabling individuals and their corporate medical reimbursements and insurance claims at their fingertips. An individual, under the umbrella of QubeHealth, can take better healthcare decisions through the QubeHealth Marketplace and can afford to pay any health expense. This is attracting several healthcare providers to partner with QubeHealth as the users do not need to face delayed insurance claim reimbursements, thereby providing a better experience.

Now, QubeHealth, with its pre-approved medical line and marketplace platform together with the tech-enabled platform Nova which provides insurance and employee wellness service, is revolutionizing the lookout of Indian companies towards employee health benefits. Consequently, PayNXT360 expects this partnership to serve several companies in India, improving employees' lives through better healthcare decisions. Over the next five years, QubeHealth plans to deploy over US$2 billion in medical credit by narrowing the gap between individual healthcare expenses and health insurance pay outs.

On the other hand, these partnerships with embedded finance platforms can be seen as part of the companies' employee happiness and retention strategy also. In a post-pandemic world, employee satisfaction has become of utmost importance. Consequently, QubeHealth, which is helping to elevate employee well-being, is anticipated to see strong demand in the Indian space.

Not only in India, embedded finance also forayed into healthcare in other countries as well. For instance,

In September 2022, Africa-based CarePay, a healthcare-embedded finance platform, partnered with Sofri, a financial product of Links Microfinance Bank, to provide Nigerians discounts of up to 37.5% on healthcare services. Under this partnership, all of Sofri's Mastercard debit card users will be able to access the discount at around 300 CarePay healthcare provider locations across Nigeria.

This discounted healthcare service will attract a significant number of Nigerians who otherwise would not have been able to afford the healthcare services. Moreover, there is no minimum spend limit to apply for the discount to access services and medical products offered by healthcare merchants, and consequently, it is expected to capture a substantial number of debit card users.

Notably, Sofri, which in general offers loans, savings etc., now post partnership will be able to embed CarePay's healthcare discount business model, making healthcare more affordable for its customers. Apart from healthcare discounts, users can also access cashback, and telehealth, making healthcare services more accessible and affordable for Nigerians.

In October 2022, Canada-based embedded finance platform Aya partnered with an on-demand virtual pharmacy, Mednow Inc., to change the healthcare landscape in Canada. Under this partnership, Aya plan members will be able to access a discount on any prescription for co-payment amounts that are not covered by their employer's insurance. After adding their prepaid Aya Mastercard to the Mednow account, the members will be able to pay the remaining amount directly to their healthcare spending account (HSA).

Apart from charging HSA directly, Aya will also provide its members purchase over the counter medications, vitamins, supplies and many more pharmacy products from the Mednow Wellness Shop. Aya, through its embedded product, allows employees to employees to make payments through healthcare spending accounts (HSAs) and wellness spending accounts (WSAs) with prepaid Mastercards. Consequently, PayNXT360 anticipates this partnership to help many healthiest companies in Canada to alter the lives of their employees through digital pharmacy care, reimbursement, and pharmacist support.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Embedded Finance — A lucrative growth opportunity for banks to cash on for driving revenue and growth

In the banking sector, embedded finance offers one of the most lucrative growth opportunities. The digital revolution over the last decade meant that the majority of the transactions, which used to occur in physical banking locations, have now migrated to digital channels. However, going forward, these transactions will originate outside the banking network altogether. The growing shift towards open banking and embedded finance means that brands and retailers will increasingly embed the transactions within customer journeys.

Notably, the presence of embedded finance is already widely felt. Lending services and online marketplaces are a few of the sectors which are already offering embedded finance solutions. Over the next few years, it is set to become an even more integral part of the consumers’ lives. Consequently, banking institutions that can embed their offering across different customer contexts are expected to see an increase in their revenue and growth over the next three to four years.

The global embedded lending market is projected to grow eight times from US$14 billion in 2021 to reach nearly US$120 billion in 2029. Whereas, the market size for embedded finance is expected to increase from US$13.5 billion to reach US$89 billion in the United States alone by 2029.

This trend will be also visible in the B2B space, where payments are projected to rise three-fold over the next 7-8 years. Consequently, for banks to capitalize on this growing embedded finance market opportunity, banking institutions must start to look beyond their traditional processes and embed financial services within the customer journey.

Notably, to capitalize on the growing embedded finance opportunity, banking institutions can consider a super app strategy. This is because, embedded financial services also include insurance and wealth management, along with banking. Digital banks, such as Revolut, have been long using embedded finance to launch new products and services, thereby targeting an increased market share.

Traditional banking institutions can also consider strategic alliances with consumer-focused brands to grow their presence in the embedded finance space. This strategy will allow them to grow their revenue without giving up their branding. For instance,

The branding of their institution remains visible to consumers when shopping from e-commerce marketplaces. This is similar to payment giants and BNPL providers, such as Mastercard and Afterpay, who display their logos to consumers on the payment checkout page of e-commerce marketplaces. Furthermore, under the alliance, these firms can also share consumer data to create a more personalized customer experience.

Apart from this, banking players can also consider a tie-up with big tech firms that are offering financial services. This will allow them to access millions of customers, thereby further bolstering their revenue. For instance,

The partnership between Goldman Sachs and Apple is a prime example of this. Under the partnership, Goldman Sachs gained access to Apple's loyal consumer base and offered them Apple Card and Apple Pay Later services.

Furthermore, banking players can also seek to capitalize on the growing opportunity in the embedded finance space for corporate payments. Notably, more and more banks are considering expansion into the embedded payments space. For instance,

Notably, in September 2022, Goldman Sachs also forged a strategic alliance with Modern Treasury to make further inroads in the embedded finance sector. Under the partnership, the firms are bringing embedded payments to their joint corporate customers.

With the demand for embedded finance solutions projected to further increase among consumers and corporates, PayNXT360 expects more and more banking institutions in the United States to enter into the space over the next three to four years, as they seek to capitalize on the growing market opportunity.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Strategic collaborations are expected to surge in the embedded insurance space

In today's world, consumers are more attracted to a hassle-free experience and thus, insurers are increasingly incorporating open APIs and other technological breakthroughs in their business models to provide a value-added, frictionless solution to the customers. This sophisticated process can be offered by embedded insurance, where customer grievances are addressed, at the same time creating a seamless experience.

Since embedded insurance solutions have become one of the key strategies for companies to get an edge against other competitors in the market, more strategic partnerships are witnessed in the embedded insurance space. For instance,

In September 2022, NEXT Insurance, a key digital insurtech, partnered with Intuit Inc., an American financial software provider, to announce the launch of NEXT Connect, an embedded insurance solution for Intuit QuickBooks. Notably, QuickBooks is an accounting software developed by Intuit that enables small and medium-sized businesses to offer on-premises accounting solutions. Together with this, QuickBooks also provides cloud-based versions to accept business payments, help manage bills, and other payroll functions.

Under this partnership, these small businesses and accountants will be able to access insurance quotations and customized coverage within their QuickBooks accounts. Apart from this, these businesses will benefit from NEXT's proprietary pay-as-you-go product, which helps in providing workers’ compensation. Additionally, the users of the solution will also get consultations from trusted insurance advisors as well as will be able to access multiple national carrier products, including NEXT. Importantly, the pay-as-you-go offering provides these businesses a convenient option to pay for their insurance upfront, helping them preserve their cash flow. Because of the partnership, the pay-as-you-go system gets integrated with Intuit QuickBooks, and thus, the embedded insurance solution can help these small businesses to prepare a relevant plan for easy payments, at the same time ensuring payments needed only for the insurance coverage.

NEXT came up with this embedded solution as most small businesses in the United States have been offered the same financial services and insurance solutions instead of customized ones. Also, their business operations have been affected by increasing inflation and interest rates, which is also taken care of by NEXT Connect. This new embedded insurance helps small businesses save money and time by bundling their insurance policies and purchasing the exact insurance coverage they need.

Consequently, PayNXT360 projects that in a time of economic uncertainty, with its innovative products, NEXT will attract many small businesses to easily access tailor-made insurance coverage and offer payments tied to the company's payroll for their employees' compensation policies.

Similarly, in September 2022, another partnership was formed between eBaoTech Corporation (eBaoTech) and Ageas Group (Ageas) in the embedded insurance space. eBaoTech, which is a digital platform catering to the insurance industry, has a product called InsureMO, an insurance PaaS (Platform-as-a-service) platform. Now, this InsureMO will enable Ageas to see growth through B2B2C channels as a tech enabler for embedded insurance offerings. Therefore, this partnership will improve its systems and operational efficiency and bring new-age technological capabilities to its business model.

InsureMO or Insurance Middle Office helps in bringing innovation in insurance, at the same time, helps in managing the massive volume of insurance business in this digital era. This platform, which has an array of insurance APIs and microservices for general, life and health insurance businesses, also supports Open API collaboration. This partnership, for Ageas, is basically a part of its digital strategy to improve its time-to-market capabilities, thereby bringing scalability to its business.

Embedded insurance is very common for vehicle companies. In August 2022, a vehicle subscription provider, Autonomy, partnered with DigiSure, to provide embedded insurance for vehicle subscriptions. Notably, DigiSure is a software firm that deals with screening, insurance management and claims for vehicle and vehicle sharing platforms, which will enable Autonomy to digitally onboard and qualify a subscriber for month-to-month auto coverage. Autonomy, which basically prioritizes providing easy and affordable access to electric vehicles, helps vehicle subscriptions to scale profitably. Therefore, with the rise in demand for electric vehicles, PayNXT360 expects more such innovative partnerships to be observed in this space to make them more financially accessible.

Another unique partnership was formed in the embedded insurance space aiming to bring financial inclusion to non-permanent factory workers of India in August 2022. An insurtech start-up, Bimaplan announced a partnership with Niyo Bharat, a prepaid card platform to enable contractual factory workers to access insurance products. Through Bimaplan's embedded insurance platform, UNO, the process of buying the insurance policy through the Niyo Bharat app will get easier as here the app directly deducts the premium from the customer's savings account. Therefore, this API integration and tailor-made low premium plans will make insurance products easily accessible to these contractual workers.

Post partnership, Niyo Bharat, which provides contractual workers with digital financial products, will be able to offer relevant insurance plans to its customers. Apart from low monthly premiums, Niyo Bharat will also now offer unlimited teleconsultation service, financial support for short hospital trips, and health insurance coverage of INR 50,000. Therefore, PayNXT360 expects this unique partnership will not only help in improving the financial wellness of contractual workers but also help in generating revenue for both parties over the long run.

Notably, from the global point of view, Asia-Pacific has the biggest market for embedded insurance products. A growing number of Indians are interested in receiving embedded insurance products directly from their banks. Since embedded insurance has the potential to boost insurance penetration rate in India, more and more players are entering the segment. For instance,

India-based insurtech start-up, Symbo, dived into the embedded insurance space after using data pools to understand potential customer behavior and underwriting risks. The platform basically engages with its partners and provides products as per clients' requirements and also helps in structuring their insurance plans.

Symbo sold around 90,000 embedded insurance policies in December 2021, which increased further to around 150,000 in March 2022. The platform, which has clients such as Redtape, Decathlon and more, has been witnessing sequential growth of around 15%. Now the company intends to explore other markets also such as, large ecommerce companies and start-ups to design tailor-made insurance products.

To know more and gain deeper understanding of the global embedded finance market, click here.

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African embedded finance start-ups are raising funds to scale up their businesses

Maximum businesses in the African region comprise of small and medium enterprises; however, these businesses do not get credit easily from financial service providers and thus are unable to grow. Now, this problem has been addressed by several tech-enabled platforms and unique embedded finance models and has helped the scenario to change. The region's rise in embedded finance can be attributed to increase in smartphone usage, booming digital adoption, and also a large unbanked population. These factors have placed Africa to create a hub of modern financial sector depending on embedded finance.

The embedded finance space has attracted investors since it represents one of the biggest opportunities in emerging markets such as Africa. Its impact is expected to be transformational, providing a huge stimulus to supply (merchants) and demand (consumers). For instance,

In August 2022, an Africa-based embedded finance platform, Pezesha, announced that the firm had raised US$11 million in its pre-Series A funding round, which was led by Women's World Banking Capital Partners II (WWBCP II). This platform, which is headquartered in Kenya, provides digital lending infrastructure to financially excluded SMEs, mostly for those residing in the Sub-Saharan African region. Pezesha entered the embedded finance space after noticing the information gap of these MSEs, which restricts these firms from ensuring quality and responsible borrowing. Pezesha launched its scalable product based on robust API-driven credit scoring technology to solve this issue.

In order to provide its customers with a real-time loan facility, Pezesha partnered with Twiga and MarketForce, which integrate its credit scoring APIs into the customers' platforms. Currently, the firm has partnered with 20 companies, thereby enabling Pezesha to extend loan facility to over 100,000 businesses.

Apart from solving Africa's working capital problem through its robust lending infrastructure, the platform also targets to provide lending opportunities for women entrepreneurs who cannot access formal banking services. Additionally, Pezesha intends to tap the local and international banking institutions, high-net-worth individuals and also the decentralized finance space to create around US$100 million in financing opportunities for SMEs in the region.

Since small enterprises make up 90% of Africa's businesses that face credit constraints, Pezesha's business model earned significant profit and is seen to attract investors' eyes. The platform, which is currently serving, Uganda and Ghana, plans to utilize the fresh capital to expand in Nigeria, Rwanda and Francophone Africa.

Similarly, in September 2022, another African fintech, NowNow Digital Systems (NowNow), raised US$13 million in a seed round. NowNow, which is entering the embedded finance space, initially provided digital banking solutions to consumers and businesses in the region. This fintech now provides an array of financial products to agents, individual consumers and also small businesses.

The platform’s business model includes several agents who help in providing financial services to the unbanked and underbanked population residing in rural and semi-urban areas. Especially, Nigerians, with the help of around 50,000 agents across the country, can access several financial services such as sending money, paying bills, and much more. Furthermore, the fintech also offers other financial products such as insurance and loans. However, only smartphone and feature phone users can access these services.

Moreover, this fintech also has a business-in-a-box platform which helps these SMEs with several tools and also with services such as, storefront and marketplace. Notably, the platform is increasingly becoming a BaaS company with this tech and its own IPs, thus providing its product to several fintechs in Nigeria and Africa. Moreover, many key financial institutions are using their products and have been successfully offering white-label solution to their clients.

Going forward, NowNow, aims to develop NFC-enabled technology to enable tap-in functionality within its product offerings, thereby attracting more businesses over the long run. This new tech will allow users to use their virtual, physical cards on their NFC-enabled phone or POS. Moreover, the new tech will also enable wallet to wallet transfers for users. Though this product has been developed for a few small businesses, it is still in the testing phase.

Through its business-in-a-box product, along with NFC-enabled services, the fintech is targeting to capture 5,000 SMEs by 2022. NowNow, which expects to reach a GMV of about US$5 billion by the end of this year, will use the fresh capital to further expand and scale up its business across Africa.

In June 2022, Thepeer, an African API-based fintech provider connecting several businesses' wallets, raised nearly US$2.1 million in a fundraising round led by Raba Partnership. Thepeer mainly provides tech infrastructure for small to medium-sized fintech businesses, offering many services such as payments, neo banking, investing and many more. Though these fintech platforms have capabilities to facilitate money transfers through digital wallets, mobile wallet interoperability is lacking in their ecosystem. Specifically, transferring money from one fintech platform to another fintech or non-fintech platform becomes difficult.

This problem is solved by Thepeer, which allows fintech companies and businesses to embed several products into their apps and websites enabling quick transfer of money by their customers. Together with this, Thepeer, also launched a new feature called Send that allows the customers of several businesses who integrate with its APIs to send money across both platforms using emails or usernames.

In Africa, the number of fintech platforms increased from 491 to 573 in 2021, according to Disrupt Africa and Thepeer observed increased demand for its product. Consequently, it partnered with Flutterwave, an API gateway provider which has a wide network in Africa, to acquire more customers. The embedded payments start-up had witnessed an average sequential transaction growth of more than 150% since its launch, with monthly transaction volume growing over 65x. Since the proliferation of consumer and B2B fintechs across Africa is increasing, Thepeer is expected to see increased businesses over the next four to six quarters in the continent. Therefore, PayNXT360 projects with digitization expanding further in Africa, more sophisticated embedded finance and embedded payments model will evolve, attracting more investors globally.

To know more and gain a deeper understanding of the embedded finance market in Africa and Middle East region, click here.

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Embedded finance has welcomed an era of consolidation

In a hyper-competitive world, traditional businesses have increasingly integrated with embedded finance offerings to stay in business. In order to provide the clients with better functionality, optionality, and flexibility, financial technology platforms are also investing in API-based platforms. For instance,

In September 2022, Jack Henry & Associates, Inc. (Jack Henry), a financial technology provider that strengthens relationships between financial institutions and individuals and businesses, completed the acquisition of Payrailz, a cloud-native, API-first platform. This acquisition strategy of the platform was solely aimed at further expanding its presence and capabilities in the payments industry.

Acquiring Payrailz allows Jack Henry to better support banks and credit unions to compete with industry disruptors and, thus, meet the growing needs of consumer and commercial account holders. Moreover, this acquisition also helps to enhance Jack Henry's payments-as-a-service (PaaS) strategy, which enables open banking together with embedded finance abilities and embedded fintech operations. Therefore, the platform adopted this strategy to cement the connections between individuals and financial institutions through technology and services to see growth in its business over the long run.

Similarly, retail banking platforms are expanding their embedded banking solutions to attract more software companies to own and process payments easily. For instance,

In June 2022, KeyBank announced to launch of its end-to-end payment facilitation capabilities after it acquired XUP Payments in 2021. XUP Payments is a digital payments platform that provides customized merchant services experiences to different sectors such as healthcare, commercial real estate, and technology companies. Now, KeyBank's new payment capabilities will enable different payment facilitators to control more client experiences by digitally onboarding new merchants. Together with this, the clients would also be able to manage risk thresholds and keep track of their transactions with the help of a reporting product. Moreover, the software companies will also be able to decrease the payment complexities, offering an advanced onboarding experience together with risk management and customer service. Consequently, the retail banking platform will now be able to simplify the client's experiences and drive new revenue opportunities. This would further attract more businesses to engage with KeyBank, making it a prime player in the embedded banking space.

Merchant commerce platforms are also diving into the embedded finance space to capture market share. For instance,

In June 2022, India-based Pine Labs acquired an API fintech start-up, Setu to foray into the embedded payments space. Setu, which enables secured access to banking systems via APIs, is witnessing strong demand in the Indian space. With the rising demand for seamless, frictionless payments around the globe, more companies are adopting strategies to make all the data, identity, consumer information and many more at their fingertips to make these journeys smoother and seamless. This acquisition decision of the platform is very much in line with this since the firm sees Setu helping its customers, merchants, and brands develop more seamless experiences over the longer run. Now, the consumers will be able to engage with the payments and financial services on their own terms.

Last year, Pine Labs plunged into the online payments space through its launch of Plural, advanced technology of embedded payments consisting of three key products, namely Plural Gateway, Plural Checkout, and Plural Console, to elevate the online commerce experience. Consequently, the platform strategized to merge the embedded finance and payments space to capture more market share. Specifically, the platform aims to build an infrastructure for open banking and open API and thus, the combination between Plural and Setu is expected to be very powerful for the company. Pine Labs, which deals with payment volumes of about INR 2,000 crores (US$254 million) per month through Plural, is expected to attract increased business post this acquisition.

Notably, Bengaluru-based Setu saw strong demand for its products across diverse industry verticals such as start-ups, retail enterprises, insurance, banks, and lending companies. This strong demand is also backed by the golden phase of digitization in India, where their work on UPI and the account aggregator space saw fast adoption. Setu's work on Aadhaar eSign to BBPS bill payment, payment collection integration via WhatsApp, FASTag payment collection and more are some of the above-mentioned cases.

Consequently, it is expected that Pine Labs' network of merchants and issuers, together with the power of API, will help achieve significant goals in personal finance management, credit underwriting, monitoring loans to predict default rates and several other areas.

On the other hand, embedded finance has proved immensely beneficial for e-commerce businesses, creating immense opportunities for small firms where the technology helps to modernize the financial processes. Therefore, embedded finance and e-commerce are seen to get merged for easier access for SMEs to receive capital, receive credit, and other financial services that they require, to drive growth. For instance,

In May 2022, an embedded finance platform, MatchMove, acquired an e-commerce platform, Shopmatic, for US$200 million. Singapore-based, MatchMove, which provides embedded financial services, will now be able to provide its Banking-as-a-Service capabilities to e-commerce SME customers through Shopmatic's ecosystem. MatchMove's array of services includes banking-in-an-app, powered by APIs, for both virtual and physical cards through Mastercard, Visa and WePay, which will be able to capture a larger user base, targeting a wider sector of the economy. Therefore, e-commerce SMEs can completely digitalize their supply chains such as supply chain lending and vendor payments, through a single platform.

Embedded finance is witnessed to boom, particularly in the Southeast Asia region, where the maximum population is underbanked or unbanked. While more than 80% of transactions in the region are made through e-commerce, SMEs need assistance, especially for supply chain financing. This opened a wide opportunity for embedded finance to flourish, where SMEs now can pay vendors overseas, and other services needed to run a business all without using a card. Therefore, e-commerce and embedded firms are forging alliances, creating numerous growth possibilities and promoting further innovation.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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Australia-based embedded insurance providers are driving growth through strategic alliances and mergers and acquisition deals

As traditional insurance has been the way for many, the embedded insurance sector has taken time to evolve and grow in Australia. However, over the last few years, there have been a host of strategic partnerships in the space, pushing the sector in a new direction while supporting the growth of the embedded finance industry in Australia.

Many innovative startups have emerged on the embedded insurance landscape over the last few years, and these startups are increasingly partnering with firms across industries to drive their growth and sales volume, which is subsequently assisting the growth of the overall sector. For instance,

In August 2022, Cover Genius, one of the leading embedded insurance firms globally and based in Australia, announced that the firm had entered into a strategic collaboration with Zip Co, one of the leading buy now pay later (BNPL) firm in Australia.

Under the strategic partnership, Zip will integrate XCover, the global insurance distribution platform of Cover Genius, into its BNPL platform, thereby enabling Zip Money and Zip Pay users to protect their purchases during checkout or after checkout on select purchases.

Along with its partnership with Zip, Cover Genius also teamed up with RMS Cloud, a property management software company, to offer embedded insurance products to park operators in July 2022. In Australia and globally, the RMS Cloud’s property management software is used by thousands of parks, campgrounds, and holiday parks.

Cover Genius has also ventured into mergers and acquisition deals to further strengthen its partner network. For instance,

In July 2022, Cover Genius announced that the firm acquired Booking Protect, a refund protection specialist. This acquisition is part of the firm’s strategy to enter the ticketing and live entertainment market.

Notably, Booking Protect is a global refund protection specialist for platforms, ticket sellers, and live event companies such as Spectrix, SeatGeek, and Night Out in the United States, Zaiko in Japan, OzTix in Australia, and TicketSource in the United Kingdom. The acquisition will allow Cover Genius to provide ticketing platforms and over 350 partners of Booking Protect with embedded insurance protection through XCover.

Notably, the strategy of partnering with firms across industries and entering into mergers and acquisition deals has allowed Cover Genius to boost its growth and sales volume globally. For instance,

In February 2022, the firm stated that it had sold over 10 million policies and registered a growth of 667% in sales for its distribution platform. As of July 2022, the firm has sold over 2 million policies.

Currently, the firm is active in different sectors such as retail, logistics, finance, property, travel, mobility, business services, and ticketing and events. In the global market, the firm has partnered with some of the leading digital platforms, including Booking Holdings, Flipkart, and Shopee, among many others.

With the growth of Cover Genius in the Australian and global markets, more insurtech firms in Australia are eyeing the embedded insurance model. For instance,

In August 2022, Coverhero, an Australian insurtech firm, announced the launch of a new Application Programming Interface (API). The launch of the API is part of the firm’s strategy to enter the embedded insurance space. Notably, the API can be integrated with most platforms, thereby allowing consumers to purchase insurance policies directly from the marketplace.

Like Cover Genius, Coverhero is also partnering with businesses across different industry verticals. In 2022, the firm also partnered with Blys to protect income for massage therapists. According to the firm, a whole range of other marketplaces is in the pipeline for 2022. Coverhero is also looking at a potential launch of its embedded insurance services in the United States in 2023.

Along with the United States, the firm has also studied markets in Singapore, Vietnam, Thailand, and Malaysia as potential new markets where it can launch services from a short to medium-term perspective.

As these firms continue to expand their geographical footprint and partner with more digital players across different industry verticals, PayNXT360 also expects these firms to raise funding rounds from global private equity and venture capital firms from the short to medium-term perspective.

The collaborations, especially for Coverhero - with global investors, will remain a crucial factor in expanding their international presence. With the Australian embedded insurance market becoming more mature amid the presence of innovative players in the sector, PayNXT360 expects these firms to keep driving the growth of the embedded finance sector over the next three to four years.

To know more and gain a deeper understanding of the embedded finance market in Australia, click here.

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Embedded finance redefines future of the insurance sector

The unprecedented COVID-19 pandemic caused a worldwide health crisis which led to entry of multiple new-age tech-driven businesses that not only meet the need for health and other related insurances but also managed to secure place in the market and carved out their position in global insurance industry. Insurtech companies are introducing new technologies such as artificial intelligence (AI), machine learning (MI), Internet of Things (IoT), apps and blockchain to improve the efficiency of insurance and reduce the processing time.

Facilitating easy insurance on everyday basis to customers by understanding their needs, many insurtech firms are shifting to embedded insurance through innovative partnerships.

In July 2022, Bimaplan, an insurtech start-up has partnered with intercity travel start-up named as Zingbusto provide travel insurance as an additional benefit to its customers.   In this business association, Bimaplan provides an easy operational and technological process to Zingbus in providing insurance services by enabling a travel-tech platform.  Bimaplan will provide a range of coverage, accidental travel death, emergency medical cover, permanent total disablement, emergency medical evacuation cover, loss of baggage during travel, and travel accidental hospitalization cash.

Chubb, a travel and casualty insurance company has partnered with Royal Brunei Airlines in July 2022 to provide embedded travel insurance products to customers. Chubb's travel insurance will cover a range of products. viz.accidents, unexpected overseas medical cover with Covid-19 cover, and travel inconveniences such as loss of travel documents, luggage, and trip cancellation. This partnership helps passengers to gain access to travel and medical services with a 24-hour helpline and ancillaries to improve the experience of booking and travel with Royal Brunei Airlines.

Next insurance, a digital insurtech company involved in small business insurance has partnered with Evident, a third-party insurance verification service in July 2022 to cater the tailored insurance solutions to small businesses. Through this partnership, Evident verifies and improves the compliance according to the company's requirements and Next Insurance will provide the exact loan that the businesses need to grow and upscale. The company's risk managers deal with the small business vendors, and Next Insurance provides insurance through its embedded insurance program called as NEXT Connect.

Symbo Insurance, an India-based insurtech start-up that started insurance under the point of sales person (PoSP) model has slowly entered into the embedded insurance segment. The company utilized several data pools to understand the behaviour of customer and associated risks in the embedded insurance sector and started getting traction in 2020-21. Symbo provided life style based embedded insurance on day-to-day products. For instance, the company provided insurance for shoes including brands like Redtape, after knowing the customer's concern about frequently damaging soles. Lenskart, Playo, and Decathlon are a few customers for Symbo to design insurance policies for their products and services.

Zimyo, a platform that offers HR and payroll solutions, entered into the embedded finance space in July 2021 by launching an employee benefits module to empower organizations to support their employees. Zimyo has partnered with several insurance companies and non-banking financial companies (NBFCs) to provide personal loans, health and term life insurance, and payday loans. By using embedded finance, these services will be executed hassle free with a great customer experience.

Insurance has become more common and essential for many businesses' safety and customers in today's world expect insurance for everyday products. Travel insurance is one such kind that it is no longer viewed as a luxury in the post-covid world. Many travelers seek improved travel insurance plans that protect them from unforeseen situations. PayNXT360 believes that the embedded insurance sector will experience significant growth in the next three to four years as the insurance industry has been rapidly growing.

To know more and gain a deeper understanding of the global embedded finance market, click here.

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B2B Agri-Fintech models are increasingly gaining popularity in the embedded finance arena

Embedded finance in the B2B space holds massive potential to scale in various other niche verticals, where online platforms and SaaS firms already have a foot in the door facilitating their transactions. With the help of embedded finance infrastructure players or enablers, practically any business can use the proprietary user data and deep customer relationships to offer customized financial services.

Several enablers are choosing their area of expertise and developing embedded finance models to emerge at scale with products that are customized to their use cases. Therefore, unique and new cases are developing in healthcare, auto, agriculture etc. The following are the embedded finance market activity for B2B space in agricultural space. For instance,

In June 2022, a United States-based software technology company, Bushel, launched a digital payment network on its platform to address the challenges of the agricultural industry of payment by paper check. This would help agricultural producers and agribusinesses to transfer money instantly across the agriculture supply chain. The platform launched

Bushel Payments acts money movement facilitator between growers and agribusinesses on the Bushel Platform.

Another product, Bushel Wallet, is an innovative digital wallet created to resolve the complexity of agribusiness.

Lastly, Bushel Wallet Link is an API that helps agribusiness embed payments in their application, connecting to Bushel Wallet's network to transfer money.

Grain and Barge Co. (CGB) will be one of the first agribusinesses to pilot Bushel Wallet Link, allowing for simple and easy electronic settlements for their growers. Bushel has been building and standardizing the digital infrastructure for the agriculture industry for the past five years by facilitating digital transactions. The company has already acquired a network of grain companies who are using their platform safely and efficiently to deploy the payment engine for 40% of grain origination in the United States.

Therefore, PayNXT360 anticipates that agribusinesses will be able to embed Bushel Wallet Link into software applications they use to connect with their customer base beyond grain merchandising. Moreover, Bushel Wallet Link can also embed into existing customer flows through an API connection, bridging payments and brand end-to-end maintenance.

In June 2021, Growers Edge, an agri-fintech solutions provider, launched a fully digital financial software and services platform for the agriculture industry. It is a customizable platform for agricultural retailers and input manufacturers to process and manage loans quickly and efficiently.

With the help of the platform, the retailer's online platform can feature apps for loan submission, management, and payment to simplify the process between the retailers and their grower customers. Together with this, the platform also provides a suite of tools and services to analyze and manage the retailer's lending portfolio. With the help of data science and analysis, Growers Edge helps make loan decisions faster and more secure for the retailers to make informed lending decisions. Therefore, agricultural retailers can bring speed, efficiency, and flexibility in consumer lending to the agricultural arena by embedding the tech infrastructure of the platform.

Because of the platform's streamlined underwriting scorecard that analyzes a grower's credit using traditional lending analysis factors; it has attracted significant customers in the agricultural space. Notably, the platform partnered with Puris, the largest pea producer in North America. Growers Edge, through its embedded lending tech infrastructure, provided financial solutions to Puris farmers to purchase the seed and inputs used to grow crops.

New York-based, Europe-focused start-up, Agro.Club is an agri-fintech firm that provides embedded financial solutions for the agricultural players in the value chain. Specifically, it connects growers, food companies, crop buyers and input suppliers through a digital ecosystem enabling members to perform more efficiently. The platform mainly stands on three pillars: crop marketing, agricultural input sales, and community and marketing services. Through its effective commercial platform, it claims to have captured around 19,000 farmers across Europe and North America. In addition to this, Agro.Club has reached a transaction volume of US$40 million, growing at 10x.

In July 2021, the platform raised fresh capital, US$5 million, in a Series A funding round led by Rabo Frontier Ventures and VentureFriends. Initially, it will be used by the firm to launch products in Spain and the United Kingdom, further across Western Europe and into the Americas.

To know more and gain a deeper understanding of the embedded finance market in the United States, click here.