aperture, a strategy consultancy, today launches a new report on the embedded banking market, “Embedded Banking: The Opportunity and the Providers Best Placed to Help Companies Capitalize on It”. The report includes The Market Map for Banking-as-a-Service (BaaS) Providers, an evaluation of 45 BaaS platforms based on digital age criteria.

Embedded banking is the phenomenon whereby consumer-facing companies can offer banking products and services, seamlessly embedded into existing user journeys, without having to become banks themselves. Since embedded – or contextual – banking promises to give consumers banking services when and where they need, it will increase conversion and the overall size of the market. According to estimates from Simon Torrance – founder of Embedded Finance & Super App Strategies – the embedded banking opportunity could add USD3.7 trillion to the market capitalization of the companies able to exploit it.

Embedded banking is attracting a lot of start-ups and venture capital. The size of the market opportunity has drawn significant venture capital investment  – USD22 billion in 2020, according to Pitchbook – and a wave of start-ups. These start-ups are mostly focused on Banking-as-a-Service (BaaS), providing the infrastructure that allows brands to offer discrete banking services, such as payments. Some incumbent banks, such as Goldman Sachs, are also pursuing the opportunity.

The challenge for embedder brands is navigating this complex and fast-moving space. Not only is the number of BaaS providers proliferating, but there are significant differences between the providers, such as whether they are vertically integrated or modular, where they operate and what services they provide.

aperture’s Market Map provides a digital age framework to help decision makers select the right platform to meet their strategic needs. The Market Map is a proprietary methodology that assesses platforms on the basis of the ability to enable business model innovation and their ability to enable technology innovation. In addition to The Market Map, the report also includes extensive information for each provider about services offered and geographies covered  – all compiled using publicly available information, complemented by a proprietary RFI process.

Simon Torrance, CEO of Embedded Finance & Super App Strategies, commented: “Embedded banking is a hugely exciting and nascent market opportunity. Most brands are only starting to wake up to the possibility of providing digital banking services alongside their existing offering to grow customer lifetime value and loyalty.”

Simon added: “This aperture report is unique and timely in that it both takes a comprehensive look at the BaaS provider landscape and applies digital age criteria to assessing it. After reading the report, a decision maker will be able to determine which BaaS providers are able to meet their use cases in the location where they operate, but also which will enable the company to achieve their business objectives – whether adding a service to enhance an existing value proposition or using banking to springboard a more fundamental change in their business model.”

Ben Robinson, co-founder of aperture, added: “The aim of this report is to throw light on an area of fintech that is fast-growing, exciting, but still unexplored by industry analyst research. Unlike other evaluation matrixes, The Market Map is not meant to separate good from bad, but to help those charged with system selection to understand which platforms can help them to achieve their strategic goals.”

Ben continued: “Ours is a new approach where we’re not concerned with how big a provider is or how many consultants it has, but the extent to which its solution can fundamentally improve end-user experiences and/or fundamentally change a business’ operating, sourcing and distribution models. Because this is our objective and because we use mainly publicly available information to compile The Market Map, we can be highly inclusive – featuring 45 providers in the report, even those with small revenues and customer numbers.”

The Market Map for BaaS is the second market assessment of its kind. The first (The Market Map for Wealth Management Software, H1 2021) was published in February 2021.