A new report published today by Mobey Forum’s Payments Expert Group has identified the unique growth drivers and opportunities that embedded finance offers financial institutions.

The report, entitled Embedded Finance: Transforming The Banking Value Chain, explores how financial institutions can capture more of the embedded finance value chain to gain strategic advantage, boost revenues and defend against disintermediation.

Embedded finance is already rapidly gaining momentum. It is forecast to realise transaction values of USD $7 trillion in the U.S. alone by 2026, while in Europe, embedded finance is expected to account for up to 15% of revenues by 2030.

The Mobey Forum report explores how financial services can be integrated to enhance and complement third-party service offerings from both banking and non-banking providers. This creates a convenient end-to-end journey with minimal friction for the end user, enabling access to financial products without leaving the retail or corporate environment.

“Today, banks typically produce the financial products and set up the distribution channels, but they don’t own all the interfaces, especially in ecommerce,” said Elina Mattila, Executive Director, Mobey Forum. “The result is that customers need to leave retail settings to visit the bank channels, adding huge amounts of friction.

“Embedded finance enables banks to integrate financial products and services directly into retailers’ sales channels, in other words, right at the heart of the customer journey, providing trusted financial services in a convenient, familiar environment. Our report highlights how banks can optimise their engagement with this high growth area, by expanding and cementing their roles in the value chain."

Tuire Mäkelä, Strategic Commercial Manager at Nordea and Co-Chair of the Expert Group, added: “Embedded finance offers significant revenue opportunities to banks willing to adjust their thinking and capture more of the value chain. They can set up marketplaces and become distributors for retailers of financial and non-financial products, accessing a larger share of revenue within or across verticals.

“By connecting directly with customer-facing third parties, they can scale up quickly and potentially realize additional revenue opportunities of anywhere between 10% and 100% of the total value created within the value chain.”

The Mobey Forum report is based on input from Mobey Forum’s members, who are subject matter experts and practitioners working within the banking and payments landscape, to analyse trends, opportunities and risks.