The embedded finance market has been predicted to rise from $43bn (£37.2m) in 2021 to exceed $138bn in 2026.
A study from Juniper Research has revealed that the market, which occurs when financial services are embedded within non-traditional financial services areas, will grow by over 215 per cent due to the increasing availability of APIs.
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It forecasted that the easy integration of these APIs will lower the barriers to entry for financial services and create a significant new revenue opportunity for providers of embedded finance.
The research found that revenue from buy now pay later services, which embed lending seamlessly in the eCommerce checkout process, will account for just over 50 per cent of the embedded finance market in 2026.
“Embedded lending at point of sale is a massive opportunity for leaders such as Klarna or Afterpay, but it is also an opportunity for banks,” said Nick Maynard, author of the research said.
“As open APIs proliferate, we expect banks to take a significant interest in the market; leveraging their existing user relationships and trusted brands to create compelling propositions.”
Zopa’s chief commercial officer Tim Waterman has previously said that he is “very excited” about the potential benefits of embedded finance for the lending industry.