Embedded Finance to unlock US$242 Billion in opportunity across Asia Pacific by 2025: Visa

Lending,deposits and payments emergeas top use cases for Embedded Finance in the region

SINGAPORE,July 27,2023 --Embedded Finance will unlock US$242 billion in revenue opportunity across Asia Pacific by 2025 across small businesses (SMBs) and consumer segments,according to the latest Visa study[1]. Embedded Finance,or the integration of financial services into non-financial platforms,brings significant possibilities for innovation and business growth within Asia Pacific,from improving the customer experience to enabling seamless access to financial services for consumers and businesses,on everyday digital platforms.

Lending is set to emerge as the top use case for Embedded Finance (US$141 billion),followed by deposits (US$56 billion) and payments (US$41 billion)[2]. SMB lending alone will comprise the majority of the opportunity within embedded lending,unlocking more than US$115 billion of addressable market value.

"Embedded Finance represents a transformative opportunity for financial service and technology providers as well as software and digital providers in Asia Pacific. Financial institutions are not only taking notice,they are investing in building a new and differentiated Embedded Finance experience today across verticals such as embedded issuing,lending and payments," said TR Ramachandran,Head of Products and Solutions,Asia Pacific,Visa. "We will continue to expand our offerings and partner with banks,fintechs,platform providers and merchants across the value chain,ensuring cost-efficiency while capturing growth opportunities and driving innovation. Together,we can pave the way for sustainable growth and shape what's next for consumers and businesses in the Embedded Finance space."

Enhancing overall customer experience through seamless integration of financial services

Customer expectations for relevant and user-friendly financial services have resulted in traditional banks,merchants and platforms embracing the Embedded Finance space to stay competitive.

Setting up core banking products within non-financial platforms enables businesses to enhance the customer journey by providing supplementary products or services that may not have been previously accessible to customers. For instance,banks can embed their services into popular non-financial platforms such as ride-sharing,messaging or business software applications. This accelerates expansion into new customer segments beyond those accessible via their traditional banking channels and is also an alternate distribution network that drives scale and a more cost-effective acquisition strategy for banks.

Additionally,merchants and business-facing platforms can leverage Embedded Finance solutions to offer customers more seamless experiences – eliminating the need for customers to navigate to external channels to complete payments or sign up for new financial services separately.

Navigating challenges on the path to growth and innovation

While a dynamic market opportunity exists,industry players must adeptly navigate this burgeoning space in light of growing responsibilities in areas such as data privacy,regulatory requirements,and drop in brand saliency and differentiation. Navigation through these areas is critical to maximising the valuable opportunities presented by Embedded Finance.

Bringing Embedded Finance to life

Most recently,Visa announced a partnership with SAP to embed payments into the SAP ecosystem through SAP Business Technology Platform (SAP BTP),enabling further automation and efficiency of business-to-business (B2B) payments for businesses in Asia Pacific. Visa estimates that opportunitiesto digitise B2B payment flows today represent more thanUS$50 trillionacrossAsia Pacific[3].

"Over the next few years,we foresee that financial institutions will need to redefine their go-to-market strategy to meet evolving customer needs and tap into the massive market opportunity provided by Embedded Finance," said Prateek Sanghi,Head of Visa Consulting and Analytics,Visa. "For banks and businesses to stay competitive in this new era of financial services,they must strike the right partnerships to drive scale while building best-in-class solutions for customers and businesses."

With Visa's robust capabilities and strategic partnerships,all participants of the Embedded Finance ecosystem,from banks,non-financial institutions,merchants to solution providers,have access to a comprehensive suite of financial solutions to support their diverse needs to capitalise on the rapid growth of Embedded Finance in Asia Pacific.

About Visa

Visa (NYSE: V) is a world leader in digital payments,facilitating transactions between consumers,merchants,financial institutions and government entities across more than 200 countries and territories. Our mission is to connect the world through the most innovative,convenient,reliable and secure payments network,enabling individuals,businesses and economies to thrive. We believe that economies that include everyone everywhere,uplift everyone everywhere and see access as foundational to the future of money movement. Learn more at Visa.com.

[1]Total addressable revenue across small businesses and consumer banking in Embedded Finance and assumes 100% adoption and share of wallet of banking revenues; large enterprise B2B segment opportunity is not in scope. Source: Visa commissioned research for Embedded Finance by BCG Digital Ventures (Nov 2022)

[2]Visa commissioned research for Embedded Finance by BCG Digital Ventures (Nov 2022)

[3]Based on research and analysis by Visa in conjunction with McKinsey,conducted in 2020