Report: Embedded finance offers competitive edge for companies that can navigate integration and regulatory hurdles

• New data highlights sustained enthusiasm for embedded finance, though complex technical integrations and regulatory hurdles can dampen impact and adoption.

• Delivering value to customers hinges on selecting a partner with proven competency, particularly when entering new markets.

SAN FRANCISCO - Airwallex a leading global payments and financial platform for modern businesses, released a report exploring the opportunities and challenges tied to embedded finance – the practice of platforms, marketplaces, and software companies integrating user-friendly financial services within their existing offerings. Airwallex’s survey of 200 enterprise decision-makers reveals that executives see incredible upside with embedded finance, particularly in modernizing user experience, but that nuanced adoption and integration processes require careful navigation.

“Embedded finance is the growth engine driving intuitive, seamless, and convenient customer experiences,” said Ravi Adusumilli, Executive General Manager, Americas, Airwallex. “But payments and financial services are inherently complex, and there is no one-size-fits-all approach for embedding these features. We’ve found that companies who treat embedded finance like a brand-new product launch – by committing the necessary resources, driving internal alignment, and carefully selecting the right strategic partner – will extract the greatest value.”   

Key Findings:

• The vast majority embed financial services for indirect monetization: Embedded finance has long been touted as a tool for new revenue generation. Surprisingly, the majority (78 percent) of decision-makers primarily see it as a tool for enhancing customer experience and reducing friction, while 71 percent see it as a way to retain customers on their platform – both value-adds that don’t involve directly charging users.  

• Direct monetization is still an attractive benefit: While enhanced customer experience is a primary driver for embedded finance adoption, 65 percent of enterprises are exploring it to grow new revenue streams – from services like global payment processing, small business loans, debit and credit cards, and digital wallets.

• Embedded finance becoming table-stakes to remain competitive: 36 percent fear falling behind or being left out of the conversation
as the market matures — and seek embedded finance to keep pace with industry leaders and differentiate themselves.

Though the benefits of embedded finance are many – the market is projected to surge to over $600 billion by 2025 – integration and adoption are not without challenges. Companies cite technical difficulties, compliance concerns, and slow customer adoption as key hurdles.

Challenges for embedded finance to overcome:

• Execs found adoption slow: 93% saw actual adoption fall short of forecasts, the primary reasons being a slow ramp-up (53%), and overly optimistic forecasts (51%). Only 6% of executives felt adoption aligned with their expectations, and just 1% saw adoption exceed predictions. 

• Technical integration: 43% struggle with technical integration, especially when aligning with legacy systems.

• Regulatory maze: 25% face compliance obstacles, including complex regulatory requirements.

• Reliable partner: 17% of businesses have difficulty finding the right technology partner to enable seamless and scalable embedded finance solutions.

Enterprises have high expectations when it comes to the right partner for implementing embedded finance. The most important consideration is delivering true customer value with an easy-to-use interface and prior experience with a range of related financial services.

Airwallex's deep global expertise in embedded finance offers enterprises a pathway to integrate financial technology with ease while navigating the complexities of payments, regional compliance, user experience, and scalability. By partnering with Airwallex, companies can accelerate their embedded finance strategy in their domestic market, attract new customers abroad, and stay ahead of industry trends.

For more information and to download the full whitepaper, visit https://www.airwallex.com/report/scaling-embedded-finance.

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About Airwallex

Airwallex is a leading global financial platform for modern businesses, offering trusted solutions to manage everything from payments, treasury, and spend management to embedded finance. With our proprietary infrastructure, Airwallex takes the friction out of global payments and financial operations, empowering businesses of all sizes to unlock new opportunities and grow beyond borders. Proudly founded in Melbourne, Airwallex supports over 100,000 businesses globally and is trusted by brands such as Brex, Rippling, Navan, Qantas, SHEIN and many more. For more information, visit http://www.airwallex.com