Embedded payments and finance saw a substantial 25% increase since 2022, revealing a "game-changing" $185 billion market opportunity for SaaS platforms, according to a new report by payment company Adyen and Boston Consulting Group (BCG).
The growth is driven by a favourable interest rate environment due to higher bank revenues from accounts and an overall expansion of banking revenue pools.
The report highlights that top platforms are now generating more than 50% of their revenues from embedded payments and finance, revealing embedded finance as the next critical growth lever for SaaS. To differentiate in an increasingly competitive market, platforms must consider integrating financial products in their offering.
The demand for embedded finance from small-and-medium-sized businesses (SMBs) has broadened well beyond payments.
Considering this, along with the market's expansion, there is a significant opportunity for SaaS platforms to embed into their offerings more advanced financial products like business accounts, loans, and issued cards, as most platforms have a chance to multiply their current revenues by up to three or four times given the typical margins on these products.
"Embedding financial products creates a win-win scenario: SaaS platforms deepen user relationships and unlock new revenue streams by addressing SMBs' overlooked financial needs," says Blake Breathitt, SVP Platforms & Financial Services at Adyen.
"Our research underscores the window of opportunity for SaaS platforms to embrace embedded finance to stay competitive, or get left behind. There is an immense market opportunity here for SaaS platforms, which are in an ideal position to deliver these within their existing ecosystems."
Meanwhile, Stefan Dab, founder of BCG's Payments and Fintech practice, notes that they are observing an appetite from SMBs to consume a broader range of financial services from within their SaaS platforms, highlighting loans extending beyond simple cash advances or current accounts tightly integrated in receivables and payables workflows.
