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Embedded finance: market challenges and market changes
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In September ((2022) 8 JIBFL 560) we outlined that embedded finance is the availability of financial products, integrated into a company’s infrastructure, provided by non-financial institutions (platform lenders) and capitalised by “traditional” financial institutions. One of the benefits of embedded finance is an enhanced customer experience. This customer-led approach will become more important in the current and forecast economic environment. COVID-19 drove a change in consumer habits and demands and saw record valuations for fintechs. However, as the world economy faces an increasingly challenging outlook, there has been a so-called “rebalancing” of these high valuations. In July 2022 credit card transactions by UK cardholders were up by nearly 10% on last year (UK Finance) and global e-commerce revenues are forecast to shrink for 2022. Does this signal trouble ahead for embedded finance?
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