Acquisition and fund-raising deals prove that the embedded finance sector is hotter than ever before

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With its ability to drive additional revenue for businesses, more and more players are integrating customized banking and credit solution into their core product offering. Over the last 12 months, the trend has accelerated significantly, and therefore, many firms are betting on the embedded finance sector. The growing number of acquisition and fund-raising deals proves that the embedded finance sector is hotter than ever before.

• In January 2023, Marqeta, the card issuing fintech firm, announced the acquisition of Power Finance, a credit card program management platform. The deal, valued at US$275 million, will enable Marqeta to dip its toes into the growing embedded finance sector. Of the US$275 million, Marqeta announced that the firm will pay US$52 million only if Power Finance is able to meet one of the undisclosed milestones within the next 12 months. Failure to meet the acquisition will result in a US$223 million acquisition deal for Power Finance.

The credit card issuance program, the first product for Power Finance, has been designed to provide banks and brands the ability to offer embedded financial experiences to their customers. With the acquisition of Power Finance, the first goal for Marqeta is to expand the capabilities of the credit product. Furthermore, the acquisition will also enable Marqeta’s customers to launch credit products embedded into their own offerings.

Along with acquisitions, the multi-million-dollar deals secured by embedded finance provider also shows the growth potential of the sector from the short to medium-term perspective. Globally, many of the leading and emerging embedded finance firms have raised venture capital and private equity rounds.

• In February 2023, Treasury Prime, the banking-as-a-service startup, announced that the firm had raised US$40 million in a Series C funding round, which was led by BAM Elevate. Since its Series B round, in May 2021, the firm had recorded nearly 400% growth in revenue and more than 450% in accounts. The firm is planning to use the capital raised for building an integrated partner marketplace and a multi-bank network. Additionally, it also plans to introduce new products and services in the market, including lending options.
• In January 2023, Liberis, another embedded finance platform, announced that the firm had raised €30 million to expand and grow its European business. The firm is particularly focused on the German and Polish markets. The capital will allow the firm to continue offering market-leading financing options to merchants, while also expanding across the Nordics and Europe. Since its inception, the firm has provided financing to over 23,000 SMEs.

Along with the United States and European markets, the embedded finance sector is also gaining strong momentum in the Asia Pacific region. In India, RATNAAFIN, the non-banking institution, partnered with Singapore-headquartered actyv.ai to provide embedded lending services to MSMEs in the country. In January 2023, actyv.ai, the B2B embedded BNPL provider, also raised US$7 million to fund its global expansion.

• CrediLinq.Ai, another Singapore-based embedded finance provider, announced that the firm had raised its seed funding round in February 2023. While the B2B online financing firm did not disclose the sun of the seed round, it plans to use the capital to scale its operations and establish its presence in the global embedded finance market. Furthermore, the firm is also exploring acquisition opportunities in Indonesia and Singapore.

With the sector projected to record strong growth in the Southeast Asian market, global firms are also expanding their presence in Singapore. Weavr, for instance, announced that the firm is launching operations in Singapore to bring its services to digital platform businesses in the country. The Plug-and-Play Finance solution offered by the firm will further drive the competitive landscape in the Singaporean embedded finance industry.

As embedded finance continues to pick up steam among banks and non-banks, who are looking at it as a way to broaden their relationship with consumers, PayNXT360 expects the trend of acquisitions and fund-raising to further accelerate in the global embedded finance market from the short to medium-term perspective. This will keep driving the growth of the overall market over the next three to four years.

To know more and gain a deeper understanding of the global embedded finance market, click here.