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Embedded finance beyond payments is now a critical growth driver for Software-as-a-Service (SaaS) platforms.
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Less than 20% of the market is currently addressed, meaning now is the time for platforms to tap into this revenue pool and meet rising SMB demand.
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SaaS platforms embedding financial products are set to amplify their revenues up to 3-4x.
Adyen, the financial technology platform of choice for leading businesses, has launched a new report with Boston Consulting Group (BCG) which reveals a game-changing $185 billion market opportunity for SaaS platforms, a substantial 25% increase since 2022. BCG’s analysis reveals this market growth is driven by a favorable interest rate environment — due to higher bank revenues from accounts — and an overall expansion of banking revenue pools.
In parallel, the demand for embedded finance from small-and-medium-sized businesses (SMBs) — a sector typically underserved by traditional financial institutions — has broadened well beyond payments.1 This, coupled with the market’s expansion, opens a significant opportunity for SaaS platforms to embed into their offerings more advanced financial products like business accounts, loans, and issued cards. Given typical margins on these products, most platforms have an opportunity to multiply their current revenues by up to three or four times.
“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.”
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The market is primed with strong demand from SMBs with 50% of SMBs expressing a high likelihood of utilizing a full suite of embedded finance products in the near future, reinforcing its growth potential.
“We are observing an appetite from SMBs to consume a broader range of financial services from within their SaaS platforms, notably loans extending beyond simple cash advances or current accounts tightly integrated in receivables and payables workflows,” says Stefan Dab, Founder of BCG’s Payments and Fintech practice.
The report highlights that top platforms are now generating more than 50% of their revenues from embedded payments and finance, and shines a light on 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.
Adyen and BCG’s report provides a strategic playbook for SaaS platforms looking to succeed in the embedded finance space. It outlines actionable insights on differentiating products from traditional banks, optimizing go-to-market strategies, and forming effective partnerships to drive growth.
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