The embedded finance landscape underwent a significant transformation in 2024, with traditional banks making bold moves and new verticals emerging as key growth areas. In our latest podcast episode, we spoke with Sam Boboev, founder of Fintech Wrap Up newsletter, to analyze the year's most impactful developments in embedded finance.
Traditional Banks Lead the Charge in Embedded Finance
The most notable shift in 2024 was traditional banks' aggressive expansion into embedded finance:
- Unicredit's strategic acquisition of Vodeno and Iron Bank
- SEB Embedded's market expansion and partnership with Swedish retailer Hemköp
- Major partnerships from NetWest, Rabobank, and HSBC
- Growing focus on regulated banking-as-a-service solutions
Retail Sector Shows Mixed Adoption of Financial Services
The retail landscape presented contrasting movements in embedded finance adoption:
- Major exits: Sainsbury's and Tesco sold their banking operations
- New entrants: Hemköp launched banking services
- Strategic partnerships: Currys expanded BNPL offering with BNP Paribas
- Market consolidation: Swiss retailer Coop ended their finance program
Banking-as-a-Service Market Matures
2024 marked a turning point for the BaaS sector:
- Increased regulatory oversight across major markets
- New fully regulated players like Griffin entering the UK market
- ClearBank's expansion into EU territories
- Enhanced focus on compliance and risk management
- Shift toward comprehensive service offerings, including compliance tools
Emerging Vertical Markets Transform Financial Services
Healthcare Financial Technology
Healthcare providers increasingly integrated financial services:
- Focus on optimizing payment flows for medical professionals
- Strategic partnerships between healthcare platforms and financial providers
- A different approach from the US market, emphasizing provider solutions over consumer financing
Renewable Energy and Home Improvement Finance
The intersection of sustainable energy and financial services grew significantly:
- Enpal's launch of dedicated financial services
- OVO Energy's HSBC partnership for solar financing
- Increasing demand for renewable energy installation financing
- Integration of payment and financing solutions for installers
Vertical SaaS Financial Integration
Software providers continued expanding into financial services:
- Hotelise's expansion from payments to lending
- ServiceTitan's comprehensive fintech offering
- Restaurant sector solutions from Nori and Metro Financial Services
- Home Services- market development
Industry Outlook and Future Considerations
As embedded finance continues to evolve, several key factors will shape its future:
- Increased emphasis on regulatory compliance
- Focus on sustainable business models
- Growing importance of risk management
- Need for clear value propositions beyond basic financial services
Conclusion
"Customers come for the software, but companies monetize through fintech products," reflects a growing trend in vertical SaaS companies, where financial services become a major revenue driver while maintaining core business focus.
2024 demonstrated that embedded finance is moving beyond early adoption into a more mature phase, with traditional banks, retailers, and vertical SaaS providers each finding their unique position in the ecosystem. Success in this space increasingly requires careful balance of innovation, compliance, and customer value.