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The Currency Revolution in Embedded Finance

Embedded finance, the placing of a financial product or service in a non-financial platform, is quickly changing the global economic landscape. According to Bain Capital, financial services embedded into software platforms will exceed $7 trillion by 2026 in the United States alone. Consultants McKinsey, in turn, foresee revenues of about $20 billion accruing to embedded finance operators in the next few years.

As the embedded finance revolution gains momentum, an often overlooked but pivotal innovation emerges: the incorporation of international payments and currency management services —including customer onboarding— into the product portfolio. This would provide industry players with new revenue streams while allowing them to stay close to their customers: a win-win situation.

The embedded finance revolution

Embedded finance stands at the crossroads of technology, business services and banking. It enables any brand or merchant, for example, Shopify, to manage and sell financial services, smoothly integrating payment, debit, credit, insurance and other services into a non-financial platform.

Application Programming Interfaces (APIs) play a key role in the embedded finance model. These software-to-software interfaces are the connectivity enabler of choice favoured by banks, fintechs and payments companies as they race to integrate financial services into non-financial platforms.

As the McKinsey study emphasises, the embedded finance model is being turbocharged, as we speak, by technology-induced cost reductions and by the coming of age of ‘digital native’ managers eager to conduct business in the context of a one-stop shop digital customer experience. The Bain Capital study foresees the size of the B2B embedded payments market at $2.7 trillion by 2026 (U.S. figures).

But it’s not only about creating an unforgettable digital customer experience. Mostly, it is about delivering real business impact and opportunities. A logistics company, for example, could generate more business and improve loyalty by enabling credit and payment solutions on its platform.

As demand for embedded finance continues to grow in deposit, payments and lending, there is a largely untapped area that looks particularly promising: currency management. Let us look at this in more detail.

Adding currency management to the product portfolio

To boost revenues in the ultra-competitive and fast-growing embedded finance landscape, players will likely need to differentiate their offerings beyond the usual payments and lending solutions.

Here’s where FX markets can play a major role. Automation technology makes it now possible for banks, fintechs, and payments companies to offer a wide range of international payments and currency management solutions such as:

  • Providing seamless FX markets operations in different currencies with easy implementation via Application Programming Interfaces (API)
  • Embedding SWIFT and SEPA international payments in dozens of currency pairs
  • Guaranteeing FX markets rates during predetermined time lapses
  • Offering seamless customer onboarding and KYC compliance

These solutions create new revenue streams, as the underlying FX market spreads are shared amongst partners. They can also enhance the competitive position of embedded finance players: why let the ‘big guys’ charge 3+ percentage conversion rates when technology makes it possible to slash end-user’s hidden fees and boost vendor revenue?

This is more than just adding a new revenue stream — it’s actually one step closer to full disruption (see Kantox CEO, Philippe Gelis: “The Next Decade in Fintech is Embedded”).

In addition, seamless currency management solutions would further cement a better digital customer experience. Surveys show, time and again, the extent to which end users value the possibility of making and receiving payments in their preferred currency.

In the embedded finance landscape, successful partnerships between tech-savvy banks, fintechs, and payments companies will differentiate themselves by providing, sooner or later, currency management solutions.

The time to act is now.


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