The Next Wave of Embedded Finance (Portage)

Summary

• By 2032, the global embedded finance market is projected to exceed US$1 trillion, a ten-year CAGR of 32%.p.3
• The SMB market accounts for more than 40% of U.S. GDP, yet only 40% of SMBs are completely satisfied with their banking provider.p.6
• Embedded payments, the largest vertical, is estimated at ~US$30 billion.p.7
• Insurance is the largest of the other verticals at an estimated US$10 billion market.p.8
• Embedded lending for SMBs is estimated at US$14 billion in the U.S. alone.p.9
• Embedded accounting/tax has an estimated SMB market size of ~US$1 billion in the U.S.p.11

Key insights

1. Payments, banking and lending have similar growth profiles of ~20% annually.p.7
2. HR/payroll, accounting and investing are nascent, with an estimated market of US$1 billion to US$3 billion.p.8
3. More than 35% of SMB respondents said they would buy financial services through vertical SaaS platforms.p.6
4. The first embedded finance wave started in the early 2000s, and PayPal launched in 1999.p.4
5. Walnut connects enterprise partners to 20+ insurance products from 15+ carriers.p.14
6. Vouch's embedded API gives it access to some 40,000 startup clients through Carta.p.14
7. Platforms can play embedded providers against each other, constraining margins as the space becomes more crowded.p.15