Embedded finance, a transformative approach where financial services are integrated into platforms that businesses and consumers already use regularly, is revolutionising the banking industry by making financial services more accessible and user-friendly.
Payments are the common thread linking all commercial exchanges and integrating them into familiar platforms can significantly improve customer experiences and business efficiency.
The global embedded finance market was valued at USD82.48 billion in 2023, according to Polaris Market Research, and it’s anticipated to generate an estimated revenue of USD1.03 trillion by 2032, with a compound annual growth rate of 32.4% from 2024 to 2032.
At HSBC, we believe this integration is set to be a critical competitive differentiator in the future. Our ‘Everything-as-a-Service’ strategy for payments is a prime example of how embedded finance is being brought to life.
We’re currently working with partners to integrate our payment capabilities into the platforms that our clients use to run their businesses, which not only helps differentiate our offering, but also delivers real benefits for customers.
Another area where we have seen great success is with embedded virtual cards. We’re the first global bank to integrate virtual cards into Oracle Fusion Cloud ERP (enterprise resource planning) and will soon be the first global bank to integrate with the SAP Taulia platform.
This integration enables our customers to make payments using virtual cards within native platforms through a streamlined and automated process, improving working capital and operational efficiency.
We’re also embedding our payment solutions into client onboarding processes. In Australia, Hong Kong, India, Ireland, Singapore, the UK and US, we’ve launched ‘HSBC Smart Transact’, a new solution designed to provide clients with non-complex requirements with everything they need to move money domestically and internationally.
This solution reduces onboarding time, internal handoffs, and the amount of data required, ultimately improving the client experience.
Data privacy and security
Data privacy and security remain paramount as financial transactions take place on apps. Protecting sensitive information will remain a key priority, driving significant investment in regulatory compliance.
Artificial intelligence can play an important role in detection and access point security, ensuring that as we continue to innovate, we protect against fraud. Despite these challenges, fraud should not limit innovation – instead, it should reinforce our commitment to secure, efficient, and transparent payment solutions.
Integrating cards into embedded finance solutions, for example, can offer numerous benefits, including favourable chargeback rates and fraud protection. For treasurers, this integration can generate new revenue sources, accelerate payments to suppliers, and improve working capital.
We aim to offer… solutions that align with our clients’ needs and help them thrive in an increasingly digital and interconnected world
Organisations are increasingly interested in leveraging embedded finance for procurement and other areas. Banks can offer card and trade solutions directly within these platforms, allowing corporates to choose the most suitable solutions for their needs. This virtually friction-free procurement process is highly attractive to businesses.
For banks, the focus must be on adopting these behaviours and presenting solutions that leverage embedded finance in the corporate space. By simplifying processes for procurement managers or accounts payable officers, banks can strengthen corporate relationships and drive business success.
Our approach to developing embedded finance solutions involves carefully examining customer platforms and placing financial services where they are most needed. This reduces manual processes, enhances real-time financial insights, and provides cost-saving benefits without requiring significant new investments in technology.
We understand that our customers want to grow rapidly and internationally. They need to manage risks in a constantly evolving environment. As a leading international bank, we are committed to delivering these experiences to our corporate clients.
By embracing embedded finance, we aim to offer innovative, secure, and efficient financial solutions that align with our clients’ needs and help them thrive in an increasingly digital and interconnected world.
A version of this article was first published by The Paypers in its report: ‘Embedded Finance and Banking-as-a-Service’ (opens in new window)
“HSBC is a London-headquartered universal bank and financial services group with unique historical and business links to East Asia and a highly multinational footprint. It is the largest Europe-based bank by total assets.”
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