Adyen & BCG: Embedded Finance Grows Amid Surging SaaS Demand

Embedded finance products have created a $185bn market opportunity for software providers, marking a 25% expansion since 2022, according to research released by global payments technology provider Adyen and Boston Consulting Group (BCG).

The report highlights that small and medium-sized businesses are seeking financial services beyond basic payment processing through their existing software platforms, known as Software-as-a-Service (SaaS) companies, as they move away from traditional banking relationships towards integrated solutions.

The expansion reflects changes in the banking sector, where higher interest rates have increased revenue from deposit accounts. This has made it more attractive for software companies to offer banking services alongside their core products.

BCG’s analysis indicates that less than 20% of the potential market has been addressed, creating opportunities for software platforms to generate new revenue by offering financial products such as business accounts and lending facilities.

The research, conducted across eight industry sectors including food and beverage, retail and hospitality, reveals a market primed for expansion as traditional financial institutions have historically underserved the small business sector.

Blake Breathitt, SVP Platforms & Financial Services at Adyen, says: “Embedding financial products creates a win-win scenario: SaaS platforms deepen user relationships and unlock new revenue streams by addressing SMBs' overlooked financial needs.”

Rising small business demand

The study, which surveyed 2,000 small businesses across North America, Europe and Australia, found that 50% of SMBs indicate they would use a complete range of embedded finance products – financial services integrated directly into software platforms they already use.

This demand extends beyond basic payment processing to include more sophisticated financial products such as business accounts, corporate cards, and lending services. The integration of these services into existing software platforms removes friction from financial operations and simplifies business management for small companies.

Stefan Dab, founder of BCG's Payments and Fintech practice, says: “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.”

Revenue impact

Software platforms that have integrated financial services are now generating more than half their revenue from these offerings, the research shows. This includes payments processing and additional financial products such as business loans and company credit cards.

The study examined platforms across eight sectors, including food and beverage, retail and hospitality. BCG's analysis suggests that software companies could increase their revenue by three to four times by adding financial products to their offerings.

The research, which combines quantitative data with qualitative insights from approximately 30 leading platforms, indicates that the market opportunity has expanded due to a combination of higher bank revenues from accounts and an overall growth in banking revenue pools.

Adyen, which provides payment technology to companies including Meta, Uber, H&M, eBay and Microsoft, partnered with BCG to analyse the evolving embedded finance landscape and its implications for software platforms and small businesses.

The findings suggest that platforms which fail to integrate financial services may risk falling behind competitors as the market matures and customer expectations evolve. The research highlights the strategic importance of embedded finance for SaaS platforms seeking to differentiate themselves in an increasingly competitive market.

Blake says: “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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