Finance

Embedded Finance Surge: A New Era for Digital Financial Services

Direct-to-consumer offerings have long been a cornerstone of finance. However, embedded finance is transforming the way banks, businesses, and FinTechs engage with customers in real-time, creating new revenue streams and providing users with a variety of payment options tailored to their needs.

In its broadest sense, embedded finance integrates banking, payments, and lending into non-financial spaces, enabling apps and online interactions to seamlessly offer services like buy now, pay later (BNPL) and other solutions at the point of sale.

Smartphones and tablets, alongside businesses' own apps and platforms, serve as gateways to commerce ecosystems that keep consumers engaged while enhancing cash flow for the firms—and by extension, the banks and FinTechs—working with them.

The Appeal of Personalized Lending

Embedded lending, a key aspect of embedded finance, offers significant benefits for lenders. It allows them to reach new customers, promote financial inclusion, and leverage data to tailor their offerings, boosting conversion rates.

In the report "Embedded Lending: From the Lender’s Perspective," a collaboration between Visa and PYMNTS Intelligence, we observe growing recognition of the value embedded lending brings. According to the data, 47% of lenders worldwide exclusively offer embedded lending, while 31% combine embedded and traditional lending. This means that just 12% of firms are not offering embedded lending options.

However, there’s some variation in the data. While 83% of consumer lenders provide at least one embedded lending product, only 55% of small and medium-sized businesses (SMBs) do the same. Furthermore, 37% of SMBs express a "highly interested" sentiment in switching to providers offering embedded lending. This shift may be further accelerated as SMBs face inflation pressures, concerns about capital access, and uncertainties around trade wars and tariffs, prompting a desire to maintain strong supplier relationships.

On the consumer side, research by PYMNTS Intelligence in partnership with Carat from Fiserv, titled “Platform Business Survey: The Rise of Embedded Payments,” reveals that adding payment features to services has allowed independent software vendors (ISVs) and marketplaces to generate revenue by integrating payments into the core of the commerce experience. The data suggests that 65% of ISVs and marketplaces not currently offering payment capabilities plan to incorporate embedded financial products for payment acceptance. These initiatives range from digital wallets to branded cards and BNPL options, further enriching the marketplace ecosystem.

TECH

EU-US Tensions Spark Urgent Push for Homegrown European Tech

The European Union is facing increasing pressure to enhance its technological capabilities and reduce its dependence on U.S. digital infrastructure and services as transatlantic relations reach a new low.

However, achieving this goal will come at a significant cost.

Currently, most European data is stored on U.S. cloud platforms, with companies such as Amazon, Microsoft, and Google controlling more than two-thirds of the European market. Additionally, Europe holds only 10 percent of the global microchip market, while U.S.-based firms like OpenAI and Anthropic are at the forefront of the artificial intelligence revolution.

CRYPTO

$1.5bn ByBit Hack: North Korean Hackers Convert Millions into Untraceable Funds

Hackers believed to be working for the North Korean regime have successfully laundered at least $300 million (£232 million) of their record-breaking $1.5 billion crypto heist, converting it into unrecoverable assets.

The criminals, known as the Lazarus Group, stole the massive sum of digital tokens in a hack of the crypto exchange ByBit two weeks ago.

Since then, it’s been a relentless effort to track and block the hackers from converting the crypto into usable cash.

Experts say the notorious group is working nearly around the clock, likely funneling the stolen funds into the regime’s military development.

"Every minute counts for the hackers, who are expertly trying to obscure the money trail, and they are highly sophisticated in their methods," says Dr. Tom Robinson, co-founder of crypto investigative firm Elliptic.

According to Dr. Robinson, North Korea is among the best in the world at laundering cryptocurrency.

"I imagine they have an entire team dedicated to this, using automated tools and years of expertise. Their activity suggests they only take short breaks, possibly working in shifts to convert the crypto into cash."

Elliptic’s analysis aligns with ByBit’s findings, which state that 20% of the stolen funds have now "gone dark," meaning recovery is unlikely.

The U.S. and its allies have accused North Korea of conducting numerous hacks in recent years to fund its military and nuclear programs.

On February 21, the hackers breached one of ByBit's suppliers, secretly altering the digital wallet address where 401,000 Ethereum coins were being sent. ByBit mistakenly transferred the funds to the hackers instead of its own digital wallet.