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Future Barriers for Embedded Finance; With Provenir, Episode Six, Aspiration and Aquanow

EY estimates that the market size of global embedded finance will grow from $264billion in 2021 to $606billion as early as 2025. With the space set to dramatically disrupt the financial sector worldwide, The Fintech Times seeks to understand how.

Financial regulation is ever-evolving across all subsectors. As embedded finance grows, it is one space that is sure to see regulations change rapidly across all regions. In order to understand how barriers may change for embedded finance organisations in the future, The Fintech Times reached out to the experts.

“The embedded finance landscape continues to change”
John Mitchell
John Mitchell, CEO and co-founder of Episode Six

John Mitchell, CEO and co-founder of payment processing and digital ledger infrastructure provider Episode Six, explains how changing laws for embedded finance could present significant challenges in the near future: “Looking ahead, there are a number of barriers for embedded finance that must be addressed. The embedded finance landscape continues to change, meaning the laws governing embedded finance will continue to change. It’s important to engage with regulatory bodies to strike a balance between innovation and consumer protection.

“Data privacy and security is another area of focus. As embedded finance expands, consumers’ financial and personal data will be handled by an increasing number of companies. These businesses must be proactive about data protection, which means investing in stringent cybersecurity measures and being transparent about what data is collected and how it’s transmitted. After all, we need customers to trust us as an industry, otherwise, we’re in real trouble.”

“Regulatory compliance remains crucial in embedded finance”

Chris Kneen, managing director in the UK and Ireland at credit decisioning software provider Provenir, said: “Future barriers are technology-led and generally pose more of a challenge to established, larger financial institutions and banks, which are being held back by legacy solutions that are harder to unplug from the tech stack. This poses a great opportunity for newer entrants in the market, who can more easily leverage microservices and API-driven technology to repackage existing solutions into embedded solutions for third-party customer journeys.

Chris Kneen, Provenir
Chris Kneen, managing director, UK&I, at Provenir

“Lending-as-a-service is a great example – by partnering with large consumer finance providers who developed capabilities internally, third parties lacking lending capabilities can now offer new solutions to their customer base. It’s a win-win for all parties involved.

“Regulatory compliance remains crucial in embedded finance. For instance, credit facilities require appropriate and affordable offers to consumers, ensuring due diligence similar to regulated products like unsecured loans. Regulatory bodies like the FCA are soon expected to announce new regulations for the BNPL sector in the UK due to due diligence concerns.

“More clarity is also needed to address privacy concerns and maintain consumer trust. Currently, the responsibility for consumer protection and risk management in most embedded finance solutions depends on the relationship between the lending-as-a-service provider, the technology partner, and the third-party embedding the solutions – but more industry collaboration with credit bureaus, fraud service providers, the regulator and providers of advanced AI solutions will become crucial in mitigating credit and fraud risk, especially for new entrants.”

“New challenges coming, especially in the ESG side”

Chad Hunter, senior director of carbon products and innovation at decarbonisation solution provider Aspiration, said: “Organisations will continue to tap the potential of embeddable finance to help serve their customers and stakeholders, but there are new challenges coming, especially in the ESG side.

Chad Hunter on embedded finance barriers
Chad Hunter,senior director of carbon products and innovation at Aspiration

“For example, embedding climate action (e.g., carbon neutralisation or tree planting) in shopping experiences either pre- or post-checkout can be incredibly valuable to both the consumer and the organisation, but only if implemented and communicated in the right way. If built with high-quality data, high-impact climate action projects, and communicated well, consumers get excited about these offerings and increase their engagement with the company and products.

“However, if these pieces are not executed in a trustworthy and transparent manner, the organisation can be seen as greenwashing and ultimately reduce the flow of capital into sustainable and socially conscious companies or climate projects. The ESG embeddable finance field will continue to evolve and organisations need support from companies like Aspiration to unlock the value for the consumer, brand, and the world.”

“Critical technological investments required in order to scale efficiently”
Sebastien Davies on embedded finance barriers
Sebastien Davies, VP of research at Aquanow

Sebastien Davies is the VP of research at Aquanow, the infrastructure and liquidity provider empowering institutional and enterprise digital asset services. Davies explains how evolving regulations could present barriers for the space: “The most important consideration is an evolving regulatory landscape.

“Many bank executives have been sounding the alarm in their annual letters and lobbying efforts that providers of embedded financial services have an unfair advantage due to a lack of oversight.

“Recent headlines about risk management at some regional banks may keep the regulatory spotlight on the incumbents, but as non-banks continue to take up more of the financial tapestry, it’s likely that the watchdogs will bring them under their purview. Along those lines, as the influence of embedded finance continues to grow, there will be critical technological investments required in order to scale efficiently.”


  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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