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By Faith Ashmore, Benzinga
As we close out 2023, it's important to reflect on the biggest fintech trends that shaped this year. At its core, fintech is instrumental in creating solution-driven models that expand upon the more antiquated aspects of traditional finance. Entrepreneurs in the space recognize the profound impact of technology on the finance sector. Both consumers and enterprises now require solutions that address contemporary challenges. Solution-driven models have led to the widespread adoption of initiatives like “Buy Now, Pay Later,” AI integrations and biometrics in 2023.
Despite this innovation in fintech, venture capital investment has significantly decreased as investors are more cautious than they were a few years ago. In 2023, funding deal volumes dropped 39% totaling 484 transactions. The standout performers are those companies skillfully adapting to shifting trends. As fintech investments have leveled out, there has been a mindset shift from growth at all costs to sustained profitability. Investors are being more cautious, favoring companies that show signs of profitability. As a result, embedded finance is one of the bigger trends in 2023 that seems set to continue to grow in 2024.
Modernizing The Traditional Finance System
Embedded finance integrates financial services directly into the products or services of companies across the globe. Instead of managing individual relationships with financial institutions, companies can now leverage APIs to seamlessly offer financial solutions – such as lending, banking, insurance, credit cards and more within the customer experience of partner companies. This integration allows enterprises to be less dependent on big banks and enhance customer convenience and access while expanding revenue streams.
In 2022, the embedded finance market was valued at $58 billion, and it is expected to grow at a CAGR of over 29% between 2023 and 2032. The digitization of financial services and the rising demand for frictionless e-commerce make embedded finance a powerful force in the industry. However, without the proper infrastructure to support embedded finance, enterprises can find themselves overwhelmed by back-end demands.
That’s why companies like MoneyLion Inc. (NASDAQ: ML) are essential to embedded finance adoption.
MoneyLion’s Embedded Finance Synergy
MoneyLion, founded in 2013, has always prided itself on proactively assessing industry needs and evolving to meet them. Among the fintech companies navigating the new landscape, MoneyLion stands out as an industry leader. In February 2022, MoneyLion completed its acquisition of an embedded finance marketplace company to form Engine by MoneyLion earlier this year, the company’s enterprise business which ramped up to expand its marketplace services more broadly. Drawing from insights gained in its consumer business, MoneyLion effectively broadened its capabilities and democratized best-in-class practices to optimize its enterprise offering.
Today, MoneyLion has created a holistic embedded finance model that it reports seamlessly integrates with enterprise systems, allowing businesses to offer personalized banking, wealth management and lending services. MoneyLion has leveraged the success of its enterprise marketplace to assess what type of services would perform well for everyday consumers and vice versa. The company has also taken advantage of a “marketplace-first” experience, pivoting its focus from solely offering first-party products to utilizing its enterprise technology to seamlessly integrate and combine its offers with other third-party providers.
MoneyLion’s two-sided ecosystem, which includes consumer finance paired with enterprise-embedded finance, reached $110 million in revenue in the most recent quarter. The increase in revenue reflects a 24% increase from the previous year. In a financial landscape marked by economic uncertainty and fluctuating interest rates, MoneyLion seems to stand out with its robust revenue growth and unique approach to fintech. In many ways, MoneyLion is revolutionizing the industry, endeavoring to shake up the financial narrative and create a scalable ecosystem. As embedded finance gains even more traction heading into 2024, MoneyLion seems set to make an even greater impact on the industry.
Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.
This post contains sponsored content. This content is for informational purposes only and not intended to be investing advice.
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