What is embedded finance?

Embedded finance is when financial services (like payment processing, lending, or insurance) are integrated directly into non-financial products or services. For example, when you can apply for financing directly in a shopping app or when a ride-sharing app lets you pay through their platform, that's embedded finance in action. It creates seamless financial experiences without requiring users to leave the app or service they're using.

What are financial APIs and why are they important?

APIs (Application Programming Interfaces) are tools that allow different software applications to communicate with each other. Financial APIs specifically enable companies to connect to banking systems, payment processors, and other financial services. They're important because they handle the complex technical and regulatory requirements of financial services, allowing businesses to offer banking features without having to build the entire infrastructure themselves or become regulated financial institutions.

How do these infrastructure companies make money?

These companies typically generate revenue through a combination of methods: transaction fees (taking a small cut of each payment processed), subscription fees for using their platforms, setup fees for implementation, and volume-based pricing where larger customers pay more based on usage. Some also charge for premium features or specialized services like fraud prevention and compliance management.

What is Banking-as-a-Service (BaaS)?

Banking-as-a-Service (BaaS) is a model where licensed banks allow non-banking businesses to offer banking services through their infrastructure. Through BaaS platforms, companies can provide services like accounts, card issuing, loans, and more without needing their own banking license. It's essentially renting banking capabilities through modern technology interfaces, allowing any company to launch financial products quickly.

What risks should I be aware of with these stocks?

These stocks face several key risks: regulatory changes that could affect how financial services are delivered, intense competition in a rapidly evolving market, potential security breaches that could damage reputation, and dependence on partnerships with financial institutions. Additionally, some of these companies are relatively young and may not yet be profitable, making them potentially more volatile investments.

15 handpicked stocks

Embedded-Finance Infrastructure

These innovative companies provide the essential API infrastructure that enables any business to seamlessly integrate financial services into their products. Carefully selected by our analysts, these stocks represent the invisible technology powering the next generation of banking, lending, and insurance experiences.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17