Embedded finance is a term describing how financial processes are being streamlined in the consumer and business commerce side.

Today, KPMG announced the launch of Singapore's first “embedded finance hub," reflecting how financial services are increasingly being shaken up by technology.

The term “embedded finance” refers to the integration of financial services or tools, traditionally obtained via a bank, within the products or services of a non-financial organisation.

It is hoped that the hub, which is due to run for at least two years and incubate more than 120 non-financial enterprises and financial institutions, will make inroads into financial areas such as payments, blockchain, lending, insurance and wealth, KPMG said in a statement yesterday. The hub, which will work with the Monetary Authority of Singapore and those from wider business sectors to speed up finances, will be imbedded in September.

KPMG will manage the hub and its financial services experts will provide best practices and venture acceleration support to companies that want to enter the space. Their activity could involve working with them to co-create digital assets to drive developments for payments, gamification of finance, decentralised finance and platforms. Startups can also trial their embedded finance innovations at this hub, gaining feedback from hub ecosystem participants on how to get these commercialised. 

The firm said the hub will also see collaborative efforts between non-financial service sector organisations (such as healthcare, agriculture, technology, media, and telecom or retail companies) and financial services businesses as they test new value propositions infused with the latest digital technologies.

"The next phase of the fintech disruption is moving beyond open banking to embedded finance. This unleashes new opportunities to create ecosystems for financial services to develop their as-a-service business and work with corporates to partner for new embedded finance initiatives; improving customer experience and creating new sources of revenue," Anton Ruddenklau, partner, global head of innovation, financial services, KPMG International, said.

KPMG said it will seek interested organisations to take part in the inaugural phase of the hub's activities.

The value of the embedded finance market is expected to exceed $7 trillion in the next 10 years, making it worth double the combined value of the world’s top 30 banks today (source: Fintech Futures, 13 April 2022).