Integrated finance: a Revolution by 2026

30 November 2022 - 11:27

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According to forecasts by Bain & Company, the value of integrated finance in America will reach 7,000 billion in 2026, 10% of total financial transactions

Integrated finance: a Revolution by 2026

The term integrated finance refers to the use of instruments or financial services by a non-financial provider.

According to research carried out by Bain & Company, an American consulting firm founded in 1973, this type of finance is gaining a lot of popularity, so much so that in the coming years it will redefine the way consumers and companies manage their relationships with financial services.

Integrated finance offers many possibilities compared to the traditional one, such as a better customer experience, financial accessibility, as well as the reduction of costs and risks of companies along the entire value chain.

According to forecasts, the market for companies developing software platforms and enabling structures for integrated finance is growing; in fact, it will go from being worth 21 billion in 2021 to $51 billion in 2026.

The value of transactions related to ungrateful finance will also rise significantly: in fact, it will reach 7,000 billion dollars in 2026 and will represent 10% of US financial transactions.

Why the integrated finance sector is growing

Platforms for integrated finance can provide companies with previously unknown opportunities. For example, by adopting a payments platform, businesses can be more efficient, as they significantly reduce the time spent reconciling payments and invoices.

According to analysts, the expected increase will not take place only thanks to the increase in the volume of transactions, but also thanks to the penetration of integrated finance in specific sectors, such as payments in the segment Business-to-Business (B2B) and that of Buy-now-pay-later (Bnpl). Payments and loans will remain the two main segments within integrated finance.

Currently consumer payments are the predominant segment in integrated finance, in fact they are worth 60%. By 2026 it is estimated that they will reach 3,500 billion dollars, while, according to analysis, B2B Payments has lagged behind with transactions projected to reach 2.6 trillion by 2026.

In addition, commercial lending in integrated finance is expected to grow five-fold over the next five years, rising from $200 million in 2021 to $1.3 billion by 2026, thanks to the emergence of a number of new specialist suppliers.

The companies destined to benefit the most from this sector are certainly those that have invested in digital and data. Thanks to their knowledge and their economic possibilities they will be able to take advantage of the opportunities that will open up. On the other hand, traditional financial institutions could lose a huge number of clients, and with them profits, unless they in turn use integrated finance to rethink their core business and benefit from it.

What will happen in Europe

Although the analysis mainly concerns the US market, it is wrong to think that this should not also concern Europe.

In fact, many dynamics, especially in the economic sphere, tend to appear first in the United States, and subsequently in the other Western countries, such as EU members, naturally with the due proportions and differences.

In Europe there is already widespread talk of integrated finance and solutions such as Bnpl, which however still have a lot of untapped potential. European companies, especially the more avant-garde ones, can look at these trends as something to be exploited to try to acquire an advantage over their competitors.

Original article published on Italy 2022-09-16 09:40:00.
Original title: Finanza integrata: la rivoluzione entro il 2026

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