What’s Driving SMB Demand for Embedded Finance in 2023?


January 27, 2023

Small and midsize businesses turn to embedded finance to solve pain points. Here are 3 of the top key challenges SMBs are facing in 2023 and the opportunity.
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Download the latest Embedded Finance Tracker®, a Galileo and PYMNTS collaboration. 

Small and midsize businesses (SMBs) face significant challenges when it comes to making payments, which often can be a high-friction, time-consuming and error-prone process. To solve these payment challenges, SMBs increasingly are looking to embedded finance solutions–and this growing demand is giving rise to what many see as one of the biggest opportunities in the payments industry. 

Solving SMB Payment Pain Points

Recent survey data reveal the key payments challenges SMB are facing, including:

  • High costs 

  • Time-consuming processes

  • Lack of financing options

Embedded finance tools offer the potential to significantly mitigate these pain points for SMBs by integrating payments into the non-financial systems SMB use to run their business, thereby streamlining the payment process, reducing costs and opening up new financing opportunities. 

“Small business owners are desperate for ways to drive more efficiency in order to realize critical financial savings and have more precious time to devote to actually running their company,” noted Scott Johnson, senior vice president of business development for Galileo Financial Technologies. “Now the technology is there to do that by embedding payments into the other non-financial systems SMBs use every day to manage aspects of their company."

The Market Potential of SMB Embedded Finance 

The potential business benefits of B2B embedded finance solutions aren’t being lost on the SMB sector, where interest in - and demand for - such solutions is growing quickly. 

A recent study found that 60% of SMBs said they desire embedded financial services to help them smooth their payments processes, while 50% believed embedded solutions would offer enhanced payment data that could drive actionable insights into their operations. 

What’s more, another recent study found that 52% of SMBs with between 50 and 249 employees were interested in banking through a non-financial services provider–and 57% were willing to pay a premium for the convenience of such an arrangement:

What’s-Driving-SMB-Demand-for-Embedded-Finance Galileo- (1)
What’s-Driving-SMB-Demand-for-Embedded-Finance Galileo- (1)

This increasing appetite for new embedded solutions represents a major opportunity for payments and financial service providers serving the segment.

Overall, the level of pent-up demand for these embedded finance tools in the B2B sector represents one of the highest growth potential opportunities in the financial services industry today...
Scott Johnson
VP of Business Development
Want to Learn More?

For more insights on the growing SMB demand for embedded finance solutions, download the latest Embedded Finance Tracker®, a Galileo and PYMNTS collaboration. 

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