2025

April 25, 2025

Every time you click, swipe, or tap, you’re participating in an evolving financial experience. The embedded finance market in GCC is expected to grow to USD 2 bn by 2030 at a 30% annual growth rate from USD 250 m in 2022 (Source: Roland Burger). Financial products are becoming invisible and being embedded into everyday platforms, or vice versa. And the fundamental change isn’t just technology—it’s how financial products are delivered and, more importantly, where they are delivered.

When Industries Become Financial Distribution Channels

What makes this evolution so powerful is that platforms are becoming the new distribution channels for financial services.

Take mobility platforms offering car loans to drivers. Or a software platform becoming the gateway for SME banking. Even a healthcare app embedding insurance into treatment plans. These industries have emerged from channels to ecosystems that customers trust and engage with daily.

Take mobility platforms like Uber or Ola, which now offer vehicle loans and insurance products directly to their drivers, often faster and more conveniently than traditional lenders. Shopify, originally an e-commerce enabler, has evolved into a powerful financial services hub, offering merchants embedded banking, lending, and payments through Shopify Capital. Zoho and Tally, popular among Indian SMEs, are increasingly integrating financial tools like invoice financing and payment reconciliation directly into their core accounting software.

Even healthcare apps are moving into this space — Practo and 1mg, for example, are exploring insurance partnerships that allow patients to finance treatments or access micro-insurance at the point of care. These industries have evolved from being mere service providers to trusted ecosystems that customers interact with daily, becoming natural gateways for financial products.

And here’s the reality: they’re doing a better job of capturing user attention than banks are.

Why Banks Can’t Sit This Out

Embedded finance changes the role of banks from financial product distributors to financial product enablers, manufacturers, and compliance layers. And unless banks adapt, they risk becoming invisible. The products may still be theirs, but the customer experience, the journey, the loyalty? That could belong to someone else.

The winners will be the banks that evolve:

• From product manufacturers to experience enablers
• From owning the customer interface to powering ecosystems from behind the scenes
• From chasing users to meeting them exactly where they are

It is imperative for banks to consider building the rails, the compliance layer, the intelligence and integrating them seamlessly into someone else’s digital experience.

The FinTech Opportunity: Build the Plumbing, Not Just the App

For FinTechs, the play is clear. The bigger opportunity lies in becoming the infrastructure layer—the rails and intelligence that power finance behind the scenes.

Think decision-making engines for marketplaces. Real-time credit embedded into platforms. Smart KYC workflows are triggered inside CRMs. This is where scale lives—and where future value will be built.

Case in Point: Mashreq’s Embedded Supply Chain Financing

We’re already seeing this play out in the GCC. In the UAE, Mashreq Bank has partnered with Invoice Bazaar to offer supply chain financing directly embedded into B2B ecosystems.

Instead of applying for credit separately, SMEs get access to working capital at the point of invoice generation. The underwriting decision is instant with a frictionless experience. Finance becomes part of the workflow, not a step outside of it. It’s finance reimagined to match the tempo of modern business.

What Leaders Need to Ask Now

For decision-makers in banks and FinTechs, this shift demands bold thinking and fast execution. Some questions to bring to the next leadership offsite:

• Are we integrated into the digital journeys our customers already live in?
• Can someone use our financial products without ever visiting our app?
• Are we seeing non-financial platforms as competition or as our next growth partners?

The Bottom Line: Finance Has to Follow the Customer

Here’s the truth: the future of finance is being built inside digital platforms where users shop, work, move, and live.

Those who embrace embedded finance will lead it.

Already, in sectors like retail, logistics, and healthcare, financial services are being woven directly into digital experiences — often invisibly to the end user. Andreessen Horowitz highlights that embedded finance has the potential to boost customer engagement and retention by up to 20% as financial services become part of native workflows. Staying relevant means adapting to a world where banking is a feature embedded seamlessly in digital workflows.

April 11, 2025

As the Digital Finance Landscape accelerates, one phenomenon is reshaping how consumers engage with financial services: the rise of the SuperApp. These integrated platforms blend Financial, Lifestyle, and Commercial Services into a single user experience—driving higher engagement, loyalty, and digital inclusion.

According to a recent whitepaper co-authored by IBS Intelligence and Mobifin, 79% of consumers express interest in using a single app to manage daily activities, while 77% say they would increase their usage of SuperApps if a broader set of lifestyle and other needs were integrated in the same app. This shift is more than a convenience play—it’s a call for ecosystem thinking, where banks, FinTech’s, and platform providers reimagine their roles in the digital economy.

Asia has the highest number of implementations for superapp innovation. WeChat in China and Grab in Southeast Asia have evolved into multi-service platforms by embedding finance into social, mobility, and retail experiences. WeChat’s mini-program architecture allows third-party services to thrive within a single interface, while Grab’s use of operational data enables real-time underwriting and tailored micro-finance products.

These platforms show that the future of Finance lies not in isolated apps, but in integrated ecosystems—where banking is contextually woven into everyday life.

India is rapidly emerging as one of the most exciting markets for super app innovation. With over a billion mobile connections and a robust digital infrastructure, India’s FinTech growth is underpinned by a unique blend of public policy, entrepreneurial momentum, and user readiness.

The foundation lies in India Stack—a suite of interoperable public digital goods including Aadhaar (identity), UPI (real-time payments), and eKYC. These layers enable rapid onboarding, seamless compliance, and cost-efficient delivery of services across urban and rural populations.

Paytm, a frontrunner in this space, has evolved into a multi-vertical platform offering payments, lending, insurance, investments, ticketing, and commerce. Its ability to serve semi-urban and rural users exemplifies the inclusive promise of the super app model. Meanwhile, PhonePe has built a robust financial and merchant ecosystem, and Tata Neu brings cross-sector capabilities by integrating retail, travel, finance, and healthcare into a unified digital experience.

Government-led initiatives like the Digital India Mission and ONDC (Open Network for Digital Commerce) are pushing the envelope further by encouraging open-access platforms and reducing digital monopolies. This supportive policy environment has enabled India’s FinTech players to test, scale, and innovate at an unmatched pace.

The Indian model offers global players an important reference point—how digital infrastructure, when combined with agile platforms and interoperable policy frameworks, can drive both scale and inclusivity.

Markets across the Americas and Europe face more complex regulatory environments and stronger consumer preferences for app specialization. However, open banking initiatives and real-time payment systems (e.g., FedNow in the U.S.) are laying the groundwork for change.

Platforms like Revolut, Cash App, and PayPal are gradually expanding into savings, crypto, remittances, and wealth products. While they haven’t yet reached the scale or breadth of their Asian counterparts, their strategic direction signals a growing interest in integrated digital ecosystems.

The competitive advantage for banks lies beyond transactions—in creating seamless experiences that integrate finance with everyday life. It demands a platform-first thinking.

India’s FinTech landscape provides a compelling example of how inclusive growth, platform strategy, and infrastructure alignment can power the next wave of global super apps. For financial institutions around the world, the opportunity lies not in replicating Asia’s success, but in interpreting its core principles in a way that aligns with local consumer needs, regulatory frameworks, and ecosystem dynamics.

March 28, 2025

Lending decisions involve assessing both a borrower’s ability to pay (capacity to repay) and their willingness to pay (intention to repay), with lenders evaluating factors like income, credit history, and business plans to determine creditworthiness.

For decades, lending decisions have relied on a rigid framework of determining borrowers’ ability to repay with factors like credit scores, financial statements, and collateral. While effective for traditional borrowers, this model excludes millions of viable businesses and individuals who lack extensive credit histories. The rise of artificial intelligence (AI) and alternative data is forcing banks and fintech firms to rethink risk assessment, unlocking new opportunities in credit access while demanding a fundamental shift in underwriting strategies.

The Limitations of Traditional Credit Scoring

Credit scoring models—primarily driven by FICO frameworks — are backward-looking. They assess past borrowing behaviour but often fail to capture a borrower’s current and future financial health. This creates inefficiencies:

• Thin-file and no-file borrowers: Millions of small businesses and individuals lack sufficient credit history, making them invisible to traditional lenders.
• Static risk assessment: Traditional models rely on historical repayment data rather than real-time financial activity, missing dynamic changes in a borrower’s ability to repay.
• Collateral dependency: Many lenders still require collateral, excluding businesses that operate on cash flow rather than fixed assets.

With the explosion of digital transactions and AI-driven analytics, these limitations are no longer justifiable.

AI and Alternative Data: A New Approach to Credit Risk

AI is transforming credit risk models by incorporating alternative data—real-time financial behaviours, digital interactions, and business performance metrics that go beyond static credit reports. This approach allows for a more dynamic and inclusive assessment.

1. Real-Time Transaction Analysis

AI-powered models analyse continuous transaction flows from bank accounts, payment processors, and accounting software. Rather than focusing solely on past credit events, lenders can assess real-time cash flow, spending patterns, and revenue consistency. This is especially valuable for small businesses that may not have years of financial statements but demonstrate healthy, recurring income.

2. Behavioural and Digital Footprints

With machine learning, lending models can evaluate signals beyond traditional financial statements:

• E-commerce sales and platform reviews: A business’s performance on platforms like Shopify, Amazon, or Etsy can indicate stability and growth potential.
• Social media and customer engagement: Frequent, positive customer interactions and online presence suggest business vitality.
• Utility and rental payments: Regular, on-time payments for rent, electricity, and internet provide alternative indicators of creditworthiness.

3. AI-Powered Predictive Risk Models

AI excels at recognizing patterns that human underwriters and legacy algorithms miss. By analyzing billions of data points, AI-driven credit models can:

• Detect early warning signs of financial distress.
• Adjust risk scores dynamically based on real-time data.
• Identify low-risk borrowers that traditional models might reject.

For lenders, this translates into lower default rates, more precise risk pricing, and increased lending opportunities.

Birds Eye View on Middle East – Where is the adoption?

While banks are catching up, regulators are front running the push towards adoption. The Central Bank of Egypt (CBE) has permitted banks to incorporate alternative data sources into their credit scoring models, including customer behavior, social data, and financial and non-financial transactions. By leveraging such diverse data points, Egyptian banks can offer tailored financial products and expand credit access to underserved segments of the population.

Similarly, Mashreq Bank analyzes six months of bank statements using an advanced analytical engine. This process provides a comprehensive 20-line summary, offering insights into turnover trends, buyer and supplier relationships, payment regularity, and the frequency of bounced checks. By focusing on transactional data, Mashreq Bank gains a nuanced understanding of an SME’s operational dynamics and financial behavior, leading to more accurate credit evaluations and expanded access to financing for SMEs that might otherwise be excluded due to inadequate financial documentation.

Challenges and Considerations

While AI and alternative data offer a more inclusive and predictive lending model, they also introduce new complexities:

• Regulatory scrutiny: Financial regulators demand transparency in AI-driven credit decisions. Lenders must ensure their models are explainable and free from bias.
• Data privacy: The use of alternative data requires strict compliance with privacy laws like GDPR and CCPA. Borrowers must have clarity on how their data is used.
• Model accuracy and fairness: AI models can inadvertently reinforce biases if not trained on diverse, representative datasets. Continuous monitoring and recalibration are essential.

AI and alternative data are not just enhancing credit assessment—they are rewriting the rules of lending. Banks and fintechs that fail to embrace these innovations risk losing market share to data-driven competitors. The future of credit is:

• Proactive, not reactive—Lenders will assess borrowers based on real-time financial health, not outdated reports.
• Inclusive, not exclusive—AI-driven lending will extend capital to underrepresented small businesses and individuals.
• Dynamic, not static—Credit models will evolve continuously, adapting to economic shifts and borrower behaviors in real time.

Traditional credit scores are becoming obsolete. The question is: Will your institution adapt to the new era of lending, or will it be left behind?