Embedded finance is reshaping how customers access financial services. As banking moves away from standalone experiences and into the digital platforms people use every day, what does this mean for the future of customer relationships?
As consumers increasingly expect seamless, personalised digital experiences, traditional, standalone banking services are no longer enough. From retail checkouts and travel bookings to business management software and digital marketplaces, embedded finance is bringing payments, lending, insurance and savings products closer to the customer’s point of need.
The shift raises a fundamental question for the banking industry, if financial services become invisible, who is responsible for managing customer relationships?
Changing customer expectations, advances in financial infrastructure and growing demand for convenience are accelerating the adoption of embedded finance. Consumers no longer want to leave an app, complete separate onboarding journeys or interact with disconnected providers when they can access financial products directly within an existing experience.
The market is already expanding rapidly. According to The Business Research Company, the global embedded finance market is expected to grow from $94.42bn in 2025 to $115.03bn in 2026, with the market forecast to reach $250.95bn by 2030. The report attributes this growth to the expansion of digital commerce ecosystems and platform-based business models, highlighting the growing role of embedded financial services across digital customer journeys.
George Toumbev, CCO at NatWest Boxed, said the industry is seeing a fundamental shift in how financial services are delivered.
“Embedded finance has moved from a niche innovation to a more mainstream part of how consumers can access financial products. At the same time, a broader change is underway within embedded financial services. While early implementation, which was led by FinTechs, focused on speed and innovation, the market is maturing as banks combine modern technology with regulatory expertise, operational resilience and the ability to scale services to millions of customers.”
However, embedded finance is not simply replacing traditional banking models. Instead, it is changing how banking capabilities are distributed.
“Banking is shifting towards embedded financial services, but embedded financial services are also shifting towards banking,” Toumbev said.
Brands are increasingly looking for regulated financial infrastructure that can support products such as payments, lending and savings, while banks are looking for new ways to deliver their capabilities through digital channels.
Moving finance closer to the moment of need
The appeal of embedded finance is centred on its key principle of reducing friction.
Rather than asking customers to seek out financial products separately, embedded finance places those services directly into the journey where they are most relevant.
For consumers, this could mean accessing a finance plan while purchasing a product, picking an insurance plan while booking travel or opening a savings account directly through a budgeting app.
For businesses, the opportunity is equally significant. Embedded finance allows companies to reach new customer relationships, increase conversion and create new revenue streams by offering additional finance options alongside their existing services.
Toumbev explained that embedded finance is becoming attractive because it creates value for both sides of the deal.
“For consumers, embedded finance provides convenient access to other financial products, like point-of-sale credit or high-interest savings accounts, without leaving the digital platforms they exist in. Particularly for businesses such as retailers that have a large customer base and frequent touch points, embedded finance is a natural extension which allows them to provide a tailored range of services at a customer’s point of need.”
The shift is also being accelerated by the changing expectations of consumers. Irene Skrynova, CEO Global Payments at Unlimit, argued that digital experiences outside financial services have raised the bar for what customers expect from banks.
“Every other interaction is now measured against that baseline, and anything slower or more generic reads as outdated. Because the gap between an AI-native experience and a legacy financial one is so visible, the cost of friction has become disproportionately high.”
As a result, embedded finance is becoming less about adding financial products and more about integrating them naturally into existing experiences. This is what customers now expect.
“Embedded finance is the natural response. Instead of pulling the customer out of the platform they’re already in, financial services are built directly into the moment of need. The service has moved from being adjacent to the business to being part of it,” Skrynova said.
Cost pressures accelerate flexible finance
One of the areas where embedded finance has gained significant momentum is lending.
As consumers face increased financial pressure, products such as buy-now, pay-later (BNPL), which allow customers to split a purchase into a series of instalments and other forms of embedded lending, have become increasingly common. Providers such as Klarna, Afterpay and Affirm have helped bring these payment options into mainstream retail and e-commerce experiences.
These products offer consumers greater flexibility when managing purchases, while giving merchants another way to reduce abandonment and increase conversion.
Philipp Buschmann, co-founder and CEO atAAZZUR said, “Cost-of-living pressures have made flexibility more valuable than ever. Consumers are increasingly looking for ways to spread the cost of everyday purchases, while businesses want financing options that help customers buy without delaying or abandoning purchases.”
As these products become more widespread, Buschmann said responsible lending will be critical to sustaining their growth. “As a result, BNPL, instalments and embedded lending have shifted from niche products to mainstream payment options.The key to their continued growth will be responsible lending, using real-time data to offer financing that is transparent, affordable and appropriate for each customer’s circumstances.”
Skrynova said cost-of-living pressures have helped move instalment products from niche offerings into becoming more mainstream. Worldpay found that global online spending through buy now, pay later (BNPL) reached $342bn in 2024, up from $2.2bn a decade earlier, highlighting how quickly instalment payments have moved into mainstream e-commerce.
“Cost-of-living pressures made BNPL structural. Instalments have moved into categories where embedded credit was previously less common: groceries, utilities, travel, healthcare. Once customers experience payment flexibility tailored to a specific purchase, they increasingly expect it to remain available.”
However, the growth of embedded lending also brings greater responsibility around affordability and transparency.
“BNPL is still evolving. The long-term winners will be those who use data and historical context to match the right payment flexibility to the right customer, with affordability and transparency built into the product from the outset,” Skrynova said.
Toumbev similarly highlighted that regulation will play an important role in shaping the next phase of the market.
“Brands are now under greater pressure to offer financial products that help customers spread costs while also delivering transparent, fair customer experiences. Within the next few years, we will see how these regulations further shape the industry and consumer’s relationship with purchases.”
Are banks losing their customer relationships?
While embedded finance has created opportunities for FinTechs and non-financial companies, industry leaders stressed that banks remain central to the ecosystem.
The question is not whether banks disappear, but whether they continue owning the customer relationship directly or become the infrastructure powering financial services behind the scenes.
Not all industry observers believe banks will retain the same level of influence as embedded finance develops. Aaron Holmes, CEO of Kani Payments, believes the biggest change is being driven by data ownership.
“Software platforms now own the customer relationship and the transaction data, so they can underwrite and service financial products banks couldn’t reach economically. Shopify originated $4.2bn in merchant lending last year. Square has lent over $22bn cumulatively with loss rates below 3%. That performance comes from workflow data no traditional lender has access to.”
For Holmes, the competitive advantage comes from understanding customers within the context where they already operate.
“The driver is data ownership, not appetite.”
Ben Helps, chief strategy officer at Hyperlayer, said customer behaviour is driving the shift.
“It’s shifting because customers go wherever the experience is easiest, not necessarily because they’ve made a considered choice about who provides their finance. If a retailer or travel site can offer them a lending or payment option at exactly the moment they need it, most people will take it there rather than open a banking app separately.”
However, Helps argued that banks still hold important advantages.
“They have the trust; the data and the regulatory relationships FinTechs would take years to build, if at all. What they’ve lacked is the ability to ship new products and services into someone else’s customer experience at the pace the moment demands.”
This creates an opportunity for banks to compete in a new way: by providing the infrastructure that enables embedded financial experiences.Toumbev agreed that embedded finance should not be viewed as a replacement for traditional institutions.
“Embedded finance is not replacing traditional banks but rather it is extending banking services into non-financial customer journeys through closer collaboration between banks and brands.”
Could the future of banking become invisible?
As embedded finance evolves, financial services are likely to become increasingly invisible.Rather than actively choosing between a bank and another provider, customers will increasingly interact with financial products through the platforms where they already spend their time.
Hyperlayer CEO Helps compared the future of embedded banking to the way digital services are integrated into everyday experiences.
“Think about what Apple CarPlay did. You don’t drive to Spotify’s offices to hear a song or pull over to check directions on Waze. Those features just showed up inside the car without you ever leaving it.”
He believes banking could follow a similar model.
“Financial products could head the same way: whoever owns the trusted environment keeps the relationship, whether or not they built every feature inside it themselves.”
However, this does not mean banks become irrelevant. Skrynova argued that the future will involve a balance between direct banking relationships and embedded experiences.
“…The balance is shifting fast. Customers will still choose banks directly for the decisions that matter long-term, such as savings, mortgages and complex products where trust and advice count. For everything else — daily payments, credit at checkout, payouts and transfers — they’ll increasingly use whatever’s already built into the platform in front of them.”
Chris Kronenthal, president atFreedomPay, said the future of embedded finance will depend on the infrastructure supporting these experiences.
“The bigger shift is that financial services are being pulled into the operating layer of commerce itself.”
He argued that successful embedded finance requires more than simply adding payment options.
“Embedded finance only works at scale if the infrastructure behind it can absorb complexity without pushing that complexity onto the consumer or the merchant.”
This will become increasingly important as businesses manage more payment methods, lending options, digital wallets and financial services across different platforms.
The challenge of invisible infrastructure
While embedded finance creates new opportunities, it also introduces new complexity.
As financial services become distributed across multiple platforms, questions around compliance, reconciliation, safeguarding and accountability become increasingly important.
Holmes highlighted that embedded products create new operational responsibilities.
“Every embedded product creates a reconciliation obligation, a safeguarding question and an audit trail that has to hold up under scrutiny.”
He pointed to the collapse of Synapse as an example of why infrastructure and transparency matter.
“Synapse collapsed with a customer shortfall between $65m and $95m, and the root cause was pooled accounts with no independentilure.”
For Kronenthal, the future of embedded finance will belong to companies that can connect different parts of the ecosystem while maintaining flexibility and resilience.
“The future belongs to platforms that can separate the customer experience from the underlying complexity, allowing merchants to change providers, add new capabilities, and optimise performance without starting over.”
Ultimately, embedded finance is not removing banks from financial services. Instead, it is changing where those services appear and who controls the customer experience.
As Toumbev concluded, trust will remain a huge factor in decision making.
“Customers will be able to access banking services through trusted brands and digital experiences, while banks provide the regulated infrastructure behind the scenes. Ultimately, trust will remain the deciding factor, and that comes when there is confidence in both the brand delivering the experience and the financial institution powering it.”
The future of banking may not be defined by whether customers choose banks or platforms. Instead, it may depend on which organisations can achieve a working combination of convenience, trust and infrastructure to deliver financial services wherever customers need them.
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