Embedded finance is rapidly changing the way consumers and businesses alike interact with financial services. As traditional banking processes are replaced by more integrated financial solutions, companies across industries are embedding payment processing, lending, insurance, and investment services directly into their platforms.
The rise of embedded finance represents a dramatic shift away from standalone banking applications, to a world where financial solutions are integrated into everyday apps and services.
From food delivery apps offering instant driver payouts, to all of the buy now, pay later (BNPL) services integrated into online checkouts across the internet, it’s clear to see that the embedded finance revolution is already well underway.
But what has driven this rapid uptake of embedded finance? To find out, we reached out to some industry experts.
Ease and convenience
Luke Voiles, CEO of Pipe
Luke Voiles, CEO of Pipe, the embedded financial solutions provider, breaks down the three biggest factors the company has seen driving embedded finance adoption: “At Pipe, we’ve identified three primary drivers accelerating embedded finance adoption: ease of integration, and customer demand for both a seamless user experience and pre-approved offers,” he explains.
“Customers increasingly expect financial services embedded seamlessly into platforms they already use, reducing friction and enhancing user experience. Technological advancements in APIs and real-time data analytics allow businesses to integrate sophisticated financial products effortlessly.
“SMBs are also driving demand for embedded finance because it simplifies their access to working capital, relying less on traditional lending processes and more on their real-time performance data.”
Steve Morgan, global banking market industry lead at Pegasystems
Steve Morgan, global banking market industry lead at Pegasystems, also shares this sentiment: “The main factors driving the rapid adoption of embedded finance is customer convenience for simple and easy to access finance offering and competition for that business.
“There is no doubt that underlying this is the technical capability to more easily embed an offer for financing something. It’s far easier to integrate into a point of sale or a web or an app-based offering than ever before.
“But I think the convenience and having it happen seamlessly from a customer point of view is the main driver of both uptake and then competition in this space.”
Big brand influence
The biggest brands in e-commerce and payments have played a significant role in proving the potential of embedded finance, says Ugne Buraciene, group CEO of payabl., the European payments provider.
Ugne Buraciene, group CEO at payabl.
“The rapid adoption of embedded finance is being driven by several factors. Now that early adopters of the model, such as Shopify and Amazon Pay, have proven the model’s success, embedded finance is moving further into the mainstream.
“Businesses are increasingly adopting embedded finance to create frictionless experiences for consumers, which includes enabling them to make payments without having to go to a separate site or portal. This is helping unlock new revenue streams for businesses, while strengthening customer relationships.
“As a result, one area of embedded finance that is seeing a lot of growth at the moment is Buy Now Pay Later. At a time where there is a high cost of living across Europe, payments services that help spread the cost are becoming more and more popular, especially when they are embedded into existing services, such as an e-commerce platform. Despite rapid growth, the sector still holds vast untapped potential.”
Responsible use is key
Steve Wishart, head of financial services at credit reference agency TransUnion UK, also points to the demand for seamless experience as a key factor: “A major driver for embedded finance is consumers demanding a seamless experience when shopping or using services via apps. A key step along the way was the rise of open banking, which liberated a lot of the data that was previously held within banking apps.
Steve Wishart, head of financial services at TransUnion UK
“But while having this data available is crucial, so is making sure it is being used responsibly. Embedded finance can be used by consumers to borrow money as part of payment journeys. Buy now, pay later is a prime example of embedded finance being used in this way and is a market that is expected to reach $560billion globally – more than £430billion – in 2025. Embedded Finance is also being deployed to service payments for higher-value goods, so ensuring a safe, secure customer experience is essential to help mitigate potential fraud risks or basket abandonment from genuine consumers.
“Access to the most up-to-date information from Credit Reference Agencies (CRAs) like TransUnion, including credit history and repayment behaviour, is doing essential work behind the scenes, helping to empower lenders to make informed decisions about creditworthiness. This can help to mitigate the risk of defaults and help ensure affordability. CRAs can also help identify potential fraud, safeguarding both consumers and businesses from financial losses.
“Of course, the customer experience needs to remain friction right while checks are taking place. As such, it is just as much a part of helping to drive adoption that CRAs, banks and consumer-facing apps are able to keep these processes streamlined.”
Keeping customers on your platform
Marc Conway, chief commercial and product officer at FinXP
“Many consumer-facing companies, such as retailers and digital platforms, are beginning to offer financial services within their platforms,” adds Marc Conway, chief commercial and product officer at FinXP. “They’re not trying to become banks, but rather they want to offer their customers added convenience while unlocking new revenue streams. Services like integrated payments or branded cards help keep customers within their platform while making transactions simpler.
“This shift is possible thanks to fintechs, which offer the technical and regulatory infrastructure needed to embed financial products through straightforward API connections.
“In Europe, the regulatory landscape has made it easier for non-financial businesses to offer these services safely. As a result, financial tools are becoming part of the everyday digital experience, without the need for customers to look elsewhere.”
Seeking a competitive edge
Neil Chandler, CEO of Aion Bank
“Embedded finance in Europe is estimated to reach €100billion by 2030, and these predictions are being driven by consumer appetite,” said Neil Chandler, CEO of Aion Bank. “Retailers and marketplaces seeking a competitive edge have turned to embedded finance to make their customer journeys better. Consumers, in turn, particularly Millennials and Gen Z, responded with their wallet, leading to increased conversion and repeat visits.
“Our research found that (52 per cent) of 25 to 34-year-olds prefer using financial products and services from their favourite brands over traditional banks, while 50 per cent will only stay loyal to brands offering embedded financial products and flexible solutions like BNPL and cashback.
“For brands, the benefits of embedded finance are clear – higher average order value and average order frequency. Seamlessly integrated financial products that meet customers at the point of need drive conversion and revenue, as well as enhance loyalty and retention. For consumers, they get access to quality financial solutions, which gives them greater choice when they shop or do business.”
BNPL has been ‘game-changing’
“Embedded finance has rapidly transformed the retail landscape and has been driven by changing consumer behaviour and fast-paced tech innovation in payments. BNPL has been a game-changing embedded finance service in the payments sector,” explains Rich Bayer, UK country manager of Clearpay, the BNPL provider.
Richard Bayer, UK country manager at Clearpay
“It offers payment flexibility without upfront costs or interest, aligning with the preferences of digitally savvy, younger generations. This flexibility allows customers to spread their payments over four instalments in six weeks.
“A 2024 EY study found 69 per cent of Gen Z use debit cards frequently, while only 39 per cent regularly use credit, marking a decisive shift toward alternative payment methods and options that do not charge interest.
“At the same time, shopping habits are changing. Online commerce has changed significantly since the pandemic, with social media reshaping how consumers discover and engage with brands. Platforms like TikTok and Instagram have become shopping destinations, which 40 per cent of Gen Z respondents cite as major influences on purchasing decisions.
“Feeding into social e-commerce shopping preferences, BNPL as a form of embedded finance, enhances the customer experience by making shopping seamless, accessible and financially feasible. As embedded finance continues to evolve, BNPL stands at the forefront of a more inclusive, flexible and consumer-driven future in retail.”
API advancement
Elie Bertha, chief product officer at Thunes, the global payment infrastructure provider, explains how advancements in API technology have also played a part.
Elie Bertha, chief product officer at Thunes
“Enhanced customer convenience and experience are key drivers of embedded finance. It allows customers to access financial services within their everyday activities, eliminating friction, and offers personalised finance products tailored to individual needs. For example, it provides faster access to credit or insurance without traditional bureaucratic challenges.
“Rapid advancements in API technology also drive adoption, making it easier for financial services to integrate within apps and services globally. Non-financial companies embedding financial services can open new revenue streams, diversify income, and gather valuable financial data to personalise offerings.
“Meanwhile, supportive regulatory changes and open banking initiatives, like PSD2 in Europe, promote open banking and API-based financial services, encouraging mass adoption from a top down approach.”
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