Why businesses cannot afford to ignore embedded finance

Embedded finance is making financial services an increasingly integral part of digital and commercial user journeys where they have been absent in the past. It involves integrating financial products and services into non-financial platforms, enabling individuals and businesses to access payments, credit, insurance, savings, and other financial solutions within the digital journeys they already use. The value here lies in fast, embedded, and low-friction access to these services at the point of need, rather than in a separate interaction with a bank or insurer.  

Whilst the shift to embedded finance is still unfolding, areas such as digital wallets and integrated checkout options are reinforcing consumer expectations for simple, fast, and trusted financial experiences. Recent analysis from the World Economic Forum points to strong long-term interest in embedded finance, reinforcing the scale of opportunity for consumers, financial institutions, and commercial platforms. Over the next few years, that shift is likely to deepen as financial products move further into digital platforms, customer journeys, and sector-specific ecosystems.

Embedded finance also sits within a longer commercial story. Since the 1950s, financial institutions and retailers have looked for ways to place credit and payment products closer to the point of purchase. American banks began issuing credit cards in the 1950s, and by the early 1970s policymakers were considering infrastructure for credit cards and other electronic point-of-sale payments, including debit cards. Later, digitisation and ecommerce moved financial activity into online journeys. Today, platform models have taken that logic further, integrating financial products directly into the digital experiences where people already shop, work, travel, and manage their organisations.

As ecosystems expand, value increasingly flows to those that control distribution, data, and customer experience. That creates a direct challenge for traditional providers. If a third-party platform owns the customer relationship, how can margin, influence, and long-term relevance be protected?

Organisations need to identify exactly where value sits within these complex networks. Participation alone is not enough. A clear strategy is needed to avoid becoming a commoditised back-end provider and to secure a role that supports sustainable profitability.

Adapting traditional models to global ecosystems

The growth of embedded finance spans multiple industries and regions. Non-financial digital platforms increasingly offer banking, credit, and insurance products; a trend that sits within a wider shift towards deeper and more complex digital frameworks. According to the International Telecommunication Union, around six billion people are using the internet in 2025, representing 74 per cent of the global population. That scale gives digital platforms a powerful route to place financial products where demand already exists.

In Asia Pacific, the growth of digital platforms and super app ecosystems shows how smoothly financial tools can operate within broader digital environments. Digital commerce is reinforcing this pattern. Recent payments analysis from Worldpay points to continued growth in digital wallet usage across online and point of sale transactions, showing how quickly embedded payment experiences are becoming part of everyday purchasing behaviour.

Over the next several years, this pressure will intensify. More industries will adopt embedded financial models, more platforms will seek to own distribution, and more providers will compete to supply regulated capability behind the scenes. Institutions that define their role early and invest with purpose will be better placed to shape commercial terms, protect economics, and scale with confidence.

That leads to the next strategic question. Once businesses enter an ecosystem, who owns the customer relationship, and how much influence is retained?

Managing customer ownership and platform dependencies

Customer ownership sits at the heart of the embedded finance model. Recent World Economic Forum analysis points to continued momentum in embedded finance, driven by partnerships between financial providers, fintechs, and digital platforms. Yet scale alone does not create durable value. In many platform-led models, the distributor rather than the regulated provider captures the strongest customer loyalty and the richest data signals.

These partnerships can open access to entirely new consumer bases. However, they can also create heavy dependency on platforms and third-party partners. Customer expectations add to that pressure. Worldpay’s 2026 Global Payments Report shows continued growth in digital wallet adoption across ecommerce and point of sale transactions, reflecting a broader shift towards faster, more integrated payment experiences. Users increasingly expect financial services to be simple, fast, and built into the digital experiences they already trust.

To protect value and influence, organisations need strategic partnerships with the right platforms and clear commercial discipline. Agreements should define data sharing practices, customer access, and revenue splits from the outset. This collaborative approach helps firms maintain visibility and influence over the end-user experience. It also helps protect the economic value of origination, servicing, and cross-sell opportunities before they shift to the platform layer.

Looking ahead, control of the customer interface is likely to become even more important. Platforms that combine reach, data, and a strong user experience will be in a powerful position to shape product design, pricing, and loyalty. Financial institutions will need to decide whether they want to own the interface in selected niches, power it in the background at scale, or build hybrid models that preserve both relevance and resilience.

Once customer ownership becomes more fragmented, governance and risk move higher up the agenda. That is where many embedded finance strategies are tested.

Balancing innovation with regulatory risk

Expanding digital footprints mean balancing innovation with risk management and regulatory compliance. Recent developments in Buy Now, Pay Later illustrate how this shift is already playing out in practice. As regulatory scrutiny increases, providers are being brought more firmly within the regulatory perimeter, with requirements around affordability checks, clearer customer communication, and alignment with Consumer Duty shaping how products are designed and distributed. This is not just a compliance exercise. It directly influences which firms can scale sustainably and which struggle under increased operational and governance demands.

In EMEA, regulation continues to shape embedded finance growth. Authorities remain focused on consumer protection, governance, operational resilience, and compliance, as reflected in the Financial Conduct Authority’s Consumer Duty and the European Banking Authority’s work on outsourcing and third-party risk.

In the UK, UK Finance’s Annual Fraud Report 2025 reported that criminals stole £1.17 billion through fraud in 2024, with authorised fraud losses reaching £450.7 million and remote purchase card fraud losses rising to £399.6 million, continuing to place pressure on firms to strengthen controls across digital journeys. The introduction of the UK’s compulsory reimbursement scheme for authorised push payment (APP) fraud further reinforces the direction of travel: firms are expected not only to detect and prevent fraud, but also to demonstrate stronger accountability for customer outcomes when things go wrong.

Financial leaders face a dual challenge. They must respond to changing regulation while managing the operational complexity that comes with integrated systems and multiple partners. That challenge is growing. The European Banking Authority’s guidelines on outsourcing arrangements underline that firms remain accountable for outsourced activities and need governance, oversight and exit planning that match the criticality of the service. Wider regulatory and market commentary, including the Financial Conduct Authority’s Consumer Duty and the World Economic Forum’s analysis of embedded finance, also points to resilience, profitability, and regulatory discipline as defining themes as embedded finance matures.

Clear governance is therefore not a compliance exercise alone. It is a commercial necessity. Automated compliance tools and robust risk management strategies can give organisations greater confidence to operate securely across borders. Firms need to protect their assets, reputation, and future by anticipating regulatory shifts before they disrupt operations. Transparent partner oversight, resilient control frameworks, and clear accountability matter just as much as speed to market.

Regulation is also likely to become more targeted and more demanding as embedded models scale. Supervisors will continue to focus on accountability, outsourcing, resilience, consumer outcomes, and the fair use of data. Firms that treat governance as a source of strategic strength, rather than a barrier to growth, will be better equipped to expand sustainably.

If those foundations are weak, profitability will be difficult to sustain. If they are strong, they create the conditions for more resilient growth.

Securing sustainable profitability

The ultimate goal is sustainable profitability. Legacy revenue streams will not be enough inside a digital ecosystem. Margin pressure is real, especially where providers supply regulated capability but do not control the customer interface. Sustainable returns often depend on choosing the right role in the value chain, whether that is underwriting, balance sheet provision, servicing, compliance, technology enablement, or a differentiated mix of these.

Data-led decision-making is now central to that effort. Recent European Banking Authority analysis shows that institutions with stronger governance, better data quality, and more effective digital controls are better placed to manage risk and support scalable innovation. That direction is reinforced by 2026 regulatory focus on resilience, outsourcing, and accountability across increasingly connected financial models. Organisations can use analytics and artificial intelligence to improve pricing, refine credit decisions, streamline compliance, and reduce loss exposure. Used well, these tools can improve both efficiency and resilience.

The direction of travel is clear. We have entered a transformative business age, and embedded finance is changing how financial institutions create, protect, and capture value. Over the next few years, the strongest players are likely to be those that make deliberate choices about where they will lead, where they will partner, and where they will provide specialist capability at scale. Some institutions will focus on owning customer segments or journeys. Others will succeed as trusted infrastructure, compliance, or balance sheet providers. The most resilient will understand where they can defend margin, build influence, and create long term strategic value.

To stay competitive, organisations need to revisit their business models, define the role they want to play in ecosystem-driven markets, and build partnerships that support long term growth. We can help organisations navigate regulatory change, balance risk and reward, and shape an embedded finance strategy that delivers lasting results.

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