Banks across the financial sector are rapidly integrating their services into non-banking platforms, marking a fundamental shift in how traditional financial institutions compete in an increasingly digital marketplace.
Industry experts, for instance, Forbes observers point to embedded finance—the integration of banking services directly into everyday digital experiences—as a critical strategy for banks seeking to maintain relevance amid changing consumer expectations and intense competition from financial technology companies.
What to Know:
- The global embedded finance market is projected to reach $7 trillion by 2030, according to research from Dealroom and ABN AMRO Ventures
- Major institutions including Goldman Sachs, JP Morgan, and BBVA have already formed strategic partnerships with technology platforms
- Banks that fail to adopt embedded finance risk becoming "invisible" as consumers increasingly expect financial services to be integrated seamlessly into their digital experiences
The transformation represents a departure from traditional banking models where customers physically visited branches. Financial institutions now seek to meet consumers where they already spend their digital lives—on e-commerce sites, within accounting software, and through various digital platforms.
"Embedded finance is a disruptive force financial institutions can't ignore," states a recent article published by the World Economic Forum, highlighting the growing importance of this strategy within the banking sector.
Strategic Drivers and Competitive Pressures
Several powerful market forces are compelling banks to pursue embedded finance strategies. Consumer behavior has fundamentally shifted toward expecting instantaneous, contextual financial services integrated directly into their digital experiences. Customers increasingly resist switching between multiple platforms to complete transactions, preferring seamless experiences.
Digital platforms like Shopify and Salesforce have established themselves as the infrastructure of the modern economy. Financial services offered within these ecosystems enjoy natural advantages in terms of convenience and user engagement.
Meanwhile, fintech companies have rapidly capitalized on embedded finance opportunities. Firms such as Stripe, Square, and Adyen now offer banking-like services despite not being traditional banks themselves.
Their agility has allowed them to quickly integrate financial capabilities into various platform environments.
Regulatory modernization has further accelerated this trend. Markets including the United States, United Kingdom, and Europe have implemented open banking frameworks and updated licensing requirements that make it easier for banks to offer services through APIs and strategic partnerships. This evolving regulatory landscape has removed many previous barriers to embedded finance initiatives.
For traditional banks, embedded finance transforms technology from a perceived risk into a significant revenue opportunity. "This is not just about adding distribution channels," notes the article. "It's about monetizing the bank's core competencies—credit, trust, compliance, and risk management—in new environments."
Implementation and Real-World Examples
Banks considering embedded finance can gain several competitive advantages. By integrating their services into existing digital platforms, financial institutions can reach more customers without expanding physical infrastructure or launching costly marketing campaigns.
They also gain access to real-time data on user behavior and transaction patterns that traditional banking relationships might miss.
The strategy also creates opportunities for collaboration rather than competition between banks and fintech companies. Several high-profile partnerships demonstrate this approach in action.
Goldman Sachs' partnership with Apple for the Apple Card and Apple Savings exemplifies how a traditional bank can embed its financial products directly into a consumer technology ecosystem. BBVA has taken a similar approach by partnering with embedded finance infrastructure provider Solaris to deliver banking-as-a-service across European markets.
JP Morgan's collaboration with payroll and HR platform Gusto further illustrates this trend, embedding small business banking and payment capabilities directly into tools that businesses already use daily. These partnerships represent significant revenue-generating strategies with long-term implications for the banking sector, not merely technological experiments.
Banks looking to implement embedded finance strategies should begin with focused approaches. Industry experts recommend starting with a single high-impact vertical such as small business lending or B2B payments rather than attempting comprehensive implementations. Institutions must also decide whether to build proprietary APIs and tools or partner with specialized embedded finance providers.
Success in embedded finance initiatives requires coordinated execution across various departments. Banks need cross-functional teams spanning product development, compliance, legal, technology, and partnership management to effectively implement these strategies.
The Future of Banking
Embedded finance represents more than just a new distribution channel—it fundamentally redefines how and where banking occurs. This approach pushes financial institutions to become infrastructure providers rather than merely service providers, representing a profound shift in organizational identity.
The transition offers liberation from traditional constraints. Banks no longer need to directly own customer relationships to create value. Similar to how cloud providers enable software companies behind the scenes, banks can position themselves as the trusted infrastructure supporting the next generation of commerce and digital experiences.
As financial services become increasingly decentralized, banks that successfully embrace embedded finance will position themselves not merely to survive but to lead industry transformation. The financial institutions that act decisively on this strategic inflection point stand to benefit most from this fundamental shift in banking's future.
Final Thoughts
The embedded finance revolution represents a critical turning point for traditional banks facing digital disruption. By integrating their services directly into the platforms where consumers and businesses already operate, banks can maintain relevance while leveraging their core strengths in regulation, security, and financial expertise. For banking executives, the message is clear: adapt to this new embedded reality or risk fading into the background of tomorrow's financial landscape.