Instead of being sent to a separate site, you can take care of financial tasks — like paying for a product, tipping a driver, or applying for credit — without ever leaving the app or website you’re on. If you have used a food delivery app to check out or noticed a Buy Now, Pay Later (BNPL) option at an online store, you have experienced embedded finance firsthand.
After spending years in banking, I find this shift both exciting and long overdue. It’s changing the way people expect to handle money and how businesses provide value. In this article, I will walk you through how embedded finance can benefit your business, how it is different from open banking, and which companies are using it well. I will also cover some of the risks and limitations and share a few insights into where the trend is headed next.
How embedded finance works
The easiest way to understand how embedded finance works is to think about the tools you already use every day. Instead of going to a separate banking website or app to complete a payment, apply for credit, or send money, embedded finance brings those actions into the platforms you are already using. From your point of view, it feels simple and seamless. Behind the scenes, it’s powered by financial providers using secure technology like Application Programming Interface (API).
Here’s what that process usually looks like:
- A non-financial business offers a financial feature like payments, loans, or insurance inside its app or website.
- The customer uses the feature during their normal activity, such as shopping or booking a service.
- A third-party financial provider powers the feature, handling compliance, money movement, applications, and underwriting in the background.
- The customer stays in the same experience, never having to leave the platform or interact with a traditional bank directly.
That setup benefits everyone involved.
- Customers save time and avoid friction.
- Businesses deliver a better experience and build loyalty.
- Financial providers reach more users without having to build the front-end platform themselves.
Pros & cons of embedded finance
Benefits
From my experience in banking, I’ve learned that people don’t want to jump through hoops to complete a payment or apply for credit; they want tools that work quietly in the background. That’s exactly what embedded finance delivers.
- Simplifies the experience. When financial services are built into a platform, customers don’t have to leave to finish what they started. That creates a smoother, faster process that feels natural, not forced.
- Opens up new revenue streams. Your business can earn through fees, interest sharing, or even partnerships with the financial providers powering the service. These extra income sources can grow alongside your core product.
- Strengthens customer relationships. When users can do more in one place, they’re more likely to return. Embedded finance helps build trust and encourages people to stick with the platforms that meet all their needs in one place.
- Gives businesses better insights. With embedded financial features, your company can collect meaningful data about how customers interact with money. That information can help guide future product decisions or tailor experiences to what people actually want.
In short, embedded finance turns everyday platforms into powerful ecosystems. It adds value without adding complexity, which is exactly what modern users expect.
Challenges & considerations
As much as I love how embedded finance is reshaping the way we do business, it is not without its complications. There are important risks and responsibilities to consider, especially if your small business is thinking about adding financial features to its platform.
From compliance to customer trust, here are a few things you’ll want to keep in mind.
- Can be complex to integrate and maintain, especially without support. You’ll need reliable APIs and developer support to ensure services run smoothly inside your platform. Also, embedded tools require regular updates, testing, and support, just like any other part of your product.
- Brings regulatory and compliance responsibilities, even if handled by a partner. You may not need a banking license, but you’re still responsible for working with partners who follow financial regulations. Additionally, handling payments or financial data means protecting users’ sensitive information at all times.
- Causes unhappy customers who may blame your brand if something goes wrong, even if it’s a third-party issue. If something goes wrong with a payment or loan, users will look to you, not your embedded finance partner, for answers.
Offering embedded finance is a smart move for many businesses, but it’s not a plug-and-play decision. You need the right partners, a clear plan for customer support, and a solid understanding of the responsibility you’re taking on.
What’s next for embedded finance?
From what I’ve seen in both traditional banking and newer fintech spaces, embedded finance is just getting started. The tools we’re seeing today, like integrated business banking, spend management, and real-time insurance, are only the beginning.
- New industries will join the trend. Over the next few years, I expect embedded finance to move deeper into industries that haven’t traditionally offered financial services.
- Healthcare platforms may start offering payment plans or financing right inside patient portals.
- Freelance and creator tools could embed instant payments, tax tools, or benefits enrollment.
- Construction and logistics platforms might add financing or insurance quoting directly into their workflows.
- Tools for small businesses will keep getting smarter. What stands out to me most is how this shift brings enterprise-level tools to small businesses. As integrations get easier and fintech partnerships expand, embedded finance will become a standard expectation, not just a nice-to-have feature.
- Early adopters will have the advantage. If you’re building a product or running a small business, this is the time to explore embedded finance. Platforms that adopt these tools early can improve the user experience, increase revenue, and build long-term loyalty.
Embedded finance vs open banking
Both embedded finance and open banking are transforming the way businesses and consumers interact with money, but they work in different ways. Embedded finance brings financial services directly into everyday platforms, whereas open banking connects different financial institutions to give users more control over their data and accounts.
| Embedded finance | Open banking | |
|---|---|---|
| Best for | Businesses wanting to offer financial tools inside their app or platform | Users wanting to connect accounts and manage money across providers |
| How it works | Financial services are integrated into non-financial apps via APIs | Banks share customer-permitted data with third parties through secure APIs |
| Primary goal | Keep users in one place to improve conversion and satisfaction | Let users move and view data across platforms for transparency and control |
| Products | Payments, lending, banking, insurance, and card issuing | Aggregated account views, payment initiation, and financial insights |
| Services | In-app checkout, BNPL, small business banking, and embedded credit cards | Budgeting apps, personal finance dashboards, and payment apps that connect banks |
| Key benefit | Seamless user experience with fewer steps to complete a transaction | Better visibility and control over multiple financial accounts |
Unsure where to begin with business banking? See our
best banks for small businesses
to find the best fit for your needs.
Who should consider using embedded finance?
In my experience, embedded finance isn’t just for large tech companies or banks. It’s a smart move for many SMBs, too, especially if you want to streamline operations, offer more value to your customers, or create new revenue streams without building an entirely separate financial product.
If you run a platform, service, or app where users already engage in transactions, embedded finance can help you do more without sending people elsewhere. I’ve seen it work well for:
- E-commerce platforms wanting to offer instant payments, financing, or even insurance at checkout
- Business software providers looking to build in banking, invoicing, or expense tools
- Marketplaces or service platforms where users pay, tip, or subscribe within the platform
- Small businesses seeking an all-in-one banking and budgeting experience without juggling multiple tools
Tools that bring embedded finance to life & their real-world use cases
If you’re ready to explore embedded finance for your business, the best tools can make all the difference. I’ve worked with enough banking products to know that choosing the right partner can save you time, money, and a lot of headaches.
Here are some top options I recommend exploring:
| Best for | Real-world use case | Our related resources | |
|---|---|---|---|
| Relay | Banking and bookkeeping in one place | Business banking | Relay business checking review |
| North One | Mobile-first banking with built-in tools for payments and budgeting | Embedded business payments | North One business checking review |
| Ramp | Flexible credit and built-in expense controls | Flexible business spending | Ramp review |
| Emburse | Managing multiple employees, frequent travel, or complex expense policies | Expense management | Best Spend Management Software - Emburse Spend |
| The Hartford | Reliable insurance options built into your business's workflow | Embedded insurance | The Hartford review |
| ERGO - Next Insurance | Seamless online insurance that's fast to quote, easy to buy, and designed for small business integrations | Instant insurance quotes | ERGO - Next Insurance review |
Relay: Best for banking and bookkeeping in one place
Standout features
- Multiple no-fee business checking accounts
- Automatic bill pay and approval workflows
- Real-time syncing with accounting software
- User permissions for teams or accountants
- Seamless embedded finance experience with no need to leave the platform
North One: Best for mobile-first banking with built-in tools for payments and budgeting
Standout features
- Designed for freelancers, startups, and small businesses wanting banking and cash flow
- Real-time budgeting with customizable envelope categories
- Embedded payments and transfers without switching platforms
- Integrations with QuickBooks and other accounting software
Ramp: Best for flexible credit and built-in expense controls
Standout features
- Unlimited virtual and physical corporate cards
- Real-time spend limits and automated approvals
- AI-powered expense categorization and duplicate detection
- Seamless integration with QuickBooks, NetSuite, and Xero
Emburse: Best for managing multiple employees, frequent travel, or complex expense policies
Standout features
- Smart expense tracking with policy enforcement
- Reimbursement automation and digital receipt capture
- Integration with platforms NetSuite and QuickBooks
- Customizable approval workflows and spending rules for teams
The Hartford: Best for reliable insurance options built into your workflow
Standout features
- Embedded business insurance offered through payroll and small business platforms
- Instant quoting and coverage options for general liability, workers’ compensation, and business owner’s policy
- Flexible policy management via digital tools and partner dashboards
- Deep experience serving SMBs across industries
- Ideal for businesses wanting protection built into the tools they already use
ERGO – Next Insurance: Best for seamless online insurance that’s fast to quote, easy to buy, and designed for small business integrations
Standout features
- Built specifically for embedded use; partners can offer insurance at the point of need
- Instant quotes and instant coverage with full online policy management
- Coverage includes general liability, professional liability, and commercial auto
- Partner integrations through APIs or embeddable widgets
- Ideal for businesses wanting to offer insurance on their platforms without redirecting users elsewhere
If you
’
re not ready to embed financial tools into your platform, starting with the right business banking setup is still a smart move. See our guide on
how to choose a bank for your small business
.
Frequently asked questions (FAQs)
Traditional banking requires customers to visit a bank’s website or app to complete a transaction. Embedded finance brings that same financial service directly into the platform the customer is already using.
No. Most businesses partner with fintech companies or licensed providers that handle the banking, compliance, and infrastructure. You don’t need to be a bank, but you do need to choose your partners carefully.
Not at all. Small businesses, software platforms, and even local service providers can use embedded finance tools to simplify payments, offer financing, or provide insurance. It’s about finding the right tools to match your business needs.
The biggest challenge is maintaining trust. If something goes wrong with a payment or insurance policy, customers will often turn to your business for support, not the third-party provider. That’s why it’s important to partner with companies offering strong compliance, support, and security.
