Embedded Finance and Payments Modernization in Non-Banking Sectors: Industry-Specific Opportunities and Challenges

Introduction: The New Face of Finance

The financial services landscape is undergoing a profound transformation. No longer confined to the walls of banks, financial products—especially payments—are now seamlessly woven into the digital journeys of retail, e-commerce, supply chain, and other non-banking sectors. This shift, known as embedded finance, is redefining how businesses and consumers interact with money, unlocking new value for all participants in the ecosystem.

The Rise of Embedded Payments: Beyond the Bank

Embedded finance refers to the integration of financial services—such as payments, lending, and insurance—directly into non-financial platforms and customer experiences. In retail and e-commerce, this means consumers can pay, finance purchases, or access loyalty rewards without ever leaving the merchant’s app or website. In supply chain and B2B commerce, embedded payments and working capital solutions are being built directly into ERP and procurement platforms, streamlining operations and improving cash flow.

This trend is not new—co-branded credit cards and point-of-sale financing have existed for decades—but the digital acceleration of commerce has given embedded finance unprecedented scale and relevance. Today, the ability to offer frictionless, context-aware financial services is a key differentiator for non-banking brands and a new battleground for banks and fintechs alike.

Industry-Specific Opportunities

Retail & E-Commerce

Seamless Checkout: Embedded payments eliminate the need for manual card entry, reducing cart abandonment and increasing conversion rates.
Buy Now, Pay Later (BNPL): Retailers can offer instant credit at checkout, boosting average order values and customer loyalty.
Loyalty Integration: Payments, rewards, and personalized offers are unified in a single digital journey, deepening customer engagement.

Supply Chain & B2B Commerce

Integrated Working Capital: Suppliers and buyers can access financing, dynamic discounting, and real-time payments directly within their ERP or procurement systems.
Automated Reconciliation: Embedded payments streamline invoice matching and cash application, reducing manual effort and errors.
Data-Driven Insights: Real-time payment data enables better forecasting, risk management, and supply chain optimization.

Platform Businesses & Marketplaces

Multi-Party Payments: Platforms can orchestrate complex payment flows—splitting, holding, or releasing funds—across buyers, sellers, and service providers.
Revenue Sharing: Embedded finance enables new business models, such as revenue sharing and subscription management, directly within the platform.

The Modular Technology Stack: Enabling Embedded Finance

The success of embedded finance hinges on a modular, API-driven technology stack. Key layers include:

Customer Proximity (Distributor/Partner): Non-banking brands own the customer relationship and design the experience.
API Layer: Provides secure, scalable access to financial services, enabling rapid integration and multi-tenancy for multiple partners.
Financial Product Manufacturer: Designs and manages the underlying financial products (e.g., payments, lending, insurance).
Banking Infrastructure Provider: Delivers the core banking processes and compliance capabilities.
Regulated Entity/Balance Sheet Provider: Holds the necessary licenses and manages risk and capital requirements.

This modular approach allows both banks and non-banks to play different roles in the value chain, from manufacturing products to distributing them at scale through digital partners.

Commercial Strategies: Banks and Non-Banks in the Embedded Finance Ecosystem

Banks and non-banks have several strategic options:

Direct-to-Consumer (SuperApp): Some players, especially in Asia, combine financial and non-financial services in a single app, owning the entire customer journey.
Partnership Model: Banks or fintechs provide white-label financial services to non-banking brands, often operating in the background.
API Platform Provider: Specialized fintechs aggregate and distribute financial services via APIs, enabling rapid integration for non-banking partners.

Each strategy comes with trade-offs in terms of brand visibility, customer ownership, and revenue potential. The most successful players are those who can scale efficiently, adapt to partner needs, and deliver seamless, differentiated experiences.

Challenges of Scaling Embedded Finance

While the opportunities are significant, scaling embedded finance is not without challenges:

Complex Partner Ecosystems: Serving multiple distribution partners with different technology stacks and business models requires robust, flexible APIs and operational processes.
Regulatory Compliance: Embedded finance must meet stringent regulatory requirements across jurisdictions, including KYC, AML, and data privacy.
Speed of Innovation: Non-banking partners expect rapid product development and iteration—much faster than traditional banking cycles.
Product/Market Fit: Success depends on deeply understanding both the end-customer’s needs and the commercial goals of non-banking partners.
Efficient Customization: Banks must balance the need for tailored solutions with the efficiency of standardized, scalable platforms.

Publicis Sapient’s Approach: Designing and Launching Embedded Finance at Speed and Scale

Publicis Sapient brings a proven, end-to-end approach to embedded finance transformation:

Strategy: Define commercial objectives, target segments, partner landscape, and economic models.
Proposition Design: Co-create differentiated offerings with partners, focusing on seamless integration into non-financial journeys.
Platform Architecture: Build modular, cloud-native, API-first platforms that enable rapid onboarding and scaling across multiple partners.
Agile Delivery: Employ multidisciplinary DevOps teams and a test-and-learn mindset to launch minimum viable products quickly and iterate based on real-world feedback.
Ecosystem Orchestration: Leverage deep relationships with fintechs, technology providers, and regulatory experts to deliver compliant, future-ready solutions.

Real-World Impact

SME Banking at Scale: Publicis Sapient helped launch a BaaS-first commercial SME bank in just nine months, orchestrating 22 fintech partners and delivering fully automated operations for 350,000 SMEs.
Platform Joint Ventures: In partnership with leading banks, we have built platforms that deliver both banking and non-banking services—such as food delivery and travel booking—enabling clients to compete with digital-native challengers.

Conclusion: The Future is Embedded

Embedded finance is rapidly becoming the default way for consumers and businesses to access financial services—wherever and whenever they need them. For non-banking sectors, this represents a powerful opportunity to deepen customer relationships, unlock new revenue streams, and differentiate in crowded markets. For banks and fintechs, it is both a challenge and an invitation to reimagine their role in the digital economy.

With the right strategy, technology, and partners, organizations can design, launch, and scale embedded finance propositions that deliver value at speed. Publicis Sapient stands ready to help you navigate this new landscape—building the future of finance, together.