Embedded Finance and the Rise of B2B Digital Banking

The New Frontier: How Non-Banks Are Redefining Financial Services

The financial services landscape is undergoing a seismic shift. No longer confined to the walls of traditional banks, financial products and services are being woven directly into the digital fabric of non-bank companies—retailers, logistics firms, technology platforms, and more. This phenomenon, known as embedded finance, is rapidly transforming how businesses interact, transact, and grow. For banks, the rise of embedded finance in B2B markets is both a wake-up call and a unique opportunity to reimagine their role in the digital economy.

What Is Embedded Finance?

Embedded finance refers to the integration of financial services—such as payments, lending, insurance, and even full banking capabilities—into the platforms and workflows of non-financial businesses. Rather than redirecting customers to a bank, these services are delivered at the point of need, seamlessly within the digital experience of another company. In the B2B context, this means that a logistics platform might offer real-time payments to suppliers, a retailer could provide working capital loans to its vendors, or a tech marketplace might enable instant credit for business buyers—all without the end user ever interacting directly with a traditional bank.

The Drivers: Why Embedded Finance Is Booming in B2B

Several converging trends are fueling the rise of embedded finance in B2B:

Digital Transformation of Commerce: The global B2B e-commerce market is projected to surpass $20 trillion by 2027. As businesses digitize their supply chains and operations, the demand for integrated financial solutions grows exponentially.
Changing Customer Expectations: Business buyers now expect the same seamless, personalized experiences they enjoy as consumers. They want frictionless payments, instant credit decisions, and real-time financial insights—all embedded in the platforms they already use.
Technology Enablers: Advances in APIs, cloud computing, and composable banking architectures make it possible for non-banks to integrate sophisticated financial services quickly and securely.
Competitive Pressures: Big Tech and fintech disruptors are moving aggressively into the B2B space, leveraging their data, scale, and digital expertise to offer compelling alternatives to traditional banking products.

Opportunities and Threats for Traditional Banks

For incumbent banks, embedded finance represents both a threat to existing business models and a powerful new growth avenue:

Opportunities

New Distribution Channels: By partnering with non-bank platforms, banks can reach new customer segments and embed their products where business decisions are made.
Data-Driven Insights: Embedded finance generates rich, real-time data on business transactions and behaviors, enabling banks to offer more personalized, relevant solutions.
Platform Business Models: Banks can evolve from product providers to platform orchestrators, facilitating ecosystems of partners and services that drive innovation and loyalty.

Threats

Disintermediation: As non-banks own the customer relationship, banks risk becoming invisible utilities, losing brand relevance and pricing power.
Margin Compression: Competition from agile fintechs and tech giants can erode margins on core products like payments and lending.
Legacy Technology: Outdated core systems and siloed data can hinder banks’ ability to integrate with partners and deliver real-time, embedded experiences.

Technology Enablers: APIs, Cloud, and Composable Banking

The success of embedded finance hinges on modern technology foundations:

APIs (Application Programming Interfaces): APIs are the connective tissue that allow banks to securely expose their services to third-party platforms. Treating APIs as “first-class citizens” enables rapid integration, partnership, and innovation.
Cloud Computing: Cloud-native architectures provide the scalability, agility, and cost efficiency needed to support high-volume, real-time financial services. Cloud also accelerates the development and deployment of new products.
Composable Banking: Composable banking platforms, often delivered as SaaS, allow banks and non-banks to assemble and reconfigure financial products as needed. This modular approach supports rapid experimentation and adaptation to changing market needs.

Case Studies: Embedded Finance in Action

Amazon: Through its marketplace, Amazon has issued billions in loans to small and medium-sized businesses, leveraging transaction data to assess creditworthiness and automate repayments.
Uber: Beyond ride-hailing, Uber offers drivers embedded financial products, including instant payments, vehicle financing, and credit cards—all integrated into the driver app.
SCB TechX: In Southeast Asia, SCBX Group partnered with Publicis Sapient to launch SCB TechX, a platform-as-a-service venture that enables banks and non-banks to deliver embedded financial and non-financial services to commercial clients and consumers.

Practical Guidance for Banks: Compete, Partner, or Orchestrate?

To succeed in the era of embedded finance, banks must make strategic choices:

Embrace Platform Thinking: Move beyond product-centric models to become orchestrators of digital ecosystems. This means building capabilities to integrate, distribute, and co-create value with partners across industries.
Modernize Technology: Invest in cloud migration, API-first architectures, and composable banking platforms to enable rapid integration and innovation. Legacy systems must be overhauled to support real-time, data-driven services.
Leverage Data and AI: Use the data generated by embedded finance to anticipate customer needs, personalize offerings, and automate decision-making. AI-driven insights can unlock new revenue streams and improve risk management.
Build Agile Partnerships: Collaborate with fintechs, technology providers, and non-bank platforms to co-develop and distribute embedded financial solutions. Success depends on the ability to move quickly and adapt to new opportunities.
Focus on Customer Experience: Whether serving end users directly or through partners, banks must ensure that their services are intuitive, reliable, and seamlessly integrated into the customer journey.

The Path Forward: Banks as Enablers of the Digital Economy

Embedded finance is not a passing trend—it is the new operating system of the digital economy. As every company becomes a potential provider of financial services, banks must decide whether to compete head-on, partner strategically, or orchestrate the platforms that will define the future of B2B commerce. Those that embrace this shift, modernize their technology, and put customer-centricity at the core will not only survive but thrive in the next era of financial services.

Publicis Sapient stands ready to help banks navigate this transformation—combining deep industry expertise, proven technology frameworks, and a relentless focus on delivering measurable business outcomes. The future of B2B digital banking is embedded, agile, and open. The time to act is now.