Embedded Finance: How Banks Can Scale and Win in the Next Wave of Digital Integration

Embedded finance is rapidly reshaping the financial services landscape, moving banking from a destination to an integrated, invisible layer within everyday digital experiences. For incumbent banks, this shift is both a threat and a tremendous opportunity. Those who act now to design, build, and scale embedded finance propositions can unlock new revenue streams, deepen customer relationships, and avoid being relegated to the background of the value chain. This guide provides a practical roadmap for banks to seize the embedded finance opportunity and thrive in the next wave of digital integration.

The Embedded Finance Imperative

Embedded finance refers to the integration of financial services—such as payments, lending, insurance, and more—directly into non-financial platforms and ecosystems. From e-commerce checkouts to ERP systems and ride-sharing apps, customers now expect seamless, contextually relevant financial experiences without switching apps or providers. The market is growing at over 40% annually, with both B2C and B2B use cases accelerating (e.g., buy-now-pay-later, embedded payments, supply chain finance, and more). Fintechs and digital-first challengers have set the pace, but banks are uniquely positioned to scale if they can adapt quickly.

Why Banks Must Act Now

The rise of embedded finance is not just a passing trend—it is a fundamental shift in how financial services are distributed and consumed. Incumbent banks face two stark choices:

Early movers have already demonstrated that banks can play a central role, but success requires a new approach to product development, technology, partnerships, and organizational design.

The Modular Capability Stack: Building for Scale

At the heart of scalable embedded finance is a modular, API-driven capability stack. This stack enables banks to efficiently serve multiple partners, adapt to diverse customer journeys, and iterate at speed. The key layers include:

  1. Customer Proximity (Distributor/Partner): Non-financial platforms (e.g., e-commerce, ERP, marketplaces) that own the customer relationship and embed financial services into their journeys.
  2. API Layer: Enables compliant, resilient, and scalable distribution of banking services. Multi-tenanted APIs allow multiple partners to consume services efficiently.
  3. Financial Product Manufacturer: Designs and refines financial products tailored to the needs of each partner and their customers.
  4. Banking Infrastructure Provider: Delivers the underlying processes and capabilities (e.g., payments, KYC, risk management) required to support the products.
  5. Regulated Entity/Balance Sheet Provider: Books the financial products and manages associated risk and regulatory requirements.

Banks can play multiple roles in this stack, from regulated entity to product manufacturer to API provider, depending on their strategy and capabilities.

Partnership Models: From White-Label to Co-Creation

Success in embedded finance depends on forging strong, mutually beneficial partnerships with non-financial platforms. Banks must move beyond traditional white-label or distribution models to true co-creation, where they work closely with partners to design blended propositions that deliver value to all parties. Key considerations include:

Technology and API Strategy: The Foundation for Agility

A modern, cloud-native, and API-first architecture is essential for scaling embedded finance. Key technology imperatives include:

Organizational Change: Becoming a Digital-First, Partner-Centric Bank

Scaling embedded finance is not just a technology challenge—it requires a fundamental shift in culture, operating model, and talent. Banks must:

Lessons from Early Movers: Case Studies

1. Building a BaaS-First SME Bank in 9 Months

2. Strategic Joint Venture in Southeast Asia

Commercial and Operational Imperatives

To avoid being disintermediated, banks must:

Getting Started: A Practical Roadmap

  1. Strategic Planning (3 months): Set direction on business and operating models, target segments, partner landscape, and capability requirements.
  2. MVP Build (6 months): Develop a minimum viable proposition with initial partners, establish the operating model, and outline the scaling roadmap.
  3. Proposition Scaling (9+ months): Refine based on market feedback, expand the partner base, and strengthen organizational capabilities.

Conclusion: The Time to Act is Now

Embedded finance is not a future trend—it is the new reality of digital banking. Incumbent banks that move decisively can leverage their strengths to become indispensable partners in the digital economy. By embracing modular technology, agile operating models, and a partner-centric mindset, banks can design, build, and scale embedded finance propositions that drive growth, relevance, and resilience in the next wave of digital integration.

Publicis Sapient stands ready to help banks navigate this journey, from strategy to execution, leveraging deep expertise, proven methodologies, and a track record of delivering at scale. The next wave of digital banking is here—will you lead, or be left behind?