What’s Fueling the Surge in Embedded Finance Adoption?

Embedded finance is quickly reshaping the way consumers and businesses interact with financial services. Rather than relying on traditional banks or standalone financial apps, users are now experiencing seamless financial transactions directly within the platforms they already use—whether that’s making purchases, accessing credit, or managing insurance, as highlighted in The Fintech Times.

From real-time driver payouts in food delivery apps to Buy Now, Pay Later (BNPL) options at digital checkouts, embedded finance is becoming an everyday feature. But what’s driving this rapid shift? Industry experts point to a powerful mix of customer expectations, technological advancement, and strategic moves by leading brands.

Convenience is King

One of the primary reasons behind embedded finance’s rapid rise is its ability to streamline user experience.

“At Pipe, we’ve identified three primary drivers accelerating embedded finance adoption: ease of integration, and customer demand for both a seamless user experience and pre-approved offers,” says Luke Voiles, CEO of Pipe. “Customers increasingly expect financial services embedded seamlessly into platforms they already use, reducing friction and enhancing user experience.”

He adds that small and medium-sized businesses (SMBs) are helping push this change by favoring real-time financial access over slower traditional lending models.

Steve Morgan, global banking market industry lead at Pegasystems, echoes that sentiment: “The main factors driving the rapid adoption of embedded finance is customer convenience for simple and easy to access finance offering and competition for that business.”

Morgan also highlights how modern technical capabilities have made embedded finance easier than ever: “It’s far easier to integrate into a point of sale or a web or an app-based offering than ever before.”

Big Brands, Big Influence

The credibility and success of embedded finance have been significantly boosted by major players like Shopify and Amazon.

“Now that early adopters of the model…have proven the model’s success, embedded finance is moving further into the mainstream,” says Ugne Buraciene, Group CEO at payabl. “Businesses are increasingly adopting embedded finance to create frictionless experiences for consumers…helping unlock new revenue streams while strengthening customer relationships.”

She notes the growing popularity of BNPL solutions, especially in today’s high cost-of-living environment: “Despite rapid growth, the sector still holds vast untapped potential.”

Responsible Innovation

While innovation is key, responsible use is equally important, especially when consumers are borrowing directly within platforms.

“A major driver for embedded finance is consumers demanding a seamless experience,” says Steve Wishart, Head of Financial Services at TransUnion UK. “A key step along the way was the rise of open banking.”

He stresses the need for responsible data use: “Access to the most up-to-date information from Credit Reference Agencies (CRAs) like TransUnion…is doing essential work behind the scenes…to mitigate the risk of defaults and help ensure affordability.”

Wishart emphasizes that seamless customer experience must remain intact even while credit checks and fraud detection are taking place.

For many businesses, embedded finance is a way to keep customers within their ecosystem while adding value.

“They’re not trying to become banks,” says Marc Conway, Chief Commercial and Product Officer at FinXP. “They want to offer their customers added convenience while unlocking new revenue streams.” Thanks to fintech providers and favorable regulations in Europe, he adds, it’s now easier for non-financial businesses to embed services like payments and branded cards without requiring users to look elsewhere.

“Embedded finance in Europe is estimated to reach €100 billion by 2030,” notes Neil Chandler, CEO of Aion Bank. “These predictions are being driven by consumer appetite.”

His company’s research found that younger generations are leading the charge: “(52 per cent) of 25 to 34-year-olds prefer using financial products and services from their favourite brands over traditional banks.”

The business case is compelling. “Higher average order value and frequency, increased conversion, and greater loyalty” are just some of the benefits brands are seeing by embedding financial products, Chandler explains.

BNPL as a Game-Changer

One of the most prominent and transformative use cases of embedded finance is BNPL. “BNPL has been a game-changing embedded finance service in the payments sector,” says Richard Bayer, UK Country Manager at Clearpay. “It offers payment flexibility without upfront costs or interest, aligning with the preferences of digitally savvy, younger generations.”

He points to shifting consumer behavior: “Platforms like TikTok and Instagram have become shopping destinations…BNPL, as a form of embedded finance, enhances the customer experience by making shopping seamless, accessible, and financially feasible.”

The API Factor

Technology—particularly APIs—is a fundamental enabler of this new financial paradigm.

“Rapid advancements in API technology…make it easier for financial services to integrate within apps and services globally,” explains Elie Bertha, Chief Product Officer at Thunes. “It allows customers to access financial services within their everyday activities, eliminating friction.” Bertha also emphasizes the role of supportive regulation, especially in Europe, where open banking and initiatives like PSD2 are promoting widespread adoption.

Embedded finance is more than just a buzzword. It’s a fundamental shift in how financial services are offered, accessed, and experienced—one that’s redefining digital engagement for both consumers and businesses. As APIs evolve, consumer behavior shifts, and big brands lead the way, embedded finance is poised to become an integral part of the digital economy.