Embedded banking integrates financial services directly into the platforms of nonfinancial businesses. This allows businesses to include banking solutions such as payments, loans, and insurance within their existing interfaces, so customers can access these services without leaving the business’s website or app. For instance, a customer purchasing a high-ticket item on an ecommerce platform could be offered financing options at the point of sale, processed entirely through the retailer’s portal.

As this type of integration becomes more popular, revenue in the embedded banking market is estimated to rise from $30.3 billion USD in 2026 to $223 billion USD by 2036. Below, we’ll explain what embedded banking is used for, how it works, and what types of benefits and challenges businesses might come across when working with it. If you’re considering using embedded banking features for your business, here’s what you should know.

Key takeaways

• Embedded banking is a subset of embedded finance that refers to embedding bank account-type services (checking, savings, cards, money movement) into nonfinancial platforms.
  
• Real examples: Shopify Balance (built on Stripe Treasury), Lyft Direct (driver banking), DoorDash's Red Card (built on Stripe Issuing), and Uber Pro.
  
• The embedded banking market is projected to grow to $223 billion by 2036, with the broader embedded finance market reaching $1.7 trillion by 2034.
  

What is embedded banking used for?

Embedded banking refers to any financial services functionality that’s integrated into a nonfinancial services digital environment. Here are some of the ways businesses use embedded banking.

How does embedded finance work?

Embedded finance shows up differently depending on where the customer is at the moment of the transaction. It generally operates across three environments: in-store, online, and in-app. In each environment it uses the same underlying mechanism (APIs linking a business to a bank or fintech provider), but with different triggers and customer experiences.

In-store

At physical point-of-sale systems, offers like store credit cards or instant financing are typically triggered by cart size or purchase history and surfaced by a cashier or self-checkout terminal. Because customers are standing in line, these offers prioritize speed: a quick approval and immediate benefit, like an on-the-spot discount, matter more here than online or in-app.

Online

On websites, offers are usually driven by behavioral data, such as cart abandonment, time on page, and order size, rather than an employee prompting the customer. A financing plan or payment option might appear directly in the checkout flow at the moment it's most likely to close the sale. Since there's no salesperson involved, terms are typically spelled out clearly upfront, and businesses can A/B test when and how offers appear in ways that aren't possible in a physical store.

In-app

Mobile apps support an ongoing relationship rather than a single transaction, so embedded finance here tends to be more personalized and proactive. A driver app, for example, might let users track earnings, auto-save, or access a linked debit card—with features such as savings nudges or credit offers surfacing based on usage patterns over time, without the customer needing to ask.

Types of embedded finance products

Embedded finance offerings typically involve a business that hosts the financial product for its customers, working alongside one or more specialized partners who supply the underlying financial capability and carry the associated regulatory responsibility. The exact split of who does what varies by product and partnership structure:

Embedded payments

Players: A business (the distributor) partners with a payment processor or payment facilitator (the infrastructure provider).

Product: A payment gateway built directly into the business's app or site, so customers can enter card, bank, or digital wallet details without leaving the platform. The infrastructure provider handles authorization and settlement behind the scenes.

Example: An online retailer embeds a checkout flow so customers pay without being redirected to a third-party page.

Embedded lending

Players: A business (the distributor) partners with a lender or a lending-as-a-service platform (the credit provider), which may in turn rely on a bank to originate and hold the loan.

Product: A credit or financing offer—installment loans, lines of credit, or buy now, pay later—surfaced inside the business's existing app or checkout, often underwritten using data the distributor already holds (transaction history, account activity).

Example: An accounting platform offers small-business loans and buy now, pay later (BNPL) checkout options. A point-of-sale system lets merchants apply for inventory financing, with approval and funds disbursed inside the same software.

Embedded banking accounts

Players: A business (the distributor) partners with a bank or a banking-as-a-service (BaaS) provider that sits between the distributor and a chartered bank (the licensed institution actually holding the funds).

Product: Deposit accounts—checking or savings—along with features like direct deposit, card issuance, and transfers, made available inside the distributor's own platform.

Example: A ride-sharing app lets drivers open an account within the driver app to receive and manage earnings directly.

Embedded insurance

Players: A business (the distributor) partners with an insurance carrier or an insurance-as-a-service platform (the underwriter or broker).

Product: A quote-and-purchase flow for insurance coverage, offered as an add-on at a relevant moment in the customer's journey.

Example: An online travel agency offers trip or rental car insurance as an add-on during booking.

Embedded investment products

Players: A business (the distributor) partners with a brokerage or investment infrastructure platform (the asset manager or broker-dealer).

Product: Investing features—fractional shares, robo-advisory portfolios, or curated funds—made accessible from within the distributor's app rather than a separate brokerage.

Example: A personal finance app lets users buy fractional shares of stocks or ETFs without opening a separate brokerage account.

Embedded rewards and loyalty programs

Players: A business (the distributor) partners with a bank or a card-issuing or loyalty infrastructure provider (the program administrator).

Product: A branded rewards program—physical or virtual cards, points tracking, and redemption—designed and customized around the distributor's own customer base.

Example: A coffee chain runs a loyalty program in its app where purchases earn points redeemable for free drinks.

Embedded expense management

Players: A business (the distributor, typically also the end customer here) partners with an expense management or corporate card platform (the infrastructure provider), often linked to an embedded banking account.

Product: Tools for employees to submit receipts, categorize spend, and route expense reports for approval, built into software the company already uses.

Example: A company's accounting platform lets employees upload receipts and submit expense reports without leaving the software.

Benefits of embedded banking for businesses

As embedded banking becomes more available, it can create important benefits for businesses:

• Customer retention and loyalty: By integrating financial services that are directly relevant to the customer’s immediate needs (e.g., POS financing, rewards programs), businesses can improve the customer experience. Customers are more likely to return to a platform that offers additional financial benefits and simplifies their finances.

• Revenue: Businesses can use embedded banking to diversify their revenue streams. For instance, by providing lending, insurance, or investment options, companies can earn income from financial service fees and commissions.

• Operational efficiency: Embedded banking creates various forms of operational efficiency. Embedded payment systems reduce manual processing, which can mitigate errors and administrative costs, while embedded expense management can reduce the workload of finance teams by automating approvals and reimbursements.

• Customer data: Embedded banking solutions often have analytics tools that provide businesses with valuable insight into customer behavior and preferences. This data can inform business strategies, marketing efforts, and product development.

• Customer experience: Businesses can create a more convenient user experience by eliminating visits to external platforms for financial services. This can be a major differentiator in competitive online markets.

• Regulatory compliance: Partnering with fintech firms or financial institutions can help businesses comply with the complex regulations on financial services. These partners typically have the expertise and infrastructure to ensure compliance and can reduce the regulatory burden on the business itself.

• Customization and flexibility: Embedded banking platforms are often highly customizable and allow businesses to choose and modify the financial services that best fit their needs and their customers’ needs. This flexibility can help businesses adapt to changes in the market and in customer expectations, in addition to keeping them relevant and competitive.

Challenges with embedded banking and how to overcome them

Payments, banking features, and financial data all come with risks and obstacles. Here are some of the challenges that come with embedded banking and strategies to mitigate them.

• Security and data privacy: Data breaches or security lapses can severely damage customer trust and cause substantial financial losses. To overcome this challenge, use state-of-the-art security measures such as encryption, multifactor authentication, and regular security audits. Partnering with fintech services that prioritize security and have a proven track record can also strengthen your defenses.

• Integration: Integrating new services with your existing systems might disrupt the user experience or existing functionalities. Address this issue by formulating a comprehensive IT strategy and possibly by hiring skilled developers experienced in both finance and your specific technology stack. Choosing fintech partners with flexible, well-documented application programming interfaces (APIs) can also make integration easier.

• User experience: Adding new services can initially complicate the user interface and detract from the user experience, rather than improve it. To mitigate this issue, focus on design and user testing. Simplify the user experience as much as possible and ensure that new features are intuitive.

• Financial liability and risk: Offering credit, insurance, or investment options exposes your business to financial risks, including defaults, fraud, and market volatility. Manage these risks by developing a comprehensive risk assessment and management strategy. Use advanced analytics to determine customer creditworthiness and implement strict fraud detection mechanisms.

• Service quality at scale: As your user base grows, maintaining the quality and reliability of embedded banking services can become difficult. To effectively handle growth, anticipate and plan for infrastructure investments accordingly. Monitor performance metrics and customer feedback to quickly address any issues that arise.

• Partnership dependencies: Relying on third-party providers for key banking services risks service interruptions, conflicts in business direction, or changes in regulatory status. To overcome these dependencies, carefully select partners with aligned goals and stable operations, and create flexible agreements that safeguard your interests. Further protect your operations by putting in place strong contingency plans.

How to get started with embedded banking

While modern embedded banking solutions are increasingly simple to implement, choosing the right features and preparing for launch can be a time-consuming process. From selection to implementation, here’s a step-by-step guide to getting started.

Step 1: Identify your needs and goals

• What are your core products and services, target audience, and key challenges? Identify areas where embedded banking features could improve your product or service and create value for your customers.

• What are you trying to achieve with embedded banking? Are you looking to generate new revenue streams, improve customer experience, increase efficiency, or gain data insight? Clearly define your objectives to guide your decision-making process.

• What financial services would be most valuable and relevant to your customers? Conduct market research and gather customer feedback to understand their needs and preferences.

Step 2: Choose the right embedded banking features

• Consider starting with core features such as embedded payments or banking accounts to address immediate needs, and create a foundation for future expansion.

• Focus on features that align with your business goals and have the potential to generate the biggest impact on your customers and bottom line.

• Consider how your embedded banking strategy can evolve over time. Choose flexible features that can adapt to future needs and market trends.

Step 3: Select the right technology partner

• Research and compare different embedded banking providers based on their features, pricing, integration options, customer support, and reputation.

• Choose a provider with flexible APIs, integration options that are compatible with your existing technology stack, and a deep understanding of compliance and security requirements.

Step 4: Develop a comprehensive launch plan

• Clearly define the features you plan to implement, set realistic timelines, and identify key milestones.

• Assign dedicated resources to the project including technical, marketing, and customer support teams.

• Create a plan to communicate the new features to your customers, and educate them about the benefits and security measures.

Step 5: Launch and promote your new features

• Thoroughly test all features in a sandbox environment before launching them.

• Develop a comprehensive marketing campaign to promote your new embedded banking features and educate your customers about their benefits.

• Consider including incentives such as discounts and rewards to encourage customer adoption.

• Ensure that your customer support team is well-equipped to handle any questions or issues related to the new features.

Step 6: Monitor, evaluate, and iterate

• Monitor key performance indicators (KPIs) such as customer adoption, usage rates, revenue generation, and customer satisfaction.

• Regularly collect feedback from your customers to understand their experiences with the new features and identify areas for improvement.

• Continually refine your embedded banking strategy based on data insight and customer feedback.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts, and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster, and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don’t have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods, or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, VAT, and GST.

• Build new lines of revenue: Optimize payment revenue by collecting fees on each transaction. Monetize Stripe’s capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards, and more on your platform.

Learn more about Stripe Connect, or get started today.

FAQs about embedded banking

Here are answers to some of the most common questions about embedded banking.