Financial services are no longer external to the enterprise. They’re being embedded directly into user interfaces, both at the customer touchpoint and across internal operational workflows. Against this backdrop, the Embedded Finance (EF) market is entering a phase of accelerated expansion, reshaping the broader fintech landscape, where competitive advantage is increasingly defined by user experience.
In recent years, the adoption of EF solutions has evolved into a structural trend. According to McKinsey, the European embedded finance market was valued at roughly €20–30 billion in 2023 and could surpass €100 billion by 2030. Boston Consulting Group (BCG) estimates that as of September 2025, the actual embedded finance market in the U.S. and Europe stood at approximately $32 billion, compared with a total addressable market of $185 billion. In other words, substantial headroom for growth remains, and a significant share of that potential is still untapped.
Key Drivers of Demand for Embedded Finance Solutions
Demand for embedded finance solutions is shaped by several concurrent forces:
- Shifting user expectations. Financial services are increasingly perceived as a core product feature. They’re expected to be seamlessly integrated into broader user journeys, rather than offered as standalone add-ons.
- SME readiness to adopt. According to the previously cited BCG research, about 50% of small and medium-sized enterprises report a high likelihood of adopting a full suite of embedded financial services.
- Control over data. Ownership of transactional and operational customer data enables more accurate risk assessment and more tailored credit underwriting, grounded in real turnover and business activity metrics.
- Lower barriers to entry. The Banking-as-a-Service, or BaaS, model, which delivers banking functionality via APIs, along with the expansion of Open Banking frameworks, has made embedded finance far more accessible to non-financial platforms.
Taken together, these factors are creating an environment in which virtually all stakeholders have a vested interest in advancing embedded finance. Customers benefit from more intuitive digital experiences. Product developers and financial service providers unlock a range of advantages that directly enhance profitability, while also simplifying and deepening their collaboration.
Strategic Preconditions for the Growth of the Embedded Finance Market
From a fintech perspective, first and foremost, the evolution of embedded finance is about controlling the user interface. McKinsey analysts note that embedded financial solutions are becoming a new distribution channel for banking products. The platform that owns the interaction layer can shape not only the user experience, but also the customer’s cash flow.
In practice, this shift manifests in several ways:
- Moving beyond payments. Payments are becoming a baseline feature, while the most significant growth is expected in adjacent financial products, including checking accounts, card issuance, and working capital financing.
- Audience-specific needs. Core demand for embedded finance comes from SMEs, for whom speed and simplicity are mission-critical. They need liquidity at the point of cash flow gaps, automated reconciliation of incoming funds, and integrated payouts. If a platform solves these pain points faster than a traditional bank, it naturally becomes that company’s primary financial partner.
Incremental revenue streams. Embedded finance enables platforms to monetize not only subscriptions or access fees, but also financial flows themselves.
According to Adyen, SaaS providers that integrate embedded financial services into their products can increase revenue by 3 to 4 times.
Fintech companies can also assume different roles within the embedded finance value chain, depending on their business model and available resources. The primary options include distributing partner bank products, acting as a technology intermediary and infrastructure provider, or developing fully-fledged licensed solutions in-house. Each model carries a distinct risk-return profile, along with varying levels of regulatory exposure.
Overall, this flexibility expands supply, intensifies competition, and ultimately improves the quality of products available to end users.
What’s Holding Back the Growth of Embedded Finance Solutions?
Despite the scale of the opportunity, the market faces structural constraints. Chief among them is intensifying regulatory scrutiny of embedded finance models involving third parties. Supervisors increasingly view embedded finance not as a technological add-on, but as a full-fledged financial activity that requires clearly defined roles and robust control frameworks.
At the same time, modular architecture introduces additional operational risks, ranging from technical failures to issues with the segregation of client funds. This, in turn, raises the bar for process transparency, reporting standards, and third-party risk management.
Regulators have also flagged concerns around fragmented accountability between licensed financial institutions and platform partners. The Dutch central bank, or DNB, for example, has pointed to potential conflicts of interest in arrangements where a bank remains responsible for portfolio quality and regulatory compliance, while the platform is incentivized to maximize transaction volume. If oversight mechanisms are weak, risk metrics can deteriorate, including a rise in non-performing assets.
What Are the Growth Prospects for the Embedded Finance Market?
Given current dynamics, several parallel developments are likely to unfold:
- A shift from basic payments to integrated financial stacks. The market will continue moving beyond stand-alone payment solutions toward comprehensive financial products embedded within industry-specific platforms, particularly where high-quality data enables more accurate risk assessment.
- A stronger role for infrastructure providers. Players capable of ensuring operational resilience, transparent settlement processes, and regulatory compliance will gain strategic importance. In the wake of several market incidents, trust in system architecture will become a competitive differentiator.
- Persistent market fragmentation. Some platforms will remain focused on distributing partner bank products, while larger companies with sufficient capital and expertise may transition to models in which financial products are issued and managed directly within the platform.
More broadly, the evolution of embedded finance reflects a deeper structural shift, one in which the platform becomes the center of a customer’s economic activity. The key question is whether fintech providers can accurately identify the needs of businesses and end users, and adapt their products accordingly. At the same time, adoption will depend on how well businesses understand the advantages of embedded finance. End users, for their part, will gravitate toward more seamless solutions, shaping demand and accelerating the development of the category.
