Strategic Intelligence: Embedded Finance in Banking

This report starts by defining exactly what we mean by “embedded finance.” It maps out the key gridlines of change likely to shape the evolution of embedded finance over the next two years. The report reviews executive survey data to delineate the level of preparedness and strategic focus for banks of various sizes across various parts of the world, before pivoting to consumer adoption and forecast data. It outlines the embedded finance value chain and key strategies providers can implement in this space. The report also provides brief firm-level summaries on who we think is best place to “win” in this theme and why, based on the preceding analysis.

Banking as a service (BaaS) (also known as embedded finance) was once the darling category in all of fintech, with unicorn valuations for new entrants threatening to unleash an avalanche of new, highly segmented players. Yet in the end that reality did not quite prevail. Buy now pay later (BNPL) took a big chunk out of banks’ credit card business, yet new providers in this space struggled to attain profitability, while regulatory headwinds challenge their unit economics further. Meanwhile, BaaS providers faced regulatory scrutiny following several high-profile failures that reverberated through the fintech ecosystem, with pioneers of the sector filing for bankruptcy and/or experiencing precipitous drops in their valuation. Yet the analyst believes embedded distribution is here to stay, as guaranteed by consumer adoption rates.

Report Scope

• Following the collapse of Synapse and consent orders against multiple other BaaS providers, increasing regulation is changing the risk and cost profile of the BaaS business model. Whereas smaller players led BaaS from the start, some of these regulatory changes play into the hands of larger banks with long, proven histories of various types of compliance.
• Banks enabling embedded finance compete on various tech dimensions, but increasingly important in the lending context is a smooth orchestration layer that can bring together a wide range of disparate services across multiple vendors into one unified decision engine that acts reliably in real-time, while automatically logging every decision, rule path, and outcome for compliance purposes.
• In 2025, Celent (part of the analyst) surveyed retail banking executives on product-level investment priorities. BNPL-undeniably the single most mature product incarnation within embedded finance-was ranked “first” or “top” priority by 16% of respondents, second only to digital deposit account opening (19%).

Reasons to Buy

• This report is essential reading for senior executives at financial services companies seeking to understand how to reassess and potentially recalibrate embedded finance efforts in accordance with evolving market conditions.
• Discover how embedded finance has influenced the financial services sector since the concept was first introduced.
• Identify key players within the embedded finance space, as well as the key strategies they use to succeed.
• Learn about the embedded finance value chain, as well as key examples of success within the space.