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Embedded Finance Provider Guide: Capturing the Next $2 Trillion Opportunity

26.06.2025

For leaders building the next generation of financial infrastructure, embedded finance is no longer a trendy buzzword. McKinsey forecasts that in 2025, $2 trillion in transactions will move to embedded finance platforms, a shift already underway. JPMorgan, one of the earliest movers in this space, manages embedded-finance initiatives for more than 20 brands, with that number expected to double within the year.

If you’re leading technology strategy at a bank or fintech, you’re at the center of this transformation. The era of passive observation is over; you have both the opportunity and the responsibility to shape, deliver, and capitalize on new embedded finance revenue streams. This guide centers on your role and gives you a clear blueprint for action.

Why Embedded Finance Matters Right Now

For IT leaders in finance firms, this means exploring how your institution’s backend or partner platforms can expose modular financial services via APIs or SDKs, enabling new distribution channels beyond traditional banking portals.

Embedded finance is transforming the technology landscape. More than this, it’s redefining what it means to be a bank. Companies that aren't traditional financial organizations, like Walmart, have already seen enormous success with embedded finance models. Walmart's marketplace revenues surged 40% year-over-year thanks to embedded banking features, offering payment convenience directly at the point of sale. Their partner, JPMorgan, sees this not as a competitive threat but as an opportunity, with embedded-finance partnerships becoming core to their growth strategy. They predict this client base will double imminently, underpinning that banks must evolve from standalone product providers to agile, technology-driven platforms.

Regulation also drives embedded finance adoption. In the U.S., fintech firms securing a national bank charter from the Office of the Comptroller of the Currency (OCC) can bypass state-by-state compliance hurdles, rapidly launching embedded finance offerings nationwide. In Europe, the revised Payment Services Directive (PSD2) similarly accelerates embedded finance by requiring banks to provide third-party access to payment and account data via APIs. However, this openness brings complexity, as banks must carefully manage data privacy obligations and strong customer authentication. Understanding and navigating these regulatory nuances positions your institution for competitive advantage.

Custom Financial Software Development in the USA

Non-Negotiable Capabilities: What Your Embedded-Finance Stack Must Include

Core Platform Readiness

Before choosing a path forward, ensure your embedded finance stack is modular and flexible. Banks and fintechs looking to become embedded finance providers require a technology platform that can swiftly spin off essential services like deposit accounts, payment processing, and card issuance into white-label solutions. These platforms must offer seamless integration points to third-party brands, enabling rapid market deployment.

Another difficult decision you will face early on is whether to build your infrastructure internally or partner with a trusted financial software development provider. Both approaches have distinct advantages, and we’ll explore them in detail below.

Compliance & Risk Management

Compliance and risk management also require careful attention from day one. Know Your Customer (KYC), Know Your Business (KYB), anti-money laundering (AML), and fraud detection capabilities must be deeply embedded into the platform. Creating a unified compliance framework shared across your partner ecosystem ensures consistency, reduces risk, and maintains regulatory trust. Alongside compliance, operational readiness, like round-the-clock monitoring and automated billing frameworks, makes embedded services operate smoothly without burdensome manual reconciliations.

Operational & Support Models

Equally critical, and sometimes overlooked, are operational and support models. Customers and partners expect instant, error-free embedded finance transactions. To deliver on this promise, your infrastructure needs a 24/7 monitoring framework, proactively managing performance and swiftly resolving potential issues before they affect end users. Additionally, you must establish a fully automated billing framework capable of efficiently handling complex revenue-share splits, interchange fees, and platform commissions. Automating these processes will reduce administrative overhead and prevent costly, time-consuming manual reconciliations.

Choosing Your Delivery Path: Build, Buy, or White-Label?

The delivery approach you choose will affect your embedded finance strategytimeline, budget, and competitiveness. Carefully consider the following pathways:

Build (18–24 months): Banks with robust engineering resources aiming for a highly customized platform to secure strategic differentiation over the long term. Building an embedded finance platform internally gives your institution control of the product roadmap, proprietary data, technology stack, and regulatory compliance processes. Your team designs the infrastructure, security measures, and APIs from the ground up, tailored precisely to your unique market positioning and business model.

Buy (3–9 months): Usually the default choice if you want to prioritize faster market entry but are still looking to maintain control over features, branding, and differentiation in a competitive market. The Buy model involves partnering with a specialized financial software development provider to implement a platform using a proven technology foundation. You can accelerate deployment timelines, often cutting launch times in half compared to building from scratch, while retaining enough flexibility to differentiate the customer experience and adapt functionalities to your specific needs. Carefully evaluate the expertise and track record of your chosen fintech development partner. Prioritize experienced providers with proven accelerators and ready-to-deploy modules to further speed your go-to-market timeline, while ensuring compliance and scalability.

White-Label (under 3 months): Optimal for market testing or pilot programs where immediate deployment outweighs customization and unique branding. White-labeling lets you leverage pre-built embedded finance solutions provided by third-party vendors. You can deploy quickly, often within weeks or a few months, but the trade-off typically involves minimal customization and limited differentiation in branding and customer experience.

Learning from Market Leaders and Cautionary Tales

Real-world examples showcase embedded finance's vast potential and the crucial importance of selecting the right fintech innovation partner. For example, Green Dot and Marqeta partnered to offer gig-economy platforms instant payouts to drivers. Their partnership reduced payout timelines from days to seconds, unlocking significant interchange revenue streams.

Similarly, Moov and SouthState Bank teamed up to offer near-instant transfers between wallets and bank accounts, leveraging embedded finance technology for real-time fund movement - a considerable upgrade in customer experience and a new source of transaction revenue.

And on the consumer-credit side, we have the collaboration between Castle Trust Bank in the UK and Accedia. Castle Trust entered the Buy Now, Pay Later (BNPL) space, working closely with our team to craft an intuitive user journey, detailed communications, and sophisticated credit calculations. This strategic partnership positioned Castle Trust as a market leader, rapidly growing its consumer finance footprint through embedded services.

Learn how Accedia helped Castle Trust transform digital lending

However, cautionary tales underline the necessity of careful due diligence. Silicon Valley-based BaaS provider Solid, once dubbed "the AWS of fintech," filed for bankruptcy after raising $80 million. Its collapse shows that technological innovation alone isn’t enough. Robust regulatory compliance, solid capital foundations, and operational resilience are critical. Selecting a well-established embedded finance provider with proven sponsor-bank relationships is essential for long-term stability.

The Power of Strategic Tech Partnerships for US Companies

Five Common Pitfalls and How to Avoid Them

Navigating the embedded finance landscape requires awareness of common pitfalls and proactive mitigation strategies:

Fragmented Compliance Oversight

Pitfall: Launching multiple embedded finance initiatives without an overarching compliance framework can create dangerous regulatory blind spots. Left unchecked, fragmented oversight increases the risk of regulatory fines, audits, and potentially damaging consent orders.
Solution: Develop a bank-wide compliance playbook. Аssign a dedicated compliance lead for each embedded finance initiative, responsible for coordinating across technology, legal, and operations teams. Incorporating compliance checks directly into partner APIs ensures seamless and consistent enforcement across every customer touchpoint.

Misaligned Commercial Terms

Pitfall: Commercial arrangements in embedded finance initiatives, such as revenue splits, interchange fees, and referral bonuses, can be complex. Ambiguity or frequently changing terms breed mistrust among partners, slowing down decision-making, harming relationships, and ultimately eroding your long-term profitability.
Solution: Early in your partnership discussions, clarify and explicitly document all financial arrangements. Interchange fees, revenue sharing, origination fees, referral bonuses, and service-level agreements (SLAs) should be clearly defined and contractually binding before launch. Regularly revisit these agreements as market conditions change, maintaining transparency, trust, and mutual alignment between you and your embedded finance partners.

Vendor Failure and Exit Planning

Pitfall: Selecting a technology provider or embedded finance platform partner that lacks sufficient financial stability or robust regulatory relationships can leave your bank dangerously exposed. Recent failures, such as the collapse of Solid, highlight the risks inherent in relying too heavily on undercapitalized vendors or those with insufficient regulatory experience.
Solution: Conduct thorough vendor due diligence well beyond just technology capabilities. Vet potential embedded finance partners carefully on financial health, capitalization, regulatory compliance history, and stability of their sponsor-bank relationships. To protect your institution further, establish strong contractual disaster recovery clauses, including mandatory 48-hour data-export provisions, code escrow agreements, and clear procedures to quickly migrate customers and accounts to alternative platforms should your primary partner fail.

Brand and UX Misalignment

Pitfall: Embedding banking services directly into third-party platforms can lead to mismatched user experiences if integration isn’t done thoughtfully. Common issues include confusing or unfamiliar language, poor visual consistency, or overly complicated workflows. These UX misalignments directly impact adoption rates, increase customer drop-off, and diminish your bank’s brand reputation.
Solution: Form dedicated joint UX and branding task forces at the beginning of every embedded finance initiative. These cross-functional teams, combining technology, marketing, compliance, and design experts from both your institution and your partner, should carefully map out user journeys, ensuring seamless, intuitive experiences. Run regular iterative user tests, gathering direct customer feedback to refine the design continuously. Adjust the interface, language, visuals, and transaction flows until conversion rates consistently meet or exceed your targeted benchmarks.

"Launch and Leave" Mindset

Pitfall: Too often, embedded finance initiatives are viewed as standalone, time-limited projects. Once launched, these solutions are mistakenly considered finished products, with little to no structured follow-up or ongoing development. This “launch and leave” mentality results in products quickly falling behind. Thus, shifting customer expectations, competitive pressures, and regulatory changes, ultimately eroding the initiative’s strategic value.
Solution: Embed a structured approach for continuous improvement from the start. Schedule regular performance reviews, leveraging clearly defined KPIs such as adoption rates, customer satisfaction scores (e.g., NPS), fraud rates, and transaction volumes. Implement structured merchant and end-user feedback loops, allowing you to continuously capture real-world insights. Establish a cross-functional Center of Excellence (CoE) or dedicated embedded finance product team responsible for continuously prioritizing and iterating on product features, compliance controls, and UX enhancements.

Taking the Next Step: Get Ready for Embedded Finance

Embedded finance is a present imperative, and IT leaders are ideally positioned to shape this exciting financial landscape. As market dynamics shift rapidly, selecting the right fintech software development partner accelerates success. With strategic planning and smart execution, your institution can become an embedded finance provider, capturing a substantial share of this transformative growth.

Ready to explore how embedded finance can fit your organization’s goals? Book a complimentary 30-minute Readiness Scan with Accedia’s financial software development team. Together, we’ll assess your current capabilities, identify gaps, and chart a practical roadmap toward a fully operational embedded finance solution.