There is a reason embedded finance has shifted from industry buzzword to a business model. At its core, it is about convenience — pure and simple. The ability to pay, borrow, or insure something directly within the platforms people already use is a core consumer expectation now. Just think back to the pre-digital era: paying bills in person, endless queues, forms, office hours. That world is gone, replaced by a swipe-and-go mentality. And yet, while the customer has evolved, much of the banking infrastructure has not.
While fintech-native platforms like Revolut or Stripe are pushing the boundaries of what is possible, traditional banks are being held back — not by poor UX, but by their own outdated infrastructure.
Go deeper with GlobalData
The real bottleneck
In a market driven by APIs, plug-and-play services, and no-code integrations, legacy core systems are proving to be retail banks’ Achilles’ heel. Most traditional banks still operate on platforms developed decades ago. These monolithic systems were not built for the API economy or for embedded models where banking becomes a feature, not a destination.
Changing that, unfortunately, is no small feat. Migrating a bank with tens of thousands of employees and millions of customers to a new core platform is a billion-dollar project, both financially and culturally. You are not just swapping out IT systems, you are untangling decades of regulatory, operational, and organisational legacy. Add to that strict compliance standards, slow-moving regulators, and deeply conservative leadership — and you begin to understand why traditional banks are moving at a fraction of the speed of fintech challengers.
What Is truly essential
What makes embedded finance truly disruptive is not just where the services appear but also how they are delivered. Instant KYC, real-time underwriting, and automated compliance workflows are replacing weeks of manual reviews. Embedded infrastructure providers now offer everything from core banking modules to AML checks and payment orchestration as APIs, effectively turning what used to be complex operations into simple plug-ins.
This shift allows for the rise of modular banking ecosystems where services can be mixed, matched and deployed in days — not months as earlier. A startup can launch a neobank with lending, savings and payments capabilities without owning a banking license, simply by plugging into a regulated infrastructure provider. Meanwhile, platforms like Shopify or Uber are turning financial services into revenue streams by embedding payments, insurance, or credit into their user journeys.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThis is the future retail banks must contend with: a model where banking is invisible, but ever-present — triggered by context, not channels.
Lessons from fintechs
If retail banks want to stay relevant, they need to take a page from fintech’s playbook. Now, it is all about orchestrating partnerships and modular solutions to create embedded experiences. And that starts with a mindset shift: moving from product-first to infrastructure-first thinking.
Take Revolut. What started as a prepaid travel card has grown into a full-fledged financial super app — not by reinventing every wheel, but by smartly integrating services under one roof. Consumers now expect this marketplace-like functionality: open a bank account, get a card, buy crypto, apply for insurance — all in one app with full transparency and instant execution.
Traditional banks, by contrast, still often operate in silos. Even basic services like currency exchange require manual confirmation, or worse — email. This kind of friction is not just inconvenient, it is a competitive liability.
And the challenge is deeper than tech. Often, it is about culture. Many banks are still led by executives whose digital literacy does not match the demands of today’s market. Add to that layers of security and regulatory protocols, and innovation becomes a bureaucratic maze.
Embedded finance as a strategic imperative
The most forward-looking banks understand that embedded finance is a structural shift in how financial services are consumed. And it is also a major monetisation opportunity. When platforms integrate banking-as-a-service (BaaS) into their offerings, they are both increasing stickiness and creating entirely new revenue streams.
Shopify, for example, makes nearly half its revenue from embedded financial services — not subscriptions. That is a truly powerful signal. Embedded finance is not eating banking but expanding it.
The implication is clear: banks that cannot enable embedded, automated experiences risk becoming utilities — back-end providers with shrinking margins and little brand visibility. The winners will be those who re-architect their infrastructure for speed, flexibility, and scale — or who partner with those who already have.
What’s next
To remain competitive, retail banks must ask themselves: are we building for the next generation of customers, or maintaining systems for the last?
The path forward will not be the same for everyone. Tier 1 banks with the resources to reinvent themselves may build modern, API-first cores. Others will need to partner, leveraging third-party infrastructure to power embedded use cases within platforms, marketplaces, and apps.
But what is certain is that the era of standalone banking is ending. Customers no longer want a separate place to “do finance,” they expect it to happen automatically, wherever they already are. In that world, banking must be embedded, automated, and above all — invisible.
Arthur Azizov is founder and investor at B2 Ventures, a private fintech alliance that encompasses a portfolio of groundbreaking financial and technology projects
