Apr 05, 2025
What is embedded finance?
Embedded finance refers to the integration of financial services into businesses that aren’t traditionally financial institutions. Today, embedded finance is becoming increasingly prevalent across various industries, from automotive to B2B eCommerce marketplaces. The primary goal of embedded finance is to offer customers access to credit or financing directly from the business they’re purchasing from, without having to go through a separate financial institution. To make this possible, non-financial businesses often partner with banks or other financial institutions to provide these services to their customers.
There are different ways businesses can incorporate embedded finance into their offerings. One common approach is partnering with a bank or credit card company to integrate their financial products into the business’s platform. Another method is developing an in-house suite of financial products, which is known as Banking as a Service (BaaS). With BaaS, businesses can create and offer their own financial products to customers, giving them more control over the services provided. Regardless of the approach, the key goal is to provide customers with easy access to financial products within the business's ecosystem, enhancing the overall customer experience.
The advantages of embedded finance are vast. For businesses, it opens up new revenue streams and helps attract new customers by making financing easier and more accessible. Customers benefit from greater convenience, as they can apply for financing and make purchases simultaneously, often at the point of service. This is a major shift from the traditional process where consumers had to apply for credit separately before making a purchase. Furthermore, as embedded finance continues to evolve, businesses have the opportunity to innovate further, potentially offering more tailored financial solutions that fit their customers' specific needs. This can foster deeper customer relationships and improve customer loyalty, creating a win-win scenario for both businesses and their clientele.
How fintech is changing the financial services landscape
Fintech is a broad term that refers to the use of technology to provide financial services. Fintech companies have grown rapidly in recent years, because of the innovative solutions and apis they offer to solve problems that come with traditional banking services.
This rise of fintech has made it easier for businesses to offer an ecosystem of financial products and services. Fintech and embedded finance have the potential to disrupt the traditional banking model by making financial services more accessible to a wider range of businesses and their customers.
Because of that, fintech and embedded finance are changing how businesses approach financial services. Now, customers can access finance services directly from a non-financial business, through embedded finance. Companies from Uber to Amazon and mobile apps and non-banking companies are embracing embedded finance solutions. This shift is driven by two main factors: the rise of fintech and the changing focus to customer service and user experience.
Customers want to access financial services from wherever they are, and need those services to be simple and convenient. Embedded finance meets these needs by making financial services more accessible and easier to use—something that traditional financing systems and banks can’t offer to everyone. When businesses start using embedded finance, it provides them with a new sources of revenue, and gives their customers convenient access to financial products and services in-house.
Resolve is an example of a fintech company changing the financial services landscape for B2B companies. Using Resolve’s unique digital net terms solution, a business can efficiently apply and receive discrete credit checks on customers (or potential customers) with no impact on their credit score.
Resolve uses this information to set credit limits and net terms for each customer. Once an invoice is issued, the customer then has 30, 60, or even 90 days to pay their invoice. Customers receive access to a company-branded online payment portal (Resolve offers a white label service) where they can access their invoices, credit limits, and make payments. On top of that, within day of the issued invoice, Resolve even has a feature to advance pay the business up to 90% of the invoice. To complete the workflow, when customers issue their payments, payment processing through the portal is integrated with the business’ accounting software.
This all-encompassing accounts receivables and financial solution that Resolve offers is a prime example of how embedded finance can empower a company to grow and reach new markets.
How embedded finance is impacting small businesses and BNPL
Embedded finance is disrupting every industry that relies on traditional forms of financing. Companies can manage cash flow more effectively. Small businesses can generate more working capital through automation. The rise in BNPL (buy now pay later solutions have led to a new industry with far more accessible financial systems. Embedded finance solutions can take many different forms, but they all have one feature in common: making it easier for businesses to offer financial services to their customers through digital platforms.
Small businesses benefit from through all the financial processes done in-house. Embedded finance gives businesses the ability to better monitor their cash flow and manage money. Unsurprisingly, BNPL is one of the most common forms of embedded finance. At its core, BNPL offers companies a new way of obtaining credit. BNPL gives customers access to financing so they can purchase more and pay the invoice over time without needing to engage with traditional financial services providers. BNPL is popular for eCommerce stores. Most people shop on eCommerce platforms through a credit card or debit card, but options only provide a short period of time to pay off purchases, which can be challenging. BNPL options offer longer payment installments, which means more time to pay for purchases without credit repercussions.
How companies are using embedded finance solutions
From integrated insurance services to fintech as a service (FaaS) and everything in between, there are numerous ways a business can use embedded finance solutions. Integrated insurance services are forms of insurance that are offered as parts of another product or service.
For example, a mobile phone company may offer insurance that covers the cost of repairs if the phone is damaged. Insurance is embedded in the product or service, which is charged along with other charges for the product or service. They generally factor this into pricing, and use cases are showing the popularity of such inclusions. Embedded insurance can be a convenient way for consumers to purchase insurance, as they don’t need to shop around for a separate policy, even though they tend to pay more for embedded coverage.
FaaS is a new category of financial technology that enables even small businesses and SMEs to offer financial services using technology. Fintech startups and providers offer a range of tools that can be used to provide a variety of financial services, such as lending, embedded payments, and investments on platforms that look and feel like typical digital banking platforms. With fintech’s focus on elevating the customer experience, embedded services are a great way to elevate the buyer experience.
Going forward, more business models will include some sort of embedded finance solutions. The advantages to a company’s customer base, as well as the business itself, may likely make embedded finance essential to the success of many companies.
If you’re looking for an embedded finance solution that can help your business grow by covering all steps in the end-to-end accounts receivables workflow, learn more about Resolve.
