The rise of embedded finance is reshaping the digital economy. Consumers now expect fast, seamless access to financial services directly within the apps they already use. Startups are leading the way by integrating payments, loans, insurance, and investing features into their platforms — creating new business models and unlocking revenue that traditional financial products couldn’t offer.

Why Embedded Finance Is Growing Fast

At its core, embedded finance thrives on one key driver: convenience. In the past, managing finances meant long lines, paper forms, and physical bank visits. Today, users expect to pay, borrow, and invest in just a few taps — all within a familiar app.

The market potential is massive. Revenue from embedded finance platforms is projected to grow from $21 billion in 2021 to $51 billion by 2026. Transaction volume is expected to hit $7 trillion, or about 10% of all U.S. financial transactions.

Technology is also fueling growth. What once required large IT teams and months of work can now be done in days using Open APIs. Platforms like Stripe and Revolut allow startups to integrate financial services quickly and affordably.

But beyond convenience and speed, embedded finance is a strong revenue driver. Startups can earn a percentage from every transaction while increasing customer loyalty. For example, nearly half of Shopify’s revenue now comes from financial services, not subscriptions — a clear signal of how powerful embedded finance can be.

Traditional Banks Are Struggling to Keep Up

Most traditional banks rely on outdated systems that make innovation difficult. Moving from decades-old infrastructure to modern, API-compatible systems is costly and time-consuming. Larger banks are investing heavily in digital upgrades, but many mid-sized or long-established banks are falling behind.

These institutions often face challenges like rigid regulations, outdated technology, and internal resistance to change. Some still require in-person visits for simple services or operate core systems with outdated tools. This puts them at a disadvantage compared to digital-first startups that deliver faster, more transparent financial services.

Consumer Expectations Are Changing

Today’s users want more than just basic banking. They expect all-in-one “super apps” that offer full visibility into their finances — from real-time balances to live exchange rates — all without leaving the platform.

Modern digital banks offer these features by default. Meanwhile, traditional banks may take days to provide the same information, often through email or manual processes. This disconnect pushes users toward tech-forward platforms that offer a better experience.

To stay competitive, banks don’t need to build every solution themselves. Strategic partnerships with embedded finance providers can help. What matters most is creating a seamless experience within one platform. Those that succeed will grow. Those that don’t risk losing customers and revenue.