From concept to customer value: scaling embedded finance
What does it actually mean when financial institutions say they're "doing embedded finance"? And more importantly, why are commercial banking customers demanding it?
In a recent webinar, Mark Corbett from Backbase and Enrico Camerinelli from Datos Insights explored how embedded finance is reshaping the relationship between banks and their corporate customers, turning what was once a defensive strategy into a powerful tool for deepening customer relationships and driving growth.
Beyond the buzzword
Embedded finance is banking services integrated directly into corporate workflows and enterprise systems. Licensed banks provide the underlying financial products while fintech partners handle integration, allowing companies to access multiple banking services without leaving their ERP systems or operational platforms.
The critical distinction: embedded finance solutions must be originated by licensed banks, even when delivered through fintech interfaces. This regulatory requirement ensures accountability while enabling corporate users to access best-in-class products from multiple institutions within their existing workflows.
Corbett framed it even more simply: it's about putting banking inside workflows that people actually live in, not spinning up more channels.
"It's not about spinning up more channels. It's about putting banking inside of workflows that people actually live in." - Mark Corbett, VP of Solutions Engineering, Backbase
The market drivers: real data, real urgency
Datos Insights surveyed over 1,000 mid-sized to large corporations across 11 countries. The numbers reveal why embedded finance has become strategic rather than optional:
84% of corporate treasurers are using or plan to use real-time payments, expecting on-demand availability within their workflows
76% of corporations now work with fintech firms for payments and cash management—services once dominated by traditional banks
60% of corporates say ERP system integration is an important or urgent priority, preferring to operate from their "enterprise cockpit"
42% of corporations would offer payments as a service to their own suppliers and customers
Corporate customers now expect composable architectures where bank and non-bank solutions coexist on the same platform.
The defensive strategy that became an opportunity
Banks face a strategic choice: deliver value where customers operate, or watch someone else fill that space. But embedded finance isn't just defensive—it's how banks regain control.
Success requires collaboration over competition:
Banks contribute: Regulatory licenses, risk management expertise, and product creation capabilities
Fintech partners contribute: Usability, convenience, and seamless integration capabilities
Together they create: Composable architectures that serve customers better than either could alone
Strategic approaches: partner, acquire, or create
Camerinelli outlined three strategic approaches banks are taking to embedded finance:
1. Partner model: Banks collaborate with fintechs through co-creation and co-design, going beyond simple customer referrals to true cooperation. Example: Capital One partnering with Trovata for treasury systems.
2. Acquire model: Banks invest in or fully acquire fintechs with embedded finance capabilities they want to control. Example: UniCredit's acquisition of ION Bank.
3. Create model: Banks turn internal capabilities into profit centers, potentially spinning off separate fintech entities. This works best when banks have sufficient knowledge about a particular industry sector and want strong vertical focus.
For banks looking to expand broadly across markets and customer types, Camerinelli recommended strong partnerships with technology providers who understand both the technology and business processes.
The commercial banking reality check
Despite the embedded finance opportunity, fundamental commercial banking problems persist:
Broken onboarding: Multiple signers, multiple entities, and static workflows create high abandonment rates
Fragmented payments: Systems multiply rather than unify, creating operational complexity
Limited visibility: Banks lack real-time insight into customer cash flow, invoicing, payables, and receivables
Key takeaways
Embedded finance is now strategic, not optional: With 84% of treasurers using real-time payments and 60% prioritizing ERP integration, embedded capabilities are table stakes.
APIs alone aren't the answer: Banks risk turning customers into unwilling system integrators without proper orchestration layers.
Banks are regaining control: Embedded finance partnerships deepen customer relationships rather than enable fintech disintermediation.
Work happens in workflows, not channels: Commercial customers want banking embedded in ERP systems and operational processes, not separate portals.
Visibility drives value: Permissioned access to supply chain and operational data lets banks anticipate needs rather than react.
Multiple strategic paths work: Partner, acquire, or create strategies can all succeed depending on vertical focus and internal capabilities.
Commercial complexity creates opportunity: B2B transactions involve sophisticated workflows that create space for genuine competitive advantage.
Technology fabric is essential: Success requires architecture that orchestrates multiple systems and provides real-time data visibility.
Frequently asked questions
Q: What's the difference between embedded finance and traditional banking APIs?
A: Embedded finance integrates banking directly into customer workflows, while APIs simply provide access points that require additional development work.
Q: Do banks lose control with embedded finance partnerships?
A: No. Banks maintain regulatory control and product ownership while gaining deeper customer relationships through improved delivery channels.
Q: Why is ERP integration critical for commercial embedded finance?
A: The ERP is where corporate teams manage operations daily. Forcing them to switch systems for banking tasks creates friction and abandonment.
Q: Can smaller banks compete in embedded finance?
A: Yes, through strategic partnerships with technology providers who understand both banking regulations and enterprise workflows.
