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
Rather than offering a textbook definition, Camerinelli approached embedded finance from a practical perspective: what can you actually do with it?
The critical distinction here is that embedded finance solutions must be originated by licensed banks. Even when a fintech company provides the embedded finance solution, there must be a licensed bank behind it that's accountable to regulators. This allows corporate users to access best-in-class products from multiple institutions without maintaining separate banking relationships, all from within their existing enterprise systems.
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
Camerinelli shared compelling data from Datos Insights' annual survey of 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 already using or plan to use real-time payments. The expectation is for everything to happen on demand, when needed, not necessarily at millisecond speed but available when required.
76% of corporations now work with fintech firms for payment and cash management services, once almost exclusively the domain of traditional banks. Corporate customers expect a composable architecture where bank and non-bank solutions coexist on the same platform.
60% of corporates say ERP system integration is an important or urgent priority. The ERP is the "enterprise cockpit" from which they don't want to move their corporate smartphone.
Perhaps most tellingly, when asked what capabilities they would offer as-a-service to their own suppliers and customers, 42% of corporations said they would offer payments as a service.
The defensive strategy that became an opportunity
Corbett positioned embedded finance as increasingly a defensive strategy. If banks don't deliver value where their customers already operate (whether that's an ERP, a vertical SaaS platform, or a payment provider), someone else will.
But Camerinelli offered a more optimistic perspective: banks aren't just defending their turf, they're actually regaining control.
The key is collaboration rather than competition. Banks bring the banking license, risk management expertise, and product creation capabilities. Fintech partners bring usability, convenience, and integration capabilities. Together, they can 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.
Commercial onboarding remains broken, with multiple signers, multiple entities, and no dynamic workflows leading to high abandonment rates. Payments need to be unified rather than multiplied across separate systems. And critically, banks need real-time visibility into cash flow, invoicing, payables, and receivables.
Key takeaways
1. Embedded finance is now strategic, not optional. With 84% of treasurers using real-time payments and 60% prioritizing ERP integration, embedded capabilities have become table stakes for serving corporate customers.
2. APIs alone aren't the answer. Banks risk turning customers into unwilling system integrators if they simply publish API catalogs. The solution is orchestration layers that unify experiences.
3. Banks are regaining control, not losing it. Through embedded finance partnerships, banks can deepen customer relationships rather than being disintermediated by fintechs.
4. Work happens in workflows, not channels. Commercial customers want banking embedded in their ERP systems, payment workflows, and operational processes, not in separate banking portals.
5. Visibility drives value. When banks gain (permissioned) visibility into supply chain and operational data, they can anticipate customer needs rather than simply reacting to requests.
6. Multiple strategic paths work. Partner, acquire, or create strategies can all succeed depending on the bank's vertical focus, market expansion goals, and internal capabilities.
7. Commercial banking is where complexity creates opportunity. B2B transactions involve more sophisticated workflows than consumer banking, creating space for embedded finance solutions that deliver genuine competitive advantage.
8. Technology fabric is essential. None of this works without solid technology architecture that can orchestrate multiple systems, maintain identity across platforms, and provide real-time data visibility.
