The Sunday Draft

After almost a decade in financial product innovation, I’ve had a front-row seat to watch something fascinating unfold: financial services are disappearing — not in importance, but in visibility. They’re being woven directly into the apps and platforms we use every day. This is embedded finance, and it’s quietly transforming how we all interact with money.

What exactly is embedded finance?

Think about it this way: Remember when buying something meant pulling out your wallet? Or when getting a loan meant visiting a bank branch? Those days are vanishing.

Embedded finance integrates financial services directly where you need them. It’s the Uber app automatically charging your card, the “Buy Now, Pay Later” button at checkout, or the working capital loan offered right inside your business management software.

What makes this truly revolutionary are the 3 main value propositions:

• Seamless experiences: Financial services appear exactly when needed, requiring zero detours
• Lower costs: Platforms often subsidize financial services, making them cheaper than standalone options
• Greater access: Using real-time platform data to assess risk differently, opening doors for people whom traditional banks might overlook

The new players changing the game

The traditional banking value chain is being unbundled before our eyes. Four key participants now power this ecosystem:

• End customers: Us — the consumers and businesses using these platforms
• Platforms: Non-financial software companies that own the customer relationship
• Enablers: Technology providers handling the complex regulatory and technical requirements
• Regulated entities: Licensed institutions providing the underlying infrastructure

Entities can adopt one or more of the above roles. Eg: Amazon is a platform, enabler and a regulated entity (RBI has granted the PA-CB license to Amazon. Check out my previous article that talks about PA-CB license and its importance for SMBs), while there are other companies which can choose to act only as a platform or as an enabler.

According to Bain’s research, embedded finance already accounts for $2.6 trillion in US financial transactions and will exceed $7 trillion by 2026!

Real-world success stories I find fascinating

• Shopify Balance: Small merchants get business accounts, debit cards with cashback, and cash flow tools right where they manage their stores
• Pine Labs : Turned retail checkout into a financial service point by enabling instant EMI options at Indian POS terminals
• RazorpayX : Indian SMEs can now manage banking, payouts, and expenses in the same interface they use for accepting payments
• Uber Instant Payouts: Drivers access earnings immediately after rides, solving critical cash flow challenges

What makes product management uniquely challenging in this space?

As a product manager, I think that embedded finance requires a distinct skill set. You’re essentially managing two products simultaneously:

• Dual-purpose experience design: Financial services must enhance, not distract from, the core product
• Contextual triggers: Developing logic for precisely when to present financial options based on user behavior
• Cross-domain metrics: Balancing core product KPIs with financial performance indicators
• Regulatory-experience balance: Creating frictionless experiences while navigating complex compliance requirements

The big strategic questions for businesses

If you’re considering embedded finance, you need to answer some fundamental questions:

• How does offering financial services affect your brand and risk profile?
• Should you build capabilities in-house or partner with specialists?
• Which verticals and services align with your core value proposition?

What’s next on the horizon?

I believe we’re just beginning. Looking ahead, I expect:

• Expansion beyond payments and lending into value added services
• Deeper personalization through AI and contextual data
• Traditional financial institutions facing both – threats and new opportunities
• Different adoption curves across industries (retail and e-commerce are already leading the way)

My take

Embedded finance represents more than a technological shift — it’s fundamentally changing how we experience financial services. The most successful implementations will be those that truly solve customer problems rather than simply adding features.

What I find most exciting is how this trend democratizes access to financial tools, potentially bringing more people into the financial ecosystem through the platforms they already use and trust.

What are your thoughts? Are you seeing embedded finance change your industry? I’d love to hear your perspectives in the comments.