Home Embedded Finance: The End of Traditional Banking

Embedded Finance: The End of Traditional Banking

The role, place, and attitude of banks have changed throughout history. In the past, people did not require much from the bank. It was just a place to store money safely. However, today in the 21st century, people have much more expectations. Thus traditional banks have to transform to survive. So what is actually wrong with conventional banking?

(1)  Too much bureaucracy and inflexibility. Doing paperwork, and visiting brick and mortar banks to do simple financial transactions sounds so outdated. Instead, customers seek simple, easy, and direct digital solutions to satisfy their needs.

(2) They do not longer fit the expectations of the new generations of the customers. For example, Gen Z is much more digitally savvy than Millennials. No wonder why there is a statement that “millennials are tech-savvy, while Gen Z’s are tech native.”

(3)   Price. High costs for maintaining the brick and mortar branches are reflected in the higher tariffs of the traditional banks. It becomes much more difficult for them to face the competition in these conditions.

What is Wrong with Traditional Banking and Why is the Plastic Card System Dying?

embedded finance

The New Reality of the Financial Market

As a result of the reasons mentioned above, more than 4,000 branches of the banks have closed since March 2020 in the United States. Moreover, it is essential to say that the pace of branch closings has doubled from the beginning of the pandemics, from 99 closings per month to 201 closings per month.

In addition, according to the research of PWC, 32% of people in the United States claim that they do not longer conduct their business in brick-and-mortar branches, moving everything online. If such a pace continues, likely, the bank branches will soon become extinct. The statistics prove it.

For example, according to the study by Self Inc, if the same trends remain in place, all the brick and mortar banks will be closed by 2034 in the United States. In addition, more than half of Americans believe that the number of online banks will be larger than the number of traditional banks in the future.

However, the problem is not only about outdated banks but also about outdated payment methods. POS terminals and plastic cards no longer provide the most direct and comfortable payment experience of the available alternatives.

To have fully functional POS terminals, it is necessary to develop them, certify them, introduce them within each country individually, to clear and finally sell them. On the other side, using a plastic card system is also not ecological and not always comfortable.

However, why pay for a POS terminal and its maintenance if the ordinary smartphone can replace it? Also, why carry a card if it is possible to pay for the goods or services by phone?

Embedded Finance: The Trend to Follow

The market constantly adapts to the needs of the market and the needs of the people. Thus, no wonder why simple and efficient embedded finance appeared as an alternative to conservative, traditional banking.

Embedded finance allows adapting to the user experiences within any industry (for example, retail, accounting, technology, transportation, etc.), allowing any company to become a banker.

The potential of embedded finance is excellent, and according to statistics, its market value is going to reach 7.2 trillion US dollars by 2030 globally. Besides, according to predictions, only the United States, it will generate more than $230 billion by 2025.

Benefits of Embedded Finance Solutions

Overall, the incorporation of embedded finance payment solutions is widespread since it can help to:

  • increase revenue streams;
  • digitalize and automate the offering;
  • decrease the costs of transactions;
  • improve the reputation of the brand;
  • increase ROI;
  • advance operational excellence;
  • enhance industry expertise;
  • achieve a better customer experience.

There are many different options for embedding financial services into the business. The most popular are fintech as a service, trading and investments, integrated insurance services, buy now, pay later (BNPL) services, and point-of-service lending.

Who are the Leaders of the Market?


The biggest e-commerce company has a range of embedded finance services and products within its portfolio. They are merchant services, products in lending, payment, insurance, prepaid cards, store/credit value cards, and many others. In other words, the company combines the services of fintech and conventional banks. The fintech portfolio of Amazon is a success story in the domain of embedded finance.


Samsung is one of the largest manufacturers of smartphones and home appliances. So it stepped into a FinTech market with a variety of different solutions. They are mobile wallet Samsung Pay, digital banking account Samsung Money, cryptocurrency Samsung Blockchain Wallet, digital identification Samsung Digital ID, and progressive payment acceptance method Samsung mPOS.

Besides, in 2020 the company partnered with Curve to promote its debit card Samsung Pay Card.


The multinational technology, and advertising company with a specialization in Internet services. It created a very successful project Google Pay, an online payment system and digital wallet platform for in-person, online, and in-app purchases on mobile devices that allows users to make payments with tablets, phones, and watches. Besides, Google has partnered with Target and Safeway to help users browse the weekly deals on groceries within the Google Pay app.


Global mobility as a service provider. The company created the financial product Uber Money. It is mainly designed for providing financial services to the drivers of the platform. It also offers the drivers the possibility of making instant payments or having digital wallets and credit cards to ensure accurate and timely payments.


American electric vehicle and clean energy company. Tesla offers its customer’s insurance service when purchasing a car. Thanks to the successful launching of its payment system for insurance, the company announced an ambitious plan to become one of the largest insurers in the United States.

Other embedded finance companies

The list could be prolonged, and include numerous other companies, including but not limited to Alipay, WeChat Pay, Apple Pay, Klarna, WhatsApp Pay, AfterPay, Affirm, Stripe, Finastra, Temenos, Treezor, Monzo, Ikea, Starbucks, Wallmart, Mercedez-Benz, and many others.

All these companies make a solid competition to traditional banking, forcing the latter to transform their business model into a more open and flexible one.

What is the Future of Embedded Finance

Making precise predictions about embedded finance is a difficult, but still an important task. For example, the neobank “N26” spokesperson rightly commented the following regarding the future of embedded finance. He stated: “Personalization will become more important, and artificial intelligence will make it possible to offer banking products tailored to individual needs, at better prices.”

Of course, the embedded finance services will not be implemented worldwide overnight. The process of transformation of the financial industry would happen step by step and would take years since the payment industry is conservative. Still, the direction of transformation is clear.

Besides, it is expected that the new players in the financial market will not fully replace banks. However, they would pose significant competition, offering the financial industry new ways and opportunities for development.

Where to Get Embedded Finance Solutions

Implementation of embedded finance solutions is a complex and multi-dimensional task. Thus, it is necessary to be careful and attentive with the choice of the solution provider. 42flows.tech Company has profound knowledge and many years of experience in the sphere of integrations, being a highly reliable and progressive technology partner. Thus, we offer:

–        assistance in selecting the solution that would fit our customers the best;

–        description of the key processes;

–        integration of all the processes based on different financial service providers.

In other words, 42flows.tec is ready to offer effective and tailored solutions that would provide a competitive advantage to our customers, modernizing their digital infrastructure, bringing business growth and new sources of revenue.

Inner Image Credit: Provided by the Author; Thank you!

Top Image Credit: by energepicdotcom; Pexels; Thank you!

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Nelia Holovina is a Senior Content Writer at 42flows.tech, a Ukrainian IT company that develops custom technical solutions and streamlined banking integrations.

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