Navigating the Embedded Finance Landscape: How Business Models Shape Success
The integration of financial services—payments, lending, investing—into non-financial platforms, known as embedded finance, isn't a one-size-fits-all approach. A company’s strategy hinges significantly on its role within the broader ecosystem. Whether operating as a B2C firm directly serving consumers, a B2B provider enabling embedded finance for other businesses, or a hybrid model encompassing both, the chosen approach dictates both the advantages and challenges encountered during implementation. Recent findings from “The Trust Imperative in Embedded Finance,” a collaborative study by PYMNTS Intelligence and Green Dot, highlight these nuanced differences.
Regulatory Scrutiny and Defining Success: Divergent Priorities
While all firms utilizing embedded finance face potential regulatory hurdles, B2B providers anticipate heightened regulatory oversight. This expectation stems from their position as foundational infrastructure providers. Furthermore, the metrics used to gauge success vary considerably. B2C and hybrid firms prioritize growth within their existing customer base, viewing this as a primary indicator of success. Conversely, B2B providers focus on operational efficiency, closely monitoring cash flow performance and cost reduction as key success factors.
Partner Selection: Trust and Strategic Alignment
Choosing the right embedded finance provider is a critical strategic decision. Institutional trust emerges as the dominant factor, particularly for B2B firms, with 69.1% prioritizing it above all else. This emphasis reflects a need for robust data security and governance. In contrast, B2C and hybrid firms place greater importance on “business fit,” ensuring alignment with their customers’ overall user experience. The study, based on a survey of 515 senior leaders across various sectors conducted between August 21, 2025, and September 10, 2025, underscores the importance of careful consideration in partner selection.
Value Drivers Differ by Ecosystem Role
The perceived value of embedded finance is not uniform. B2C firms frequently cite improvements to customer relationships (39.8%), faster onboarding (33.1%), and new revenue streams (31.4%) as key benefits. B2B providers, however, prioritize enablement outcomes, such as seamless user experiences (51.9%) and expedited fund transfers (46.9%). Hybrid firms blend these perspectives, with a stronger focus on risk assessment (39.4%) and platform control (35.9%). Ultimately, a firm’s embedded finance priorities align closely with its position within the value chain: B2C firms emphasize growth, B2B companies focus on delivery, and hybrids balance customer value with governance and control.
Transparency, Cost, and Regulatory Complexity: Key Barriers
Despite the promise of seamless user experiences, B2C firms report challenges, primarily a lack of transparency in provider processes (28.8%) and high integration costs (25.4%). B2B firms cite limited flexibility and low return on investment (ROI) as friction points. Hybrid firms encounter regulatory and compliance issues (27.9%) and unexpected operational complexities (26.3%). These findings suggest that successful embedded finance deployment requires transparent operations, adaptable integration models, and cost-effective governance.
Evolving Regulatory Landscape and Expectations
While most surveyed firms do not anticipate that increased regulation will negatively impact the industry, a significant portion, particularly B2B providers, expect stricter regulatory oversight in the coming years. This shift suggests a move towards prioritizing program governance, compliance maturity, transparency, and operational resilience over rapid deployment or feature breadth.
Defining Success: Beyond Growth Metrics
While growth of business with existing customers is a common success metric (cited by 46.6% to 59.7% across segments), B2B providers place greater emphasis on operational health, specifically cash flow performance and cost reduction. Beyond these primary indicators, over 40% of respondents across all segments also track new customer acquisition and balance sheet health as measures of success. This highlights a divergence in priorities: B2B providers prioritize operational efficiency, while firms closer to end users focus on customer retention and relationship strengthening.
Methodology
The PYMNTS Intelligence and Green Dot study, “The Trust Imperative in Embedded Finance,” analyzed data from a survey of 515 senior leaders across financial services, technology, enterprise software, and retail sectors. Participants, holding director-level or higher positions within companies employing 100 or more individuals, were directly involved in finance or embedded finance operations. The survey was conducted between August 21, 2025, and September 10, 2025, focusing on companies generating between $10 million and $2 billion in annual revenue.