Embedded Finance Transforms Bank Balance Sheets Into Growth Channels

Embedded finance is transforming not just how transactions happen but where financial relationships begin. What once sat at the edge of apps and platforms is now embedded directly into the daily workflows of consumers and businesses, pulling banks toward realizing new revenue streams and balance sheet growth.

At the center of this shift are digital connections. Application programming interfaces, cloud infrastructure and real-time data flows have made it possible to integrate payments, deposits and lending directly into non-financial platforms. These connections are powering faster checkout, embedded wallets and instant access to financial services. They are also reshaping traditional financial institutions, which increasingly serve customers they may never meet directly.

Defining Embedded Finance

Embedded finance refers to the integration of financial services, including payments, banking, lending and money movement, into non-financial platforms. Instead of sending users to a bank or payments app, financial services are delivered at the moment of need inside commerce, payroll, mobility or software platforms.

According to PYMNTS Intelligence, embedded finance is no longer experimental. Nearly every firm surveyed offers at least one embedded finance capability, and more than nine in 10 are satisfied with the results. Embedded finance is now viewed as foundational to growth, customer engagement and competitive differentiation.

BMW Bank and FIS

A clear example of how embedded finance is changing bank models comes from BMW Bank GmbH’s partnership with FIS. Through a deposits-as-a-service implementation, BMW Bank transitioned more than 300,000 deposit accounts to a new digital platform in 2025, as detailed here. The solution integrates deposit accounts directly into the bank’s digital ecosystem, supporting both lending and deposits while modernizing customer experiences and offering core functions to partners.

The balance sheet implications are significant. Deposits sourced through embedded channels can be more stable and more closely tied to customer activity. For banks, this creates new funding pathways while opening cross-selling opportunities across lending, payments and related services. Embedded finance also allows banks and credit unions to reach new customers by partnering with merchants, automakers and software platforms that already own the customer relationship.

PYMNTS Intelligence data underscores the urgency. More than three quarters of firms plan to upgrade their embedded finance capabilities within the next 12 months, and 94% expect to increase investment over the next three years. Embedded finance is increasingly tied to financial performance and customer growth.

Avoiding Technical Debt

One of the clearest lessons from the data is that most firms do not want to build embedded finance alone. Nearly 70% of companies rely on third-party partners to deliver embedded finance capabilities, citing strategic alignment, customization and speed to market as top reasons for partnering. PYMNTS Intelligence research on white-label options indicates the attraction of infrastructure to embed finance quickly while retaining brand control and customer ownership.

Embedded finance is no longer just about processing transactions. It is about placing the balance sheet, the brand and the bank’s capabilities inside the platforms where customers already interact. For institutions willing to partner and modernize, embedded finance offers a path to growth that does not require owning the entire customer journey.