Banks serving SMBs face a revenue problem, which is made worse by the current rate environment. Net interest margin is now cited as the top external risk in the 2025 CSBS Annual Survey of Community Banks, and growing deposits has become the number-one challenge for community bank executives. The pressure to alleviate these challenges is on non-interest revenue — fee income that does not rise and fall with rates — and on keeping the SMB relationships that generate it.
Embedded finance is where that revenue is increasingly being made. The market was valued at USD 145 billion in 2025 and is projected to reach roughly USD 1.9 trillion by 2034, a CAGR above 33%. The bulk of that growth is within the financial services delivered inside the software, marketplaces, and payment tools that SMBs already use — much of it revenue that historically flowed through banks. The strategic question is no longer whether embedded finance matters; it is whether a bank captures that revenue itself or cedes it to a platform operating on top of its balance sheet.
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$145B Embedded finance market size, 2025 |
~$1.9T Projected market size by 2034 |
33%+ Forecast CAGR, 2025–2034 |
Source: Fortune Business Insights, Embedded Finance Market, 2026
This article focuses on the embedded finance decision a bank actually has to make: what embedded finance is (and how it differs from banking-as-a-service), where the revenue sits, and how to choose between building, buying, or partnering to capture it. Additionally, discover how open banking and open data feed embedded finance and how SMB financial insights drive retention and share of wallet.
IN SIMPLE TERMS
Embedded finance is the integration of financial services — payments, lending, accounts, and cashflow tools — directly into the digital experiences a business already uses, so the SMB can access them without leaving the product they are in. For a bank, it means delivering banking services and insight inside the SMB's everyday workflow, rather than waiting for the SMB to come in for a statement.
The distinction worth holding onto is between the data layer and the service layer. Open banking and open data share consented information; embedded finance embeds the service itself. As covered in the open banking and open data guide, open banking unlocks account and payment data, and open data extends that view across accounting, commerce, and payroll. Embedded finance is the next step: putting the payment, the loan, or the account where the SMB works. Open banking is what the SMB consents to; embedded finance is what they experience.
These terms are used interchangeably across the industry, but by doing that, it sends banks down the wrong path. The short version: BaaS is the infrastructure layer; embedded finance is the experience layer. BaaS powers embedded finance — but they imply very different strategies for a bank that already holds licenses and SMB relationships.
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Dimension |
Banking-as-a-Service (BaaS) |
Embedded Finance |
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What it is |
A bank exposes its licensed core banking functions via APIs so third parties can build financial products |
Financial services delivered inside a platform the customer already uses |
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Layer |
Back-end infrastructure and regulated rails |
Front-end experience and point of access |
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Who the customer sees |
Usually invisible — the end user rarely interacts with the provider |
The brand they already use — in this case, the bank's own digital channels |
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The bank's role |
Rent out the balance sheet and license to others |
Own the customer experience and the revenue on top of the rails |
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Strategic question |
Do we power someone else's product? |
How do we reach SMBs and get them to use our platform every day? |
Source: synthesis of industry definitions from Stripe and ConnectPay
For a bank, the embedded finance path is the more direct revenue play: keep the brand front and center, keep the customer experience, and capture the margin a platform would otherwise intermediate. BaaS turns the bank into a supplier; embedded finance keeps it the principal.
Embedded finance is not one product. For a bank, the revenue concentrates in three streams, and each one is a place where the bank is leaking volume to a non-bank platform.
Payment acceptance, money movement, and merchant services delivered inside the banking experience capture transaction revenue and surface upgrade signals — like card volume tripling — at the moment they happen. Payments remain the largest embedded finance category by revenue.
This is the fastest-moving stream for banks. Embedded lending revenue reached roughly $7.7 billion in 2025 and is projected to climb toward $28 billion by 2032. Consented revenue, expense, and deposit data feed underwriting directly, enabling pre-qualified offers and same-day decisions — winning back the volume banks lose to online lenders purely on speed.
Embedded cashflow forecasting and consolidated cash position give SMBs a daily reason to log in, which protects deposits and surfaces the signals that drive every other product conversation. Cashflow is the through-line: A bank that delivers it under its own brand becomes the partner that an SMB would otherwise assemble across several apps, as the blog to embedded finance tools for cashflow lays out.
Embedded finance revenue streams for banks, by relative scale
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Embedded payments |
Largest share |
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Embedded lending |
$7.7B → $28B |
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Embedded banking / deposits |
Fast-growing |
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Embedded insurance |
Emerging |
Source: embedded lending sizing from Resolve / industry estimates; relative scale is illustrative.
Most embedded finance programs do not stall on strategy. They stall on execution. And the first real decision is how to build the capability. There are three routes, and they trade off cost, speed, and control differently.
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Approach |
What it means |
Trade-off |
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Build |
Construct and maintain the integrations, data layer, and UX in-house |
Maximum control, highest cost and slowest to market; a permanent engineering commitment given the ongoing lack of API standardization |
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Buy |
License a point solution for a single use case (e.g. a payments widget) |
Fast for one feature, but fragments the experience and rarely delivers the unified data layer that makes embedded finance compound |
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Partner |
Use a white-label provider that owns the integrations and data foundation while the bank keeps the brand, relationship, and revenue |
Fastest route to a unified, bank-branded experience; success depends on choosing a partner with bank-grade security and breadth of connections |
Three challenges decide which route works, and they are where most programs underinvest:
The business case is clearest at the level of a single SMB. Two banks, the same customer, the same products, the same 12 months. The only difference is whether financial services are embedded where the SMB works — and therefore which bank captures the revenue and which one watches it leak.
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The moment |
Bank A — no embedded layer (revenue leaks) |
Bank B — embedded finance (revenue captured) |
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Card volume triples |
SMB sees a fintech ad and signs up for a competitor's merchant services |
An embedded merchant services recommendation surfaces in the dashboard — transaction revenue retained |
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Cash buffer drops |
SMB applies for a loan elsewhere and gets a decision in hours |
A cash-shortfall trend triggers a pre-qualified line of credit, same-day — loan volume captured |
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Idle balance climbs |
Funds sit unmanaged; the SMB moves them to a higher-yield fintech account |
A treasury or sweep recommendation surfaces — deposits retained |
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End of year |
SMB has quietly consolidated banking elsewhere; discovered at the quarterly review |
SMB has added three products; fee, interest, and deposit revenue all up |
Source: scenario adapted from 9Spokes State of SMB Financial Health & Banking report (2026)
The willingness to move is real and measured: 71% of SMBs are open to new financial providers and 84% to non-bank financial services. Embedded finance is what converts that willingness into the bank's revenue rather than a competitor's. (The retention and share-of-wallet mechanics behind it are covered in 9Spokes’ SMB financial insights article.)
9Spokes is a white-labeled data insights platform built specifically for financial institutions that serve SMBs — or want to grow their SMB clientele. It is the partner route done right: it embeds inside the bank's existing digital channels via single sign-on, keeps the bank's brand front and center, and delivers aggregation, normalization, insight generation, and banker-facing intelligence from a single stack. Two products do the work.
A configurable, white-labeled platform the bank embeds inside its existing digital banking experience. SMB customers connect business and personal accounts across 800+ financial and business service providers and get a unified view of their entire financial life, under the bank's brand: consolidated cash position across every connected account, automated cashflow forecasts modeled on their own history, consolidated cards and spending trends, and merchant data that reveals the full revenue picture. Explore the SMB Financial Hub.
The same consented data, shaped for relationship managers, product, credit, and marketing teams. It identifies cross-sell opportunities with competitive insight into wallet share and addressable market, sharpens credit decisions, surfaces emerging risk early, and runs as an API-first platform with bank-grade security — rather than an engineering program the bank has to staff. This is the layer that turns embedded finance from a feature into measurable revenue. Explore the Customer Insights Hub.
The platform is built on the constraints banks live with: ISO 27001 certified and annually penetration-tested, hosted on AWS and Azure with documented BCDR and 99.9% uptime, AES-256 encryption at rest and TLS 1.2 in transit, and compliant with GDPR, PSD2, and CCPA. The result is what banks need from embedded finance — not more raw data, but a white-labeled, embedded experience that turns consented SMB data into daily engagement on the front end and new revenue on the back end.
See how 9Spokes embeds financial services and insight inside your existing digital channels — under your brand, on your rails, and measurable in deposits, lending, fee income, and retention.