Global Restructuring of Embedded Finance: The Next Fifteen Years of Open Banking and Industrial Digitalization

The Global Restructuring of Embedded Finance: Open Banking and the Next Fifteen Years of Industrial Digitalization

Over the past decade, the boundaries between finance and digital platforms have rapidly dissolved. Payment, credit, insurance, and even investment functions are being embedded into shopping, mobility, healthcare, and enterprise management software. On the surface, this phenomenon is a form of product innovation, but beneath it lies a more profound shift in the global economic structure: the delivery of financial services is moving from standalone counters to digital workflows, while the upgrading of global payment and data infrastructure is redefining the pathways of currency circulation and capital allocation.

I. The Economic Logic of Financial Embedding

Traditional financial systems rely on bank branches, dedicated apps, and linear approval processes. Embedded finance, by contrast, encapsulates financial capabilities as APIs, enabling non-financial platforms to offer financial services directly within their user journeys. This model reduces transaction costs, shortens user decision paths, and allows payments and credit to occur at the very moment of demand.

From a macroeconomic perspective, the expansion of embedded finance means that financial deepening is no longer limited to the expansion of bank credit, but is instead reflected in lower transaction frictions and improved data-driven credit assessment capabilities. Software companies do not need to become banks to gain the ability to distribute financial products through partnerships; banks, in turn, leverage third-party software to reach long-tail users that traditional channels struggle to cover. This improvement in division-of-labor efficiency is a bright spot during a period of slowing global productivity growth.

II. Public Digital Infrastructure Becomes the Foundation for Growth

Embedded finance did not emerge out of thin air. Its accelerated development is premised on the implementation of open banking and real-time payment systems across multiple economies. Reference data shows that Open Banking Limited achieved 31 million open banking payments in March 2025, with 13.3 million active users. Pix, operated by the Central Bank of Brazil, recorded 63 billion transactions in 2024. India's Unified Payments Interface (UPI) has likewise provided a deeply penetrated underlying infrastructure for merchant and in-app payments.

The significance of these public digital infrastructure systems lies in their transformation of payment and account data into programmable public resources. Developers can invoke payment, reconciliation, and identity verification functions through unified interfaces, thereby substantially lowering the barrier to entry for embedded finance. Particularly in emerging markets such as Brazil and India, QR code payments and instant settlement networks have already achieved economies of scale in retail, logistics, and public services, providing embedded finance with high-frequency, low-value, and wide-coverage transaction scenarios.

III. Market Size and Structural Growth

According to estimates by Future Market Insights, the global embedded finance market will reach $74.1 billion in 2025, is expected to grow to $85.8 billion in 2026, and will reach $370.9 billion by 2036, corresponding to a compound annual growth rate of 15.8% from 2026 to 2036. This incremental space amounts to approximately $285.1 billion, far exceeding many traditional fintech sub-sectors.By demand structure, large enterprises are expected to account for 63.9% of end-user share in 2026. The reason is not hard to understand: embedded finance involves API integration, compliance management, risk screening, and fund settlement. Only scaled enterprise platforms can bear the corresponding organizational costs and maximize cross-selling benefits. Cloud deployment will hold a 58.6% share, reflecting that financial services moving to the cloud has become mainstream. The elastic scaling and rapid iteration capabilities of cloud-native architectures enable platforms to flexibly launch new financial products across different countries and regulatory environments.

API platforms will account for a 52.6% share in 2026, validating that integration depth is the key to competitiveness in embedded finance. What truly determines user retention is not the front-end interface, but whether the underlying APIs can stably handle identity verification, transaction routing, and anomaly monitoring.

4. Compliance and Regulation: The "Gravity Field" of Embedded Finance

As financial functions are embedded into software, regulatory responsibility has not disappeared; instead, it has spread across a more complex network of entities. In July 2024, U.S. regulators made clear that even when third parties offer deposit products, banks still bear ultimate responsibility. This means banks will place greater emphasis on the completeness of account records and anti-money-laundering screening capabilities when choosing software partners. Embedding compliance into product architecture, rather than remediating it after the fact, is becoming the new industry standard.

The Payment Card Industry Security Standards Council (PCI SSC) has also tightened requirements. Starting March 31, 2025, 51 of the 64 new requirements of PCI DSS v4.x will take effect. This places higher demands on embedded payment providers: data encryption, access control, and security monitoring must be embedded into products from the outset of design. This trend will accelerate the elimination of marginal players lacking security capabilities, while benefiting the leading platforms that have already built compliance infrastructure.

Rising compliance costs have also changed the comparative advantages of platform economics. Marqeta processed $291 billion in total volume in 2024, up 31% year over year. This scale means it can spread compliance and security costs across massive transaction volumes, thereby forming a moat in its cost structure.

5. Competitive Landscape and Global Capital Flows

At the vendor level, the market displays two competitive logics. Payment technology companies represented by Stripe and Adyen focus on providing payment tools and embedded fund management capabilities for software platforms. Through developer-friendly APIs and modular products, they are quickly capturing SMB platforms. Traditional banking technology vendors such as FIS and Fiserv, in contrast, rely on their core banking systems and corporate payment infrastructure to maintain deep ties with large banks and financial institutions.

The competition between these two paths in fact reflects that global fintech capital is shifting from "standalone consumer-facing applications" to "B2B infrastructure." Capital is more inclined to invest in fintech companies that can be embedded into enterprise business processes, because their unit economics are healthier, customer stickiness is stronger, and they are less susceptible to the fading of traffic dividends.From a regional perspective, India and Brazil are the twin engines of high growth. India, driven by UPI and merchant payment penetration, is expected to achieve a compound annual growth rate of 19.4% over the forecast period; Brazil, relying on Pix and platform payment services, is expected to see a growth rate of 18.7%. The growth of these emerging markets stems not only from the efficiency of digital infrastructure, but also from the vast yet previously underbanked segment of micro, small, and medium-sized enterprises (MSMEs). Embedded finance's role in alleviating cash-flow pressures and providing working capital for MSMEs could have a positive impact on the total factor productivity of these economies.

6. Long-Term Trends: From Embedded Finance to the Intelligent Economy

Looking ahead to 2036, the boundaries of embedded finance will continue to expand. As artificial intelligence and machine learning capabilities mature, financial decisions will become further embedded in enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management systems. For example, an e-commerce platform can automatically provide merchants with dynamic credit lines based on real-time sales data, without the merchants having to apply proactively. This kind of "invisible finance" will increase the accessibility of financial services, but it also brings new challenges in algorithmic transparency and data governance.

For policymakers, the rise of embedded finance requires a shift in the regulatory framework from institutional regulation to functional and activity-based regulation, while also strengthening coordination on cross-border data flows and consumer protection. For businesses and investors, understanding embedded finance is not merely about understanding a niche market, but about understanding how finance becomes the foundational operating system of the digital economy.

The fifteen-year expansion cycle of embedded finance is a structural migration of the global financial system from being bank-centric with counter-based interfaces to being data-centric with software-based interfaces. In this migration, public digital infrastructure, enterprise software ecosystems, and regulatory technology will jointly shape the future of finance. Countries without finance can still be strong, but economies with programmable financial infrastructure will command more efficient resource allocation capabilities in the next cycle.

(Note: The data in this article are all from the "Embedded Finance Market" report published by Future Market Insights and are for reference only.)