Embedded Finance Explained: What users should know about app-based banking

Imagine getting a loan, making a payment, or investing without ever leaving the app you are already using. That’s the promise of embedded finance, a growing trend that integrates financial services directly into non-financial platforms such as e-commerce sites, marketplaces, or mobile apps.

Unlike traditional banking, where customers must visit a branch or a standalone fintech, embedded finance brings financial services to where the user already is.

“Embedded finance pushes financial services to the customer’s environment, making them contextual, instant, and often invisible,” says S Anand, Founder and CEO of PaySprint.

APIs and partnerships allow non-financial platforms to offer banking features within their interface, creating a seamless experience for users.

Faster, simpler, contextual

For retail users, embedded finance removes friction. Micro-loans can be offered during signup, buy-now-pay-later options appear at checkout, and investment opportunities pop up within savings apps — all without multiple forms or separate logins.

“It lets customers access credit, payments, or investments instantly within the platforms they already use,” says Saurabh Puri, Chief Business Officer at Zaggle.

Vivek Iyer, Partner at Grant Thornton Bharat, adds that integrating finance into platforms “improves customer experience and speeds up turnaround for businesses.”

Risks to keep in mind

Despite the ease, embedded finance carries certain risks.

Customers should know how their data is stored and shared, who is liable if something goes wrong, and the reliability of third-party providers.

"Consumers should watch who stores and shares their data, who owns the customer relationship when things go wrong, and the reliability of the underlying provider,” says S Anand.

Saurabh Puri advises users to check platform credibility, regulatory compliance, and customer protection measures.

Vivek Iyer points out that consumers should understand grievance redressal mechanisms and recourse in case of operational or fraud-related issues.

A nudge for responsible use

The seamless nature of embedded finance can encourage overspending or higher borrowing.

Anand notes, “The convenience that makes embedded finance powerful can also nudge over-consumption. Affordability checks, sensible credit limits, clear disclosures, and cooling-off periods are necessary.”

Puri emphasises the need for financial discipline, while Iyer adds that regulatory safeguards and customer awareness should prevent misuse or asset bubbles.

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