Transforming customer experiences

Checking out on Amazon seems as elemental as zipping up your coat. But behind the scenes of that simple payment lies a multi-layered ecosystem of industries, stakeholders, and innovation, working together to power the massive shift in how we interact with money. This process — embedded finance — is revolutionizing how people access banking, payments, loans, insurance and investing.

As a society, we’re already beyond the point where standing in line at a bank is going the way of the payphone. The very geography of financial services is rapidly expanding, from bank branches to digital wallets, loyalty apps, virtual shopping carts, and ticket booking platforms. For consumers, that can mean placing an order without entering a credit card number at Amazon and Shopify, or using a “buy now, pay later” option on a new fridge at Walmart. For Uber drivers, it can mean getting your cut of the fare sent directly and instantly into your bank account in real-time, after every ride. For companies (like Shopify, Walmart, Amazon and Uber) that have nothing to do with banking, it means being able to invisibly weave financial offerings into the seams of their core business. And that can mean a whole new kind of revenue.

Embedded finance has been transforming legacy companies, particularly since the pandemic, which saw an acceleration in the adoption of digital payments – and mid-size and smaller businesses have benefited as well. With a global market estimate of $115.8 billion in 2024, embedded finance is expected to more than double in the next five years to reach $251.5 billion by 2029. By all accounts, we’re just at the beginning – but Cross River is prepared to be at the forefront of this shift. Successful embedded finance requires the integration of a new set of technologies and the right banking partners that will all seamlessly enable financial services to end users. With COS, Cross River’s API-driven banking core, companies can build personalized banking solutions that align with ever-evolving business objectives and customer needs.

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How embedded finance works

While the concept of embedded finance isn’t a new one, the way it is being integrated today is. Retailers and car dealerships have offered sales financing and loans for decades, and airlines launched cobranded credit cards as early as the 1980’s. What’s different today is that financial products can be slipped into the digital spaces consumers interact with daily — phones, tablets, computers, the checkout counter — in a personalized way without redirecting to a bank.

For nonbank brands, that advance is palpable. Previously, if you were a local clothing retailer and wanted to issue your own credit card, you relied on intimate knowledge of your clientele to underwrite and offer credit -- all while focusing on selling ties and blazers. As time passed, and retailers expanded beyond their local markets, the underlying process of owning credit servicing operations to issue cards became increasingly complex, including, but certainly not limited to, verifying customer identity, screening for criminal activity, and ensuring fair lending. As a result, much of the structural activity shifted to banks, with the potential downside of brands losing control of customer experiences. Fast forward to 2025 – now there’s an entire ecosystem available in which a bank handles that heavy lifting, including access to funds for lending, wherein partner banks and infrastructure providers can also help companies take charge of the user experience.

There are several ways this can work. Often, it’s a layered cake connected through APIs (Application Programming Interfaces -- a software intermediary that allows applications to communicate with each other).

• It starts with a financial institution at the bottom. In this stack, a bank offers banking as a service (BaaS), the underlying architecture that lets you do embedded finance.
• Next is a modern fintech, the nonfinancial brand or company:
  • Fintechs buy the service and pick and choose which features they want to integrate into their platforms without having to develop the whole cumbersome banking infrastructure.
  • Often, they specialize (i.e. Imprint focuses on cards, for example, Adyen on payments, while Affirm does buy-now, pay later (BNPL))
  • Some fintechs even offer a full platform with several products and customize offerings for their nonbank client brands which, in turn, are modified to appeal to their shoppers.
• Finally, the customer on top.

In an alternative model, banks can partner directly with a nonfinancial company -- without the need for a middle fintech layer.As both a traditional bank and a financial technology company, Cross River has long worked with fintechs offering a full suite of banking services (in 2019, Forbes called us “the secret bank behind the fintech boom”) — partnering with Stripe on push-to-card payments so gig workers can get their earnings quickly, Plaid on instant payments, and Best Egg on lending for flexible rent solutions. Now, Cross River is beginning to partner directly with nonfinancial brands as well to support an era of expedited growth.

How brands can profit from embedded finance

Capterra, a marketplace that connects businesses to the right software, recently surveyed leaders of companies who were considering or offering embedded finance. Among those who already used some form of it, 94% said their revenue had risen since implementation. Depending on the product, embedded finance accelerates revenue both directly and indirectly, including:

Driving sales and cart size

Digital lending has been soaring among retailers, travel, and other nonbanks. BNPL specifically, which offers point-of-sale loans paid in installments over a short period of time, approves a customer’s credit in a few minutes and lets them take their merchandise home on the first payment. In these use cases, it’s not just the sales that go up; the order value rises by 10% on average, while cart abandonment goes down. A 2021 RBC Capital Markets report found that BNPL for retailers increases conversion rates 20-30% and lifts average ticket sales 30-50%. Newer research out this November in Harvard Business Journal also looked at the consumer side and found that the likelihood of a shopper making a purchase rose 17% to 26% among those who adopted BNPL – key in addressing consumer purchase needs and expanding purchasing power for those who need it most.

Several airlines now also offer “fly now, pay later” options for travel parity, including American Airlines through Citi Flex Pay, and United Airlines and Alaska Airlines through Flex Pay and Upgrade. Various reports have shown that these plans drive up revenue by allowing people to make purchases or book a trip they otherwise would not have – another win-win for company and customer.

Adding interchange fee revenue

Every time a customer swipes a cobranded credit card, interchange fees are generated. Such fees, typically paid by the merchant making the sale, are distributed among the issuing bank and other parties to cover costs. But with cobranded versions “everything is often passed along to the fintech, which has the opportunity to share the revenue with the brand partner,” says Andrew Lambert, Senior Product Director, Cards & BaaS at Cross River. Synctacta, for example, says it distributes 70% of the interchange revenue back to the merchant.

Increasing customer stickiness

“It used to be, you'd look for the cheapest flight,” says Cross River’s Head of Fintech Banking Adam Goller. “But now with rewards programs, people tend to stay with one airline to earn status and use those rewards over and over again. That’s created a very closed ecosystem, which not only facilitates greater sales, but also increases customer engagement and stickiness.”

Novel ways of embedding can amplify that effect, turning plastic into flypaper. Turkish Airlines recently launched a new Visa credit card with the fintech Imprint and embedded it so you apply and pay right on TA’s app and website -- without having to go to the program’s originating bank: in this case First Electronic Bank. “If, on the other hand, I want to know what's happening with my American Airlines card, I have to go to the Citi app,” says Lambert. “It's a very bifurcated experience from a consumer perspective and if I'm American Airlines, I'm losing that direct engagement.” But with Turkish Airlines, everything is in the app. “They control the entire user experience, and that's a really interesting proposition,” he adds. What’s more, ninety percent of businesses that have used various forms of embedded finance reported increased customer loyalty, according to the Capterra survey.

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Boosting employee retention

Uber is using embedded finance with a debit Mastercard program and associated checking accounts to retain its gig workers. Based on a collaboration with its partner bank of choice and the fintech “Branch”, The Uber Pro Card deposits driver earnings from each fare immediately into their respective card accounts, providing them seamless access to funds along with benefits associated with the card program like cash back rewards at Advance Auto Parts, the gas pump and EV charging stations.

Gaining data insights

Financial products, like cobranded cards, can offer a whole new influx of valuable data about your customers’ purchasing habits, preferences, and behaviors to guide strategies, product development and new growth opportunities that best fit their needs. In a hypothetical example, a major football team sees from its cobranded loyalty card data that a preponderance of fans at their home matches stay in a certain hotel. From there, the football club and hotel can get creative, offering a new benefit to fans who use the card to book a room. Or maybe they launch a campaign offering sweepstakes entry to watch a game from the presidential suite if the card is used 10 times in two months, further driving loyalty from both ends.

There’s also a fine line to walk, Lambert says. Customers these days are quick to cancel a brand if they feel like the company just wants to make money off of them. It’s a tricky balance between finding new revenue streams and leveraging every interaction for value to the point where customers get turned off.

How embedded finance can change your business model 

Nonfinancial brands that embed bank services end up becoming what Lambert describes as “fintech lite.” Even though you’re outsourcing, you’ll still need to hire people to manage the new vendors of your insurance offering or debit programs, ensure compliance, and extend customer support. 

“You’re still layering in an entirely new business line right within your organization,” says Lambert. You also have to start caring about data differently. He points to Turkish Airlines, which is now flooded with transactional information from every cardholder, meaning that the company must tighten its security to a whole new level to safeguard its customers. 

One of the biggest challenges is blending two very different business environments. “When you take the rigor and regulation of financial services and try to embed that into retail or sales, which have relatively low regulation and barrier to entry,” says Goller, “there’s a natural friction point.” He notes various pitfalls. If you’re used to being in control of your advertising, for example, one word that’s incorrect from a UDAAP standpoint (like giving the impression something is offered that is not), could get both the bank and company in trouble. UDAAP refers to the Unfair, Deceptive, or Abusive Acts or Practices regulations that apply to financial products and services for consumers. With a new set of nuances to work through, choosing the right partners becomes key. 

Cross River has processes and tools in place to mitigate those kinds of risks, including technology that scrubs the web for problems in ads for merchants it works with. Cross River offers a trifecta of support to help nonfinancial companies scale safely: 

• A platform with easy-to-integrate products
• A team of experts that works closely with clients to ensure they’re protected
• In-house consultants who advise on individual financial sectors like payments, loans, and cards 

What’s ahead for embedded finance 

Right now, the economics of embedded finance may only make sense for companies of a certain size. “If you’re a boutique that wants a custom card, you may not be there yet," says Lambert. “But we’re not talking about having to be Walmart either.” 

Payments are already getting faster and more adept at moving across international borders. Looking ahead, Goller sees social media platforms shimmering in his crystal ball. “When I think about where folks will do banking in the future, it’s the apps that they interact with on an hourly basis,” he says. “This is where the evolution of embedded finance is heading. It’s about taking what people already use and embedding the financial products into that.”