The next decade of finance: embedded, instant, and invisible

 

Arjun Vir Singh, Arthur D. Little: The future belongs to those who blend trust, speed, and scale to make finance a seamless part of everyday life.

Arjun, could you please introduce yourself?

I lead fintech globally at Arthur D. Little, working with banks, FIs, regulators, platforms, and scale-ups on the next wave of finance – especially across the MENA region and other emerging economies.

Earlier, I launched and ran a multi-jurisdiction payments & fintech business for a conglomerate, so I’ve operated as both builder and advisor. I also host Couchonomics, a weekly podcast on the future of finance, and co‑founded Fintech Tuesdays, one of the region’s largest grassroots communities.

Why is Embedded Finance such a hot topic now?

Embedded Finance (EmFi) has been a ‘hot topic’ for a while, primarily driven by Embedded Payments (i.e. global adoption of Apple Pay and real-time payments growth in India and Brazil) and the rapid adoption of what I like to refer to as the ‘naughty’ poster child of embedded lending: BNPL.

Independent sources suggest that BNPL grew 21.7% CAGR between 2021 and 2024 and is forecasted to expand at 10.2% CAGR from 2025 through to 2030.  B2B BNPL is a major opportunity for SMEs, poised to transform B2B commerce by boosting liquidity and purchasing power. The market is set to grow rapidly, capturing 15%–20% of B2B payments by 2030, with ADL forecasting a high double-digit annual growth rate.

The continued interest in the topic is driven by a combination of trends that we see within financial services, including and not limited to:

• Growth in digital commerce (i.e. ecommerce crossed USD 6 trillion in 2024 and is on track for ~20% of retail sales globally if not more),
• Distribution of financial services (of all sorts) moving to apps and platforms (the use cases of EmFi are now extending into Savings, Investments, Wealth, Insurance, etc.),
• Rapid maturation of financial rails, especially in payments (FY2024–25, UPI transaction volumes stood at a staggering 185.8 billion),
• The arrival of usable data and the rapid adoption of AI (which is acting as an accelerant),
• Regulatory shift on the back of Open Banking and Open Finance. There is a symbiotic relationship emerging between Open Finance / Open Banking (Regulation), Banking-as-Service – BaaS (New Business Models) and Embedded Finance. 

For Embedded Finance to truly achieve its potential, several pieces of the jigsaw will need to come together, but most essentially, it will require active and progressive participation from the Incumbents, i.e., banks, insurers, and asset managers.

Are Embedded Finance and BaaS the same?

No.

• Embedded Finance is the what: financial features delivered inside non‑financial journeys (ride‑hail wallets, checkout credit, in‑app savings).
• Banking‑as‑a‑Service (BaaS) is the how: licensed entities expose accounts, cards, payments, and compliance via APIs so brands can embed them.
• A simple analogy: BaaS is the engine; Embedded Finance is the ride.

Why do FIs adopt BaaS and similar business models?

Banks are adopting several business models in response to emerging trends, primarily to monetise their capabilities. These include Banking-as-a-Service, where banks provide their capabilities to third parties, allowing for unbundling and expansion via third-party financial products. Banking-as-a-Platform enables banks to open their suite of products to third parties, fostering ecosystems, new branded products, and better competition against digital and neo banks. Lastly, as third-party providers, banks source services to address broad customer needs, often via super apps, with revenue-sharing and white-labeling arrangements. Each model presents new monetisation opportunities and helps banks adapt to an evolving marketplace.

Where are the biggest EmFi opportunities, and how do non‑financial players converge?

Embedded Finance is changing how every sector creates value. Instead of selling financial products to customers, companies can now embed them inside existing journeys, making finance an enabler, not an add-on.

In retail and ecommerce, embedded payments and BNPL are driving up to 15–20% higher basket sizes and stronger loyalty. For telcos and super apps, it’s a natural next step; they already own the customer data and daily interactions that make financial services stick. In SME ecosystems, embedded credit and accounting tools are helping to close the financing gap for the vast majority of small businesses that remain underbanked.

The real opportunity is convergence - as industries from mobility to utilities build on the same financial rails, they’re learning to monetise trust, turning engagement into recurring financial relationships.

Who are the most active and promising players globally right now?

Rather than focusing on logos, I would like to emphasise the importance of the roles that different parts of the financial services ecosystem, including regulators, need to play. As demonstrated in the image below, for Embedded Finance to realise its potential, several ‘actors’ need to come together, and the ‘supporting drivers’ need to be present. 

What’s stopping wider EmFi adoption?

The challenge isn’t ambition, it’s execution. Everyone wants to embed finance; few realise what it actually takes.

• Regulation is still built for banks, not ecosystems. When a telco or retailer wants to offer payments or credit, it’s often unclear who carries the regulatory risk. Progress on open-finance frameworks is happening, but unevenly
• Then there’s the technology gap - APIs make it look plug-and-play, but most legacy systems can’t connect compliance, risk, and data seamlessly. That “last mile of integration” breaks more partnerships than strategy does
• The economics and trust equation. Margins are thin, data governance is complex, and customers are cautious about who handles their money. Growth now depends on finding the right balance; frictionless experiences built on transparency and real accountability
• Reluctance of the incumbents; Covid pushed most incumbents' financial institutions to advance their intent and plans in the payments space, but most Incumbents are still in doubt with regard to the merits of BaaS (which greatly enables EmFi) and the fear of being disintermediated from their customers, if Embedded Lending, Savings, Wealth and Insurance takes off in scale. 

 

How could DeFi integrate with—or disrupt—traditional EmFi?

DeFi and Embedded Finance share the same goal: making financial services seamless and intelligent, but they approach it differently. Embedded Finance relies on regulated infrastructure, while DeFi removes intermediaries altogether.

The real opportunity, at least in the near term, lies in hybrid models that combine both. We already see payment and remittance platforms utilising stablecoins and blockchain-based settlements to reduce cross-border payment costs by up to 40% and significantly speed up transfers. Tokenization of Financial Instruments and Real-World Assets is doing the same by enabling greater access, participation and transparency. 

The future will belong to players that are composable, blending the best of both worlds to deliver transparency, automation, and global reach without losing regulatory trust.

How does EF change competition among banks, fintechs, and bigtech?

One could argue that Embedded Finance is shifting the competitive game from owning products to owning customer journeys. Also, for Embedded Finance to realise its potential, the three players you mention need to collaborate, so one can suggest that EmFi will encourage co-opetition (cooperation among potential competitors). In the evolving world:

• Banks still provide trust, capital, and regulation, but many are realising their strength lies in powering others (especially fintechs) through Banking-as-a-Service. In our view, this is the move from being banks of record to banks of relevance
• Fintechs sit in the middle; fast, API-driven, and focused on user experience. They extend what banks can do rather than replace them. Fintech is now maturing and providing infrastructure – both in the core and around the edges to the Fis including banks and playing the role which ‘connects’ the FIs to the Embedders (which sometimes are BigTechs)
• Bigtechs and other Embedders (such as telcos, marketplaces, SaaS platforms, etc.) hold the daily customer relationship and engagement. They use Embedded Finance to deepen loyalty and make switching invisible.

The real competition is now shifting. It’s no longer between institutions, but between ecosystems. Those that can combine trust, technology, and reach will define the next decade of financial services.

What are the implications of cross‑border EmFi for global interoperability?

Let`s begin with a reality check: the G20 cross‑border roadmap shows progress, but cost/speed/access/transparency targets won’t be universally met by 2027 without multilateral links and shared data standards. Costs still bite, with the global average remittance price being ~6.7% for USD 200 in Q2 2024 - well above the 3% SDG target.

Cross-border continues to be one of the biggest friction points in Embedded Finance; and potentially one of its largest opportunity. Cross-border payments still move through fragmented rails and legacy correspondent networks, while customers expect the same instant experience they get locally. That gap is closing as APIs, blockchain networks, and real-time systems start to connect but we have a long way to go. Initiatives like UPI-PayNow and the GCC cross-border frameworks already show that interoperability can cut costs by 30–50% and speed up transactions by up to 40%.

The real prize is network-level scale. The players that master embedded cross-border interoperability will go beyond payments to shape trade, remittance, and SME financing — turning regional ecosystems such as ASEAN, the GCC, and LATAM into integrated financial operating systems for commerce.

Will Embedded Finance remain critical over the next decade—and why?

A definitive yes!

Embedded Finance is not a passing trend but a structural shift in how financial services are built and experienced. We are still in the early stages. Today, most activity is focused on payments and lending, but the next wave will expand into insurance, savings, investments, and digital identity. Also, the biggest ‘unlock’ will happen when Embedded Finance embeds itself in the B2B financial services (currently a lot of the popular use cases are in the P2P, B2C and B2B2C segment)

A good example of this evolution is telcoassurance, a model designed by Arthur D. Little (ADL). Telecom companies are leveraging their wide customer base and unique data to offer insurance products—such as home, auto, life, and cyber—directly through their platforms. This creates seamless, user-friendly experiences while opening new revenue streams for both telcos and insurers. It’s a clear sign of how Embedded Finance is broadening, with telcos stepping up as important players in the ecosystem.

Another growing trend is embedded savings, where automated roundups and behavioural savings tools help individuals save and invest effortlessly as part of everyday transactions. This not only enhances financial wellness but also boosts customer engagement and loyalty for banks and non-financial platforms alike.

As AI and real-time data evolve, finance will become predictive, appearing at the moment of need, often before the customer even asks. In the next decade, we will stop talking about Embedded Finance altogether because it will simply be finance.

The future will belong to those who combine trust, speed, and reach. Banks will provide regulatory depth, fintechs will deliver agility, and platforms will bring scale. Together, they will define how finance becomes part of everyday life.

About the interviewee

 

Arjun Singh is a Partner with Arthur D. Little’s (ADL) Global Financial Services Practice, specialising in Fintech, Payments, and Digital Assets. Beyond consulting, Arjun is a prominent voice in the MENA finance & technology ecosystem, contributing as an angel investor, advisor, mentor, and commentator. He hosts the acclaimed podcast Couchonomics with Arjun, which explores trends shaping financial services, and has a widely subscribed Newsletter, Couchonomics Crunch. He is also the Co-Founder of the largest grassroots fintech community in the UAE called Fintech Tuesday. In recognition of his influence, LinkedIn named him the "Voice of the Gulf Region" in 2022.