What Is Embedded Finance? A Guide for Platforms

What is embedded finance?

Embedded finance means integrating financial products, such as lending, payments, insurance or banking, directly into your platform so users access them without leaving your product. If your users can apply for a loan, pay an invoice or buy insurance inside your software rather than visiting a bank, that is embedded finance.

For UK B2B platforms, embedded lending is typically the highest-revenue category. Fundably enables platforms to embed multi-lender SME lending via iFrame, Web Component or REST API, with zero setup fees.

The six main categories

1. Embedded payments

The most mature and widely adopted category. PayPal in eBay (1998) was an early example. Today, a rider-hailing app’s in-app payment, a restaurant’s tap-to-pay on the waiter’s tablet or a freelancer platform’s payout system are all embedded payments.

2. Embedded lending

Businesses or consumers borrow money within a platform they already use. Shopify merchants access Shopify Capital. Amazon sellers access Amazon Lending. SMEs access funding through their accounting software or payment dashboard. UK examples include iwoca (integrated with Xero and FreeAgent), Funding Circle, YouLend (embedded in payment platforms) and Capital on Tap.

This is the highest-revenue-per-deal category for platforms. See: What Is Embedded Lending?

3. Embedded insurance

Insurance offered at the point of need within a third-party platform. A travel booking site offering flight delay cover at checkout. A courier platform offering per-parcel insurance. An ecommerce platform offering product liability cover for sellers.

4. Embedded investment

Investment products accessed within non-investment platforms. Round-up saving/investing (Monzo, Revolut). Stock trading within a banking app. Tax-efficient investment wrappers integrated into accounting software.

5. Embedded banking

Banking services (current accounts, cards, account numbers) offered by non-banks using Banking-as-a-Service (BaaS) providers. Uber offering a current account and debit card to drivers. Shopify offering a business banking account to merchants.

6. Embedded wealth management

Advisory or automated investment management embedded in employer HR platforms, payroll products or accounting software. Pension auto-enrolment initiated during payroll runs is an early form of this.

Why is it happening now?

Three structural enablers:

API infrastructure: BaaS and fintech-as-a-service providers (Stripe, Railsbank, ClearBank, Modulr) have made it possible to launch financial products without building core infrastructure from scratch.

Open Banking / PSD2: mandated data sharing between banks and third parties enables account data access with user consent. This is the backbone of credit decisioning, payment initiation and financial management tools.

FCA regulatory evolution: the FCA’s regulatory perimeter has matured to accommodate embedded models. Non-financial firms can partner with regulated entities and act as introducers or regulated agents, rather than needing to become regulated entities themselves.

The commercial model

For platforms embedding financial products, the commercial model is typically:

• Revenue share: a percentage of interest, fees or premiums generated through the platform’s distribution
• Referral fee: a fixed fee per completed transaction
• Float income: a share of interest on funds held in embedded accounts (relevant for embedded banking)

Embedded lending via a credit broker generates revenue share, typically up to 30% per funded deal for platforms working with Fundably. This makes it one of the highest-yield embedded finance categories available to B2B platforms today.

Where to focus for B2B platforms

If you run a B2B SaaS, marketplace or platform serving UK businesses, embedded lending is typically the highest-priority embedded finance product:

• High deal value (average funded SME loan: £50k–£250k)
• High revenue per event (typically £500–£5,000+ commission per funded deal)
• Relatively simple to integrate (iFrame live in <48 hours)
• No balance sheet risk or regulatory overhead

For a deeper look at how the revenue model works, see how platforms generate revenue from embedded lending. If you are ready to explore integration options, see how to embed lending in your platform.

Frequently asked questions

What is the difference between embedded finance and open banking?

Open banking is infrastructure: it enables third-party access to bank account data via APIs, with user consent. Embedded finance uses that infrastructure (and other APIs) to deliver financial products (lending, insurance, payments) inside non-financial platforms. Open banking is a subset of the enablers; embedded finance is the product layer built on top.

Does my platform need FCA authorisation to offer embedded finance?

It depends on the product. For embedded lending via a commercial finance broker like Fundably, you typically do not need your own FCA authorisation, because commercial credit broking to UK Limited companies sits outside the FCA regulated perimeter and the broker handles the broking activity in any case. For embedded banking (e-money), embedded investment or direct lending, FCA authorisation or registration is usually required. Seek specific legal advice for your use case.

Which embedded finance product generates the most revenue for platforms?

Embedded lending typically generates the highest revenue per transaction for B2B platforms. With average SME loan sizes of £50k–£250k and revenue share up to 30%, a single funded deal can generate £2,000–£5,000+ in platform revenue. This compares favourably to embedded payments (fractions of a percent per transaction) or insurance (single-digit percentage).

How quickly can a platform integrate embedded lending?

With Fundably's iFrame embed, which routes applicants to lenders including iwoca, Funding Circle, YouLend and Capital on Tap, a platform can go live in under 48 hours with no engineering work required. Web Component and REST API integrations offer more customisation and typically require 1–5 days of development work.

Book a demo with the Fundably platform team to get started.