FinTech & Financial Services 03.04.2026

7 min Read Time

Embedded finance transforms non-banks into financial service providers. A machinery manufacturer offering instant financing to its customers during the ordering process. A SaaS provider delivering working capital directly through its dashboard. McKinsey forecasts €100 billion in European revenue by 2030. The B2B segment is growing nearly four times faster than consumer-facing services. What does this mean for Germany’s mid-sized enterprises – the Mittelstand?

The Key Takeaways

Why Every B2B Company Can Embed Financial Products

Embedded finance operates via a three-tiered model. At the base sits a licensed financial institution providing the regulatory infrastructure: banking license, BaFin oversight, and compliance frameworks. In Germany, Solaris SE is the best-known provider in this layer – the so-called Banking-as-a-Service (BaaS) layer. Above it lies an API layer that delivers financial products as programmable building blocks: accounts, payments, loans, insurance. At the top sits the platform of the non-financial enterprise, embedding these components directly into its product.

The result: An ERP system can offer invoice financing directly to its users. A procurement platform integrates trade credit into checkout. A fleet manager offers per-vehicle insurance without developing insurance products itself. The platform becomes a financial service provider – without ever applying for a banking license.

„The embedded finance revolution that transformed consumer payments is now reshaping B2B commerce. In 2025, companies are integrating working capital, virtual cards, and automated workflows directly into their platforms.“
Sandy Weil, Chief Revenue Officer, Galileo Financial Technologies (PYMNTS, 2025)

B2B Outpaces B2C

Public perception of embedded finance remains heavily consumer-driven: Klarna at online stores, Apple Pay at supermarkets, BNPL for shoe purchases. Yet the real growth engine lies in B2B. Bain projects B2B embedded payments will climb from $700 billion (2021) to $2.6 trillion by 2026 – nearly quadrupling. Over the same period, B2B lending will rise from $12 billion to $50-75 billion.

Why? B2B payments remain complex, fragmented, and often paper-based: invoice purchasing, advance payments, payment terms of 30-90 days, early-payment discounts, trade credit insurance. Each step represents friction that embedded finance can eliminate. A 2026 PYMNTS study found that 54% of all B2B platforms report direct revenue growth from embedded financial products. Among platforms with over $1 billion in annual revenue, that figure rises to 67%.

Germany: Solaris, Billie, Mondu – and the BaFin Problem

Berlin serves as the de facto capital of Germany’s embedded finance ecosystem. Solaris SE – founded in 2016 and holding a full banking license since 2017 – long served as the go-to Banking-as-a-Service (BaaS) partner for fintechs like Vivid Money and Grover. Billie and Mondu focus specifically on B2B solutions: invoice-based purchasing and installment payments for business customers, seamlessly integrated into checkout flows.

Yet the Solaris case also illustrates the risks. In January 2023, Germany’s Federal Financial Supervisory Authority (BaFin) ordered corrective measures against Solaris due to deficiencies in risk management and anti-money laundering controls. A special commissioner was appointed. In March 2024, BaFin imposed a €6.5 million fine for systematically delayed suspicious activity reports. For over 18 months, Solaris was barred from onboarding new fintech clients.

The consequence for the Mittelstand: Maintaining a banking license is far more demanding than obtaining one. Companies embedding finance via a BaaS partner assume regulatory risk. If that partner falls under supervisory scrutiny, your own financial service grinds to a halt. Due diligence on your licensed partner isn’t mere formalism – it’s business-critical.

New CEO at Solaris: A Reset Under Stricter Oversight

At the end of 2025, Steffen Jentsch assumed the CEO role at Solaris. His stated mission: “Durable growth built on regulatory strength and commercial execution.” The message is unambiguous. Solaris no longer positions itself as a fast-moving fintech – but as a regulatorily robust infrastructure provider. For prospective partners, this signals that compliance is no longer treated as an afterthought. At the same time, the leadership change underscores how deeply BaFin’s intervention impacted the company.

The broader ecosystem has taken note. New BaaS entrants now adopt multi-partner strategies from day one: rather than relying on a single licensed bank, platforms engage several banking partners simultaneously. This increases complexity – but dramatically reduces single-point-of-failure risk. For Mittelstand companies embedding finance, this is a strategic consideration that must not be missing from any evaluation process.

Otto, Ratepay – and the Retail Blueprint

The Otto Group demonstrates how a retail conglomerate can turn financial services into a standalone revenue stream. Its Financial Services segment – operated via Eos Group – generated nearly €1.1 billion in revenue in fiscal year 2024/25, up 5.8% year-on-year. Otto operates its own payment service provider and collaborates with Ratepay to deliver Buy-Now-Pay-Later (BNPL) solutions at checkout.

This model translates directly to B2B. A machinery supplier with its own webshop could embed order financing – without building banking infrastructure. A software vendor could automatically calculate and offer early-payment discounts. The technical building blocks exist; the regulatory framework is defined. What’s often missing is the strategic decision to treat financial products as core components of your value proposition.

PSD3, DORA – and the Evolving Compliance Landscape

The regulatory landscape for embedded finance is growing more complex. The Payment Services Regulation (PSR) – set to replace PSD2 alongside PSD3 – is expected to be published in the EU Official Journal by end-Q2 2026. It introduces stricter open banking requirements, stronger consumer rights, and clearer liability allocation between BaaS providers and frontend platforms.

Simultaneously, the Digital Operational Resilience Act (DORA) entered force in January 2025. All regulated financial market participants – including BaaS providers like Solaris – must demonstrate ICT risk management, incident reporting, and third-party risk oversight. Their platform customers are indirectly affected: if a licensed partner fails to meet DORA requirements, the entire financial service is jeopardized.

According to a PwC analysis, 80% of sponsor banks (i.e., licensed entities) describe compliance as “challenging.” The main issue? Lack of control over policy implementation at fintech partners. The organizational maturity matters just as much as technical integration for success.

Why B2C BNPL Is Cooling Off – While B2B Takes Off

Early saturation signs are emerging in the consumer space. Germany’s BNPL market CAGR declined from 19.4% (2021-2024) to a projected 8.3% (2025-2030). Klarna, Ratepay, and PayPal have largely divided the market. New entrants struggle to find viable niches.

In contrast, B2B dynamics differ sharply. Manual processes still dominate: bank transfers, handshake-based payment terms, credit checks conducted via traditional banks. Each step represents an embedded finance opportunity. Transaction volumes are higher, margins better, and customer retention stronger than in B2C. A B2B buyer who manages procurement financing through their supplier’s platform won’t switch as easily as a consumer toggling between Klarna and PayPal.

For the Mittelstand, this means: entering embedded finance doesn’t require launching BNPL in your webshop. More lucrative use cases lie in B2B financing, working capital management, and automated creditworthiness assessments. Companies like Creditsafe show how seamlessly credit checks can integrate into procurement workflows.

Entry Strategies for the Mittelstand

● Payment integration as the first step: Expand payment options in your own webshop or B2B portal. Embed invoice-based purchasing, SEPA direct debit, and card payments via an embedded payment provider. Lowest regulatory barrier – and fastest ROI.

● Trade credit for existing customers: Offer automated payment terms or trade credit to established customers. Billie and Mondu provide ready-made integrations for common e-commerce systems.

● Working capital as a platform feature: SaaS vendors and marketplace operators can offer working capital loans as a native feature to users. Revenue – not balance-sheet health – becomes the primary credit criterion.

● Due diligence on your licensed partner: Verify BaFin status, research whether a special commissioner has ever been appointed, and ensure robust exit clauses are included in contracts. Relying on a single licensed partner creates a single point of failure.

What Embedded Finance Means for Your Balance Sheet

Embedded finance changes not only processes – but also balance sheet metrics. Platforms embedding payments tie up liquidity in new ways: payment terms extended to customers appear as receivables on the balance sheet. Working capital loans disbursed via the platform alter risk profiles. Even when the BaaS partner formally bears the credit risk, chargebacks, payment defaults, and dispute costs can flow back to the platform.

For CFOs in the Mittelstand, this means: embedded finance is not merely an IT project. It must be reflected in financial controlling, factored into risk assessment, and fully auditable. Companies that consider these implications from day one avoid unpleasant surprises during year-end audits. McKinsey’s €100 billion Europe-wide revenue forecast by 2030 sounds enticing – but those revenues arrive with new categories of risk on the balance sheet.

The good news: precisely this complexity enables differentiation. Companies that implement embedded finance cleanly – with sound governance, reliable partners, and transparent accounting – build a competitive advantage that’s hard to replicate. The market rewards not the fastest movers – but the most robust.

Conclusion: Financial Products Are Becoming Product Features

Embedded finance is no longer a fintech niche. It’s an infrastructure trend dissolving the boundary between financial and non-financial enterprises. For B2B Mittelstand firms, this presents a dual opportunity: as users, to streamline your own value chain – and as providers, to embed financial products directly into your customer offerings.

Risks are real – as Solaris shows. But the alternative – continuing to treat financial services as a separate, external process – is increasingly becoming a competitive disadvantage. Already, 54% of B2B platforms report revenue growth. Those who wait until the remaining 46% catch up will find entry more expensive – and the market tighter.

Frequently Asked Questions

What is embedded finance?

Embedded finance refers to the integration of financial services into non-financial products. Instead of visiting a bank, customers access payments, loans, or insurance directly within platforms they already use – such as ERP systems, B2B marketplaces, or fleet management tools.

Does my company need a banking license to offer embedded finance?

No. Embedded finance operates via licensed partners (BaaS providers) who supply the regulatory infrastructure. Your company integrates financial products via APIs – no BaFin license required. However, you do bear indirect regulatory risk if your partner comes under supervision.

How large is the embedded finance market in Germany?

According to Research and Markets, the German market reached approximately $33 billion in 2025 and is projected to grow to $44 billion by 2030. Across Europe, McKinsey forecasts €100 billion in revenue by 2030 – equivalent to 10-15% of total banking revenues.

What’s the difference between embedded finance and open banking?

Open banking (under PSD2) mandates banks to share account data via APIs. Embedded finance goes further: it embeds full financial products – not just data – into non-financial platforms. Open banking enables embedded finance, but the two are not synonymous.

What risks does embedded finance pose to the Mittelstand?

The three primary risks are: regulatory risk stemming from dependence on a licensed partner (as illustrated by the Solaris case); compliance burden arising from DORA, PSD3, and BaFin requirements; and data privacy risks tied to processing sensitive financial data under GDPR. Rigorous partner due diligence and contractual exit clauses are essential.

Further Reading

• → Instant Payments: Why Europe’s Banks Are Under Real-Time Pressure – How the IPR Is Transforming Payments (MyBusinessFuture)
• → TLS Certificates 2026: Why Shorter Validity Periods Are Changing Management – Infrastructure Security for Financial APIs (cloudmagazin)
• → NIS2 in Germany: What Companies Need to Know Now – Regulatory Framework for Critical Infrastructure (SecurityToday)

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