FinTech & Financial Services 03.04.2026

7 Min. Reading Time

Embedded Finance is transforming non-banks into financial service providers. A machinery manufacturer offering financing directly to customers during the ordering process. A SaaS provider offering working capital through their dashboard. McKinsey forecasts 100 billion Euro in revenue by 2030 in Europe. The B2B sector is growing nearly four times faster than the consumer business. What does this mean for German SMEs?

Key Takeaways

Why Every B2B Company Can Embed Financial Products

Embedded Finance operates through a three-tiered model. At the bottom layer is a licensed financial service provider that offers the regulatory infrastructure: banking license, BaFin supervision, compliance framework. In Germany, Solaris SE is the most well-known provider in this segment, the so-called Banking-as-a-Service (BaaS) layer. Above this lies an API layer that provides financial products as programmable building blocks: accounts, payments, loans, insurance. At the top is the non-financial company’s platform, which embeds these building blocks into its product.

The result: An ERP system can offer invoice financing directly to its users. A procurement platform integrates goods credits into the checkout. A fleet manager offers insurance per vehicle without developing insurance products themselves. The platform becomes a financial service provider without ever having applied for a banking license.

“The Embedded Finance revolution that has transformed consumer payments is now changing B2B commerce. By 2025, companies will integrate working capital, virtual cards, and automated workflows directly into their platforms.”
Sandy Weil, Chief Revenue Officer Galileo Financial Technologies (PYMNTS, 2025)

B2B Overtakes B2C

The public perception of embedded finance is strongly consumer-driven: Klarna in online shops, Apple Pay in supermarkets, BNPL when buying shoes. However, the actual growth dynamics lie in the B2B segment. According to Bain, B2B embedded payments are growing from $700 billion (2021) to $2,600 billion by 2026, almost quadrupling. B2B lending is rising from $12 billion to $50-75 billion USD in the same period.

The reason: B2B payments are complex, fragmented, and often still paper-based. Invoice purchasing, prepayment, payment terms of 30 to 90 days, discounts, trade credit insurance. Each of these steps is a friction point that embedded finance can eliminate. According to a PYMNTS study from 2026, 54 percent of all B2B platforms report direct revenue increases through embedded financial products. For platforms with over $1 billion in annual revenue, it’s 67 percent.

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

The German embedded finance ecosystem has its capital in Berlin. Solaris SE, founded in 2016 and with a full banking license since 2017, was long the preferred BaaS partner for fintechs like Vivid Money and Grover. Billie and Mondu offer B2B-specific solutions: invoice purchasing and installment payments for business customers, integrated directly into the checkout.

However, the Solaris example also shows the risks. In January 2023, BaFin ordered measures against Solaris: deficits in risk management and anti-money laundering prevention. A special representative was appointed. In March 2024, a fine of €6.5 million followed due to systematically delayed suspicious transaction reports. For over 18 months, Solaris was unable to onboard new fintech customers.

The consequence for the Mittelstand: maintaining a banking license is more complex than obtaining one. Embedding embedded finance via a BaaS partner involves regulatory risk. If the partner comes under supervision, the company’s own financial service comes to a standstill. Due diligence on the licensed partner is not a formality but business-critical.

New CEO at Solaris: Restart under Intensified Supervision

At the end of 2025, Steffen Jentsch took over as CEO of Solaris. His stated goal: “Durable growth built on regulatory strength and commercial execution.” The message is clear. Solaris is no longer positioning itself as a fast fintech but as a regulatory robust infrastructure provider. For potential partners, this is a positive signal, as it means compliance is no longer treated as a secondary matter. At the same time, the CEO change shows how deeply BaFin’s intervention has hit the company.

The broader ecosystem has learned from this. New BaaS providers are adopting multi-partner strategies from the start: instead of relying on a single license holder, platforms work with multiple banking partners simultaneously. This increases complexity but significantly reduces the single-point-of-failure risk. For the Mittelstand, which embeds embedded finance, this is a strategic consideration that should 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 an independent revenue source. The financial services segment (through the Eos Group) generated sales of almost 1.1 billion Euro in the 2024/25 financial year, a 5.8 percent increase compared to the previous year. Otto operates its own payment service provider and cooperates with Ratepay for BNPL solutions at checkout.

The model can be applied to B2B. A mechanical engineering supplier with its own webshop could integrate order financing without building bank infrastructure. A software provider could automatically calculate and offer advance payment discounts. The technical building blocks exist, and the regulatory framework is defined. What’s often missing is just the strategic decision to understand financial products as part of your own value proposition.

PSD3, DORA, and the Compliance Landscape

The regulatory landscape for embedded finance is becoming more complex. The Payment Services Regulation (PSR), which will replace the current PSD2 together with PSD3, is expected to be published in the EU Official Journal by the end of Q2 2026. It will bring stricter open banking requirements, stronger consumer rights, and a clearer distribution of liability between BaaS providers and frontend platforms.

At the same time, the Digital Operational Resilience Act (DORA) has been in effect since January 2025. All regulated financial market participants, including BaaS providers like Solaris, must demonstrate ICT risk management, incident reporting, and third-party risk management. Their customers, the platforms, are indirectly affected: if the licensed partner does not meet DORA requirements, the entire financial service is at risk.

According to a PwC analysis, 80 percent of sponsor banks (i.e., licensors) describe compliance as “challenging.” The main problem is the lack of control over policy implementation among fintech partners. Organizational maturity is just as crucial to success as technical integration.

Why B2C BNPL is Cooling Down and B2B is Taking Off

The consumer business is showing initial signs of saturation. The CAGR of the German BNPL market dropped from 19.4 percent (2021 to 2024) to a projected 8.3 percent for the period 2025 to 2030. Klarna, Ratepay, and PayPal have largely divided the market, leaving little room for new entrants.

The dynamics in the B2B segment are different. Manual processes still dominate: bank transfers, payment terms agreed upon by handshake, credit checks through the house bank. Each of these steps is a starting point for embedded finance. The volume is higher, margins are better, and customer loyalty through embedded financial products is stronger than in consumer business. A B2B customer who handles their procurement financing through their supplier’s platform is less likely to switch than a consumer who jumps back and forth between Klarna and PayPal.

For SMEs, this means that entering embedded finance doesn’t have to start with BNPL in the webshop. More lucrative use cases lie in B2B financing, working capital management, and automated credit checks. Companies like Creditsafe show how credit checks can be seamlessly integrated into procurement processes.

Entry Strategies for SMEs

● Payment integration as the first step: Expand payment options in your own web shop or B2B portal. Integrate invoice purchase, SEPA direct debit, and card payments via an embedded payment provider. Lowest regulatory hurdle, fastest ROI.

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

● Working capital as a platform feature: SaaS providers and marketplace operators can offer working capital loans as a feature to their users. Sales become the credit criterion, not the bank balance.

● Due diligence on the licensing partner: Check BaFin status, research special representative history, and ensure exit clauses in the contract. A single licensing partner is a single point of failure.

What Embedded Finance Means for the Balance Sheet

Embedded finance not only changes processes but also balance sheet key figures. Platforms that embed payment transactions tie up liquidity in new ways: payment terms granted by the platform operator to its customers appear as receivables on the balance sheet. Working capital solutions disbursed via the platform change the risk profile. Even if the BaaS partner formally bears the credit risk, chargebacks, payment defaults, and dispute costs can impact the platform.

For CFOs in SMEs, this means: Embedded finance is not a pure IT project. It must be reflected in financial controlling, considered in risk assessment, and be presentable in the audit. Companies that think this through from the start avoid nasty surprises at the next annual financial statement audit. McKinsey’s Europe forecast of 100 billion Euro by 2030 sounds tempting, but these sales come with new risk categories on the balance sheet.

The good news: This complexity creates differentiation. Companies that implement embedded finance cleanly, with solid governance, clear partners, and transparent accounting, build a competitive advantage that is hard to copy. The market rewards not the fastest but the most robust.

Conclusion: Financial Products Become a Product Feature

Embedded finance is no longer a fintech niche. It is an infrastructure trend that blurs the line between financial and non-financial companies. For B2B SMEs, this presents a double opportunity: to simplify their own value chain as users of embedded finance and to embed financial products into their own customer offering as providers.

The risks are real, as Solaris shows. But the alternative – continuing to treat financial services as a separate, external process – is becoming an increasing competitive disadvantage. 54 percent of B2B platforms already report revenue increases. Those who wait until the remaining 46 percent catch up will find that entry has become more expensive and the market narrower.

Frequently Asked Questions

What is Embedded Finance?

Embedded Finance refers to the integration of financial services into non-financial products. Instead of going to a bank, customers receive payments, loans, or insurance directly within the platform they already use, such as in an ERP system, a B2B marketplace, or fleet management.

Does my company need a banking license for Embedded Finance?

No. Embedded Finance works through licensed partners (BaaS providers) that provide the regulatory infrastructure. Your company integrates financial products via APIs without needing a BaFin license itself. However, you bear an indirect regulatory risk if your partner comes under supervision.

How big is the Embedded Finance market in Germany?

According to Research and Markets, the German market is expected to reach around $33 billion by 2025 and grow to $44 billion by 2030. Across Europe, McKinsey forecasts €100 billion in revenue by 2030, which would then account for 10 to 15 percent of total banking revenue.

What is the difference between Embedded Finance and Open Banking?

Open Banking (PSD2) obliges banks to make account data accessible via APIs. Embedded Finance goes further: it integrates complete financial products, not just data, into non-financial platforms. Open Banking is an enabler for Embedded Finance, but not the same thing.

What risks does Embedded Finance pose for SMEs?

The three main risks are: regulatory risk due to dependence on the licensed partner (e.g., Solaris), compliance effort due to DORA, PSD3, and BaFin requirements, as well as data protection risks due to the processing of sensitive financial data under GDPR. Due diligence when selecting a partner and contractual exit clauses are essential.

Read More

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Source title image: Karolina Grabowska / Pexels