Online Shops Become Banks: Embedded Finance’s Impact
7 Min. Read Time
Germany controls 21 percent of the European embedded finance market – more than any other country. The market is expected to reach $143 billion by 2026. What began as a niche topic five years ago is becoming a dominant business model: financial products are disappearing as standalone products and reappearing as invisible features in e-commerce platforms, SaaS tools, and mobility apps. As the online store becomes a bank, it’s not just the financial industry that’s changing – every industry is.
Key Takeaways
- $143 billion market volume for embedded finance in Europe by 2026. Germany is the largest single market with a 21 percent market share.
- 46 percent of SMEs in Western Europe are already using financial services integrated into non-financial platforms – from automated invoice financing to integrated business accounts.
- Time-to-Market drops drastically: With Banking-as-a-Service providers like Solaris, integrating financial products takes 3 to 6 months instead of 2 to 3 years with an in-house license.
- Berlin BaaS Hub: Solaris, Mambu, and Raisin form a cluster that supplies international non-banks with regulated financial products.
What Embedded Finance Means – and What It Doesn’t
Embedded finance describes the integration of financial services into products and platforms that are not themselves financial companies. A logistics company offering its drivers a business account. An e-commerce platform providing merchants with goods credits directly in the dashboard. A mobility provider including insurance in the booking process.
The difference from traditional FinTech: the user doesn’t interact with a financial product, but with a product that contains financial functions. The account, credit, or insurance is a feature – not a standalone product. That’s the paradigm shift.
The technical foundation is provided by Banking-as-a-Service (BaaS) providers. They offer regulated financial infrastructure via APIs: accounts, cards, credits, payment processing – all modular, all integrable via API. The company with customer contact doesn’t need its own banking license.
Why Germany is the Hotspot
Berlin has evolved into Europe’s hub for Banking-as-a-Service. Solaris (formerly Solarisbank) is the most well-known player – with a full German banking license and an API platform that supplies companies like Samsung, ADAC, and Vivid Money with regulated financial products. Mambu delivers cloud-native core banking systems. Raisin (WeltSparen) has built a platform for deposit marketplaces.
The location advantage is regulatory: BaFin established clear rules for BaaS models early on. The agent banking model allows non-banks to distribute financial products under the license of a BaaS provider – with clear responsibilities and supervisory duties. Other EU countries are following suit, but Germany has a two to three-year head start.
Use Cases that Work
The most successful embedded finance applications solve a specific problem in the provider’s core business:
● E-commerce Financing: Shopify Capital grants loans to merchants based on their sales data. The merchant doesn’t need to apply for a loan – the system evaluates automatically and offers proactively. Repayment is made through a percentage of sales.
● Platform Accounts: Uber, Lieferando, and similar gig economy platforms offer drivers and couriers integrated business accounts with instant payout. This reduces waiting times and binds drivers to the platform.
● SaaS-integrated Invoice Financing: Accounting software like Lexoffice or sevDesk offers factoring directly within the tool – open invoices are paid immediately, and the customer doesn’t wait for payment receipts.
● Embedded Insurance: Rental car bookings with included insurance, electronics purchases with extended warranties, neobanks with integrated insurance products.
“The biggest disruption doesn’t come from new banks – but from companies that don’t want to be banks at all, yet still offer financial products. Embedded finance makes the bank invisible.”
Based on fynqo.org Embedded Finance Adoption Report, March 2026
Risks and Regulation
Embedded finance creates new chains of responsibility. When an e-commerce merchant offers loans that are technically provided by a BaaS provider, which in turn uses a bank’s license – who is liable in case of problems? BaFin has clarified: the license holder is responsible. But operational risk is distributed among multiple parties.
DORA tightens this further. BaaS providers are considered critical IT third-party providers for financial institutions and thus fall under the requirements of the Digital Operational Resilience Act. This increases compliance costs – and filters out disreputable providers from the market.
For companies that want to use embedded finance, this means: carefully selecting the BaaS partner. Not just looking at API quality and prices, but also at regulatory solidity, audit capability, and long-term stability. A BaaS provider without a viable business model is an existential risk for all companies that build on its infrastructure.
Frequently Asked Questions
What is the difference between Embedded Finance and FinTech?
FinTech companies offer financial products as their main product (e.g. N26 as a bank). In Embedded Finance, a non-financial company integrates financial products as a feature into its existing offering – the customer primarily interacts with the core product.
Does a company need a banking license for Embedded Finance?
No, that’s the point. Through BaaS providers, companies can offer regulated financial products without having a license themselves. The BaaS provider provides the regulatory infrastructure.
Which BaaS providers are there in Germany?
The best-known are Solaris (accounts, cards, loans), Mambu (core banking platform), Swan (Europe-wide), and Raisin/WeltSparen (deposit infrastructure). Berlin is the European hub for BaaS.
What are the risks of Embedded Finance?
The main risks are dependence on the BaaS provider (counterparty risk), regulatory uncertainties in the distribution of responsibilities, and reputational risks if financial products fail under your own brand. DORA further tightens the requirements.
Further Reading
- One year of DORA: What BaFin is now checking
- What traditional banks can learn from neobanks
- Startup comeback: Germany’s startup scene leaves the funding winter behind
- CIO Agenda 2026: Between cost pressure and innovation obligation (Digital Chiefs)
Editor’s Picks
- Funding brakes for the Mittelstand: Why doing it simply is faster
- Managed Services: Why the Mittelstand outsources IT instead of building it
- NIS2 implementation: What the Mittelstand still needs to do
More from the MBF Media Network
cloudmagazin | SecurityToday | Digital Chiefs
Source title image: Pexels / Pixabay
Also available in
