Every business is a fintech company—they just don’t know it yet. 

Embedded finance enables businesses to integrate financial services (e.g. banking, payments, lending, and insurance) directly into their core offerings. As such, the primary goal of embedded finance is to enable consumers to interact with platforms without context switching, thus boosting user attention and engagement. Financial services will be increasingly embedded into every application as digitization and new financial primitives transform consumer transactions.

The question isn't if embedded finance will change how companies are built—it's whether you'll leverage it more strategically than the incumbents and emerging competition.

Over 85% of companies that embed financial services see increased customer engagement and new customer acquisition. Additionally, embedded finance can increase revenues. In 2023, Shopify saw 3x growth through its embedded finance offerings compared to its subscriptions, and in 2024, the company’s embedded finance solutions made up ~73% of its revenue.

While others have written extensively about embedded finance and its history, this research report focuses on its future. In this context, we’ll mainly discuss blockchain technologies, such as smart accounts and stablecoins, as these will reshape embedded finance, leading to new financial primitives. We start with an overview of conventional embedded finance and then explore the future of this vertical through the lens of blockchain technologies.

Conventional Embedded Finance 

Conventional embedded finance refers to nonfinancial platforms integrating legacy financial services. Such services rely on traditional financial institutions—banks work behind the scenes to facilitate consumer loans, accelerated payments, virtual bank accounts, and shopping experiences. 

For example, travel platforms like Airbnb offer insurance at their checkout. Platforms like QuickBooks don’t just do bookkeeping; they also provide small-business loans using the data in your accounting reports to speed up underwriting. Business owners can click a button in QuickBooks to access a line of credit—never leaving the app to apply separately at a bank. 

Embedded finance reduces the need for consumer-bank interactions, using code to replace what would historically be face-to-face transactions with bank tellers. Businesses embed financial services into their offerings to increase consumer retention, create new revenue streams, and capitalize on consumer data. This unlocks enormous efficiencies for companies and their customers while increasing bank revenue. 

Companies that offer embedded finance require partnerships with sponsor banks to function. Regulators typically view sponsor banks as “gatekeepers,” so they must implement robust risk management frameworks, ensure third parties comply with relevant laws, and perform ongoing due diligence to maintain their banking charter. 

By taking on the responsibility of consumer protection and regulatory compliance, sponsor banks make the lion's share of revenue through interchange fees (which vary depending on the card type used), loan origination fees, or subscription-based models. The more complex the embedded service, the higher the fees the sponsor bank can charge. 

Sponsor banks that provide infrastructure for embedded finance platforms generate ~51% of their revenue from such partnerships. The total embedded finance market was estimated between $80–$100 billion in 2023, with projections exceeding $1 trillion in the next decade. Moreover, 47% of banks plan to boost embedded finance investments, as new projections suggest that the market could soon account for 15% of bank revenue.

That said, businesses that embed finance into their offerings will increasingly seek ways to reduce fees. In this context, blockchain technology is increasingly coming up the agenda, giving rise to “hybrid” embedded finance.

Hybrid Embedded Finance

We view hybrid embedded finance as nonfinancial platforms integrating blockchain technology like stablecoins or smart accounts.

Hybrid embedded finance can capture billions in additional revenue that would otherwise go to interexchange fees paid to card processors and cardholder banks to facilitate transactions. Beyond explicit fees, onchain systems save costs by simplifying operations. For example, integration with existing card and banking networks is required to create new financial services, which can take months. Stablecoins are a superior alternative: They can be accepted with far simpler code integration, which makes them accessible to businesses of any size and can vastly improve time-to-market.

A lot of time (which is money) is spent by businesses and banks on reconciliation—matching payments with invoices, tracking down lost wires, and fraud investigations for chargebacks. Much of this inefficiency stems from fragmented payment databases without standardized transaction information. In 2020, failed payments cost the global economy $118.5 billion—that same year, financial institutions were willing to tolerate failed payment rates of up to 5%.

Hybrid embedded finance solutions, by contrast, offer integrated and interoperable infrastructure, greatly reducing operational complexity and costs and bringing businesses closer to their customers.

We have seen first glimpses of hybrid embedded finance, but all have yet to truly take off. Super apps are leading the hybrid embedding charge, with applications like Grab integrating Solana USDC and Telegram leveraging stablecoins and TON for non-fiat transactions. Other notable hybrid embedded finance examples are Solana Blinks and Phantom’s embedded wallets. 

The lack of mass adoption of hybrid embedded finance stems from several factors, including the stickiness of existing payment workflows, lack of incentives to switch to using Blinks for payments, lack of integration into non-Solana applications/payment networks, and no mass adoption within Solana and beyond. 

Hybrid embedded finance solutions should focus on real-world use cases, provide frictionless consumer experiences, prioritize safety, and ensure compatibility with as many existing wallets, apps, and merchants as possible. The most important change to the current embedded finance paradigm is that stablecoins are now widely accepted and easy to integrate; the tools are all there, and now it is up to developers' creativity to build the next embedded super app.

Stablecoins Powered By Smart Accounts: The Next Evolution Of Hybrid Embedded Finance

Smart accounts unlock the full potential of stablecoins, combining programmability with security to reshape how embedded finance is built.

Smart accounts enable developers to deploy millions of global accounts for customers in seconds. These customer accounts accept global payments, offer flexible access and recovery options, automate escrow and subscription workflows, allow for time locks and session keys, and enable gas abstraction and other transaction policies. Rather than relying on traditional banking infrastructure, these accounts operate on permissionless blockchain networks supported by thousands of validators, delivering faster, more cost-effective, globally accessible financial services.

Smart accounts serve as the operational layer facilitating secure stablecoin adoption across applications, driving the shift toward more efficient, borderless financial systems. Developers can programmatically access onchain accounts for payments, trading, and identity management to create new products and revenue streams.

Developers can now easily integrate smart accounts through Squads API, powered by our recently launched Smart Account Program. Smart accounts have traditionally forced developers to choose between programmability, cost, and security. The Smart Account Program eliminates this trilemma with an architecture that delivers on all fronts, providing developers with a high-performance, low-overhead infrastructure layer for building stablecoin payment systems and deploying smart wallets at scale. For example, developers will soon be able to deploy 1 million wallets for just 2.5 SOL total—a fraction of a penny per wallet compared to the traditional $0.30 cost per smart wallet.

Here are examples of what developers can build with Squads API and embedded finance:

• Stablecoin Neobanks: Deploy financial applications with direct debits and real-time settlement. Synchronous execution delivers the instant confirmation users expect, while compliance controls ensure regulatory requirements are met.

• Smart Wallets: Launch wallet infrastructure for millions of users without prohibitive costs. The new account unit economics make large-scale user acquisition viable, with passkey support arriving in the second half of Q2 2025.

• E-commerce Marketplaces: Build payment systems with escrow capabilities for secure buyer-seller transactions. Gas abstraction creates a frictionless checkout experience without requiring native tokens.

• AI Agent Infrastructure: Deploy autonomous financial agents with programmable authorization logic. Spending limits and transaction policies provide guardrails for automated systems to operate securely within defined parameters.

Today, multiple payment processors and banks are required to create or implement an embedded finance solution, significantly reducing revenue. Stablecoins and smart accounts disintermediate these parties, increasing margins and creating opportunities for novel primitives.

Conclusion 

Smart accounts will increasingly fulfill the functions of the traditional embedded finance stack without relying on sponsor banks or fintech middleware. This will enable a new segment of builders to compete with legacy embedded finance without dealing with the complexities of navigating traditional sponsor bank relationships.

The moment to adapt and build is now. Explore Squads API and contact our team to integrate hybrid embedded finance into your product or service.

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