Embedded Finance has grown leaps and bounds since its inception in 2016, with this year being no exception as more and more non-financial entities are incorporating payment capabilities to diversify their offerings to customers.
Three executives from NatWest Boxed, HDI Embedded and Paynetics share their thoughts on the next developments within Embedded Finance that will shape the payment function, from AI to insurance, compliance and user experience.
HDI Embedded Managing Director, Marat Nevretdinov

The front offices takes the front seat
With a focus on the front office, insurance companies will prioritise customer-facing processes and digital engagement over back-office efficiencies. This will result in more investment in customer experience technologies, digital communication tools, and interactive customer service models.
As customer experience during the claim management process grows in importance, insurers will likely introduce more streamlined, automated claims processes tailored to evolving customer needs.
This includes but is not limited to instant claim management. Seamless claims management with excellent user experience is increasingly essential, especially for younger customers like Gen Z. This focus could drive the adoption of AI for predictive claims handling and elevate the role of claims departments as pivotal to the customer relationship journey.
A collaborative model will overcome embedded insurance challenges
In the competitive financial services sector, insurers are likely to prioritise enhancing customer experience to make their embedded insurance offerings stand out.
Rather than running in search of new partnerships, insurers will likely expand collaboration within existing insurtech ecosystems to deliver seamless and integrated insurance experiences across the whole value chain.
By leveraging the strengths of both established insurers and innovative insurtechs, this collaborative model will enable more effective embedded insurance solutions, resonating with customers across both digital and offline channels.
Insurers will need to build better digital brands
Transitioning to digital models will require insurers to establish stronger brand presence and product awareness digitally. This may result in the adoption of new strategies for engagement and retention, such as personalised content, gamification, and enhanced customer education efforts to foster informed purchasing decisions.
Moreover, insurers may experiment with techniques to “insure” customer focus, perhaps through opt-in digital touchpoints or reminders that periodically reinforce product knowledge. Expect insurance marketing to emphasise educational content and user-friendly interfaces to ensure that customers fully understand and can access their benefits.
A growing focus on ethical practices means insurers will likely prioritise transparency, making insurance terms more accessible and understandable. This includes ensuring customers are fully aware of their insurance purchases, understand the benefits, and can easily use them when needed. Insurers may adopt clearer language, visual aids, and simplified digital tools to support informed decision-making and streamline claims processes.
The arrival of truly embedded insurance experiences
As the market matures, embedded insurance products will deliver seamless, end-to-end coverage that integrates smoothly into the customer journey. From onboarding to claims processing, embedded insurance aims to provide a unified experience that feels like a natural part of the broader purchase or engagement process, enhancing customer satisfaction and retention.
This approach moves beyond traditional channels, offering customers a fluid and convenient way to access coverage within their everyday interactions.
NatWest Boxed CEO: Andy Ellis

Embedded finance and the re-bundling of financial services
In 2025, the great re-bundling will accelerate – driven by financial institutions themselves, but also increasingly by non-financial services (FS) brands.
Previously only available directly from the source, the growth of embedded finance has seen financial services embedded directly into the ecosystem of popular brands. So far we have seen businesses such as retailers integrate select services, initially with a focus on convenient payment options — BNPL being the most obvious example.
Over the next 12 months, expect to see brands introducing new offerings to build a patchwork of convenient products and services that enhance customer choice.
We’ve already seen brands like Shopify and Apple build out their financial services to the point they now operate, in effect, like a bank. Other leading brands will follow suit, collaborating with FS providers to establish a new normal where customers can turn to their favourite brands for all their finance needs.
Make no mistake, banks will continue to play an integral part in this journey. Regulatory scrutiny continues to raise the bar for compliance, and non-FS businesses on an embedded finance journey will increasingly seek providers that have their own banking licence and compliance expertise.
Paynetics Co-Founder: Ivo Gueorguiev

Regulation will prioritise KYC and AML
By 2025, embedded finance will be a fundamental part of the global financial ecosystem, driving both innovation and regulatory challenges. As the sector evolves, businesses must prioritise regulatory compliance, adopt innovative technologies, and address the needs of underserved markets to unlock its full potential.
Regulatory scrutiny will intensify as embedded finance integrates further into commerce. This means businesses must prioritise compliance, embedding KYC, AML, and transaction monitoring directly into their financial offerings. Convenience can no longer come at the expense of security and trust.
A critical shift will be the move from APIs to Software Development Kits (SDKs). While APIs remain a solid foundation for experienced fintech players, many businesses lack the expertise to manage compliance complexities. SDKs, which bundle financial services with regulatory safeguards, will bridge this gap, offering a practical, secure option for those controlling consumer access but lacking financial acumen.
Moreover, white-label solutions will see a resurgence. Early fintech efforts often focused on creating unique user experiences, but as the market matures, the emphasis is shifting to efficiency and compliance. By adopting white-label solutions, businesses can deliver seamless, secure services without the overhead of building proprietary platforms.
AI will prove to be pivotal for SMEs
AI will play a crucial role in the next wave of innovation. Real-time transaction monitoring powered by AI can analyse millions of data points to identify anomalies, enhancing fraud detection and regulatory compliance. Scalable, structured AI integration will be a game-changer, providing businesses with the tools to manage complex requirements without sacrificing agility.
SMEs are another focal point for 2025, with embedded finance poised to address their long-standing challenges. Historically underserved by traditional banks, SMEs will gain access to financial tools that were once the preserve of larger enterprises. The synergy between SaaS platforms and embedded finance will drive much of this transformation. SaaS platforms, in particular, stand to benefit by integrating embedded finance to drive loyalty and unlock new revenue streams. For SMEs, this means access to real-time insights, capital solutions, and more sophisticated financial services.
Embedded finance will also level the playing field for SME merchants. Acquiring partners offering integrated financial services will deliver cost reductions, faster settlements, and improved working capital – critical advantages in a competitive market. These benefits will empower smaller businesses to innovate and compete effectively with larger players.
As embedded finance continues to evolve, it holds the potential to reshape the financial landscape. By addressing regulatory challenges, leveraging advanced technologies like AI, and focusing on empowering underserved markets, businesses can harness its power responsibly and drive meaningful progress. As the industry evolves, businesses that embrace these trends will be well-positioned to lead the next wave of innovation in embedded finance.