Open up any app on your phone or visit a website, and the odds are high that you’ll find some form of financial technology integrated into the experience. Companies that were not originally considered fintechs — like Apple, Shopify, and Uber — now offer financial services ranging from payments and lending to banking and credit.
These companies aren’t alone. Thanks to the maturation of fintech infrastructure, companies of all types and sizes are embedding financial services into their products and business models. The benefits are clear: improved customer loyalty, new revenue streams, and valuable data insights. However, these forays into finance also require companies to pay closer attention to compliance, fraud, data security, and brand risk.
Fortunately, fintech infrastructure platforms like Middesk are building the tools that are making it easier than ever for companies to deploy new financial services while managing the attendant risks and delivering a seamless customer experience.
How integrating financial services can fuel company growth
From payments to loans to banking, financial services are inherently designed to grease the gears of economic activity. So when these services are offered to customers by companies that are not financial services providers by nature, they naturally drive growth for those companies by supporting:
- Increased customer loyalty and retention: When customers rely on a company for financial services, they’re more likely to stick around.
- New revenue opportunities: Companies can monetize financial transactions through fees, interest, or premium offerings.
- Better business intelligence: Financial data provides deep insights into customer behavior, allowing companies to optimize their offerings.
We can see plenty of examples of companies that didn’t start out in financial services now offering them in different ways:
Payments
Many companies now integrate payments services to provide seamless checkout experiences, reduce cart abandonment, and keep customers within their ecosystem. Shopify introduced Shopify Payments, for example, to remove third-party friction and allow merchants to accept payments directly within the platform. By controlling the payments flow, Shopify enhances merchant convenience, collects transaction data, and generates additional revenue through processing fees.
Lending and credit
Providing credit and financing options helps companies grow by enabling customers and partners to access necessary funds. Many platforms, such as e-commerce and gig economy services, introduce lending solutions tailored to their users' needs.
Amazon introduced Amazon Lending to provide small and medium-sized sellers on its platform with quick access to capital. By analyzing seller data, Amazon identifies businesses with strong sales performance and offers short-term loans to help them purchase inventory, expand their operations, and drive further growth — all without requiring them to navigate traditional banking hurdles.
Banking-like services
Companies are offering financial tools that create more value for their customers. For instance, Lyft introduced Lyft Direct, a banking solution that provides drivers with an FDIC-insured bank account and a debit card that enables instant payouts, cashback rewards, and fee-free ATM withdrawals. This banking feature helps drivers access their earnings more quickly, improving financial stability and making Lyft a more attractive platform for gig workers.
With the benefits of financial services come additional risks and responsibilities
While embedded finance offers significant upside, it also comes with risks that companies must proactively address:
Brand reputation risks
Mismanaging financial services — whether through poor user experience, fraud, or compliance failures — can erode customer trust. While Shopify Payments allows merchants to accept payments through the online store platform, this also means Shopify must handle chargebacks, fraud disputes, and regulatory compliance to ensure that both merchants and buyers maintain trust in the system.
Fraud prevention and compliance challenges
Companies must navigate Know Your Customer (KYC), Know Your Business (KYB), and Anti-Money Laundering (AML) requirements while protecting their platforms from fraudulent accounts. For example, because Amazon Lending extends credit to sellers, the e-commerce giant must rigorously assess borrower risk while ensuring it does not facilitate money laundering or fraudulent activities.
Managing data security
Companies must ensure that sensitive financial information is protected against fraud, breaches, and regulatory non-compliance. The Lyft Direct debit offering required Lyft to implement robust security measures to protect user accounts and transactions. This has meant investing in encryption, fraud detection, and compliance with data protection regulations to maintain customer trust and avoid legal repercussions.
How companies can mitigate risk while enhancing the customer experience
The good news is that companies don’t have to solve these challenges alone as they tap into the benefits of financial services. A growing ecosystem of fintech and risk mitigation solutions helps them embed financial services securely and efficiently:
- Identity verification and fraud prevention: Platforms like Middesk streamline KYC/KYB compliance and prevent fraud while maintaining a seamless onboarding experience. By automating verification processes, businesses can onboard legitimate customers quickly while reducing the risk of fraudulent activity and maintaining compliance.
- Banking-as-a-service (BaaS): Embedded finance providers allow companies to offer banking products — such as accounts, cards, and lending — without having to become banks themselves. This makes it possible for companies to expand their financial offerings without the burden of regulatory complexity and infrastructure development.
- Payment processors: Secure and efficient payment solutions enable companies to process transactions with minimal friction, whether online or in person. By integrating trusted payment processing systems, companies can reduce failed transactions, improve checkout conversion rates, and protect against fraudulent activity.
With the right partners, companies can not only mitigate the inherent risks of financial services, but also foster customer trust and drive operational efficiency as they scale.
The time is now for fintech-forward companies
Many observers are eyeing 2025 as a comeback year for fintech, which has matured through the ups and downs of the industry’s rise. As a result, more companies and new sectors will continue to embrace financial services as they find novel ways to safely and seamlessly fold them into their customer experiences, and those that succeed will gain a competitive advantage in their industries.
But success in embedded finance depends on more than just growth. Companies must proactively manage risk, stay compliant, and ensure seamless customer experiences to avoid regulatory hurdles and reputational damage. The businesses that thrive won’t be those that move the fastest, but those that scale financial services responsibly and securely.
Curious to see how Middesk works?
You can also see our compliant, friction-free seller onboarding platform in action by talking to an expert today.
