Taking risk on technology is crucial to competitive advantage: Banks are challenged to counter emerging threats, seize opportunities, and build an innovation pipeline. While digital organizations evolve, corporate labs, ventures, accelerators, and strategic investors lead the charge.

Railsr has become the latest embedded finance firm to raise money, netting $46M.

Embedded-finance-driven business lending is expected to grow sixfold in the next five years.

Competition from fintechs and consumer brands is compelling leading banks and technology providers to revise their strategies. These fintechs and brands are scaling and evolving rapidly on top of banking as a service (BaaS) and open banking infrastructure. We’ve spoken with executives at financial institutions, fintechs, and vendors about how to thrive in an ecosystem that’s reshaping financial services.

Available to fintechs and consumer brands, the solution lets Q2 tap into a market with great potential and add to its breadth in banking-as-as-service (BaaS).

The UK-based neobank’s founder and CEO Anne Boden outlined plans to offer banking as a service globally in 2022, giving Starling a potential opening into embedded finance.

Shake-ups in the new year will include hyper-personalization, tech companies venturing further into embedded finance, and the prospect of super apps in Western countries.

Spurred by shifts in customer expectations, incumbents will race to personalize services and enhance distribution strategies. Fintechs will focus their attention on tapping opportunities that first emerged in 2021.

It’s not alone in the race. An influx of new BaaS entrants indicates the emergence of an industry to underpin embedded banking.

eBay seeks to plug small business financing gap with an embedded lending product for its UK SMB sellers. eBay and other ecommerce firms will likely add more financial services, like accounting solutions, to better serve their user bases.

Consumers’ growing willingness to get their financial services from non-FI providers is spurring consumer brands to embed financial elements in their products and services. But this new form of finance will mean dramatic changes for incumbent and startup FIs.