Why embedded finance is a disruptive force financial institutions can’t ignore

The financial system of the future won’t be built in banks — it’ll be embedded in the apps, platforms and services people already use. Redefining how financial services are accessed and delivered, embedded finance is at the forefront of fintech innovation.

By seamlessly integrating payments, lending, insurance and other financial products into non-financial platforms, embedded finance is making financial interactions more accessible, seamless and intuitive. This rapid evolution is sparking discussions about the future of traditional banking institutions. But does this mean the end of banks as we know them? Probably not.

Rather than signalling the end of traditional banking, this shift offers institutions a chance to evolve. By partnering with fintechs, banks that innovate will thrive.

Globally, the embedded finance market is expected to reach $7.2 trillion in size by 2030, according to a report by Dealroom and ABN AMRO Ventures, while in the MENA region, the market, valued at $11.2 billion in 2024, is projected to soar to $37.7 billion by 2029, as reported by Research and Markets. This impressive growth underscores the increasingly vital role of this sector in transforming financial ecosystems regionally and globally.

The banks-versus-fintech narrative is outdated. What we are seeing now is 'coopetition' — a strategic blend of selective competition and essential collaboration. Fintechs are nimbler, often better suited to solve hyper-specific problems quickly. Banks, on the other hand, offer scale, trust and capital. I’ve seen firsthand how the smartest players on both sides are shifting their mindset from rivalry to partnership.

This has prompted established financial players to rethink their innovation strategies, leading them to either cultivate innovation internally or seek it externally through investments and acquisitions. By fostering strategic partnerships, financial institutions can leverage the strengths of fintech disruptors, ensuring they remain relevant in an increasingly digital and diversified economic landscape.

The announcement that Astra Tech’s subsidiary, Quantix, secured $500 million in asset-backed securitization financing from Citi, marking the largest UAE fintech deal to date, highlights the power of collaboration between traditional financial giants and fintech disruptors. This funding allows Quantix to scale its CashNow consumer lending platform, extending credit to underserved segments, like gig workers and SMEs, while Citi diversifies its portfolio and taps into the growing embedded finance sector. Together, Citi’s stability and Quantix’s innovation drive financial inclusion and competitiveness. Collaboration, not competition, will define the winners of the financial future.

Beyond large-scale financial deals, the most meaningful transformation lies in accessibility. Bank–fintech collaborations are having a real impact on the ground — especially for underserved communities. By offering user-friendly apps and online tools, these platforms make it easier for a diverse range of users, including SMEs and individuals previously excluded from the formal financial system, to manage their finances, access credit and build financial confidence. Through simplified investment tools, personalized financial advice and real-time financial management features, fintech is demystifying finance and empowering users to make informed decisions.

This increased accessibility has enabled participation in the modern digital economy and driven a rise in digital financial literacy that is organic and impactful. In my view, the next wave of financial inclusion won’t come from traditional branches, but from intelligent, contextual platforms that can anticipate user needs and deliver tailored financial solutions with a depth of understanding that traditional models simply can’t match.

Looking ahead, AI is set to play a transformative role in embedded finance by enabling real-time processing of payments and transactions, enhancing security and providing hyper-personalized financial services. AI-driven fintech platforms are no longer just facilitating transactions — they are making finance smarter and more intuitive.

Quantix’s AI-driven credit scoring is already enabling lending for gig workers and SMEs who lack traditional credit histories, opening new avenues for financial inclusion. Similarly, our AI-powered assistant, Botim AI, is set to transform the Botim Ultra app by introducing advanced features that will improve user interactions and financial management. This feature will create a more intuitive, efficient and seamless experience, empowering users to manage their financial activities directly through the app with ease and convenience. Meanwhile, Astra Tech-owned PayBy’s AI-powered fraud detection processes billions of transactions in real-time, identifying anomalies and potential threats faster than legacy banking systems, ensuring safer and more reliable financial interactions.

As AI continues to evolve, this model will shift from being just a feature to an autonomous, intelligent financial ecosystem — one that anticipates user needs, minimizes risk and delivers financial services precisely when and where they are needed.

Despite its vast potential, there are several factors to scaling embedded finance adoption. Technologically, there is a need for robust and secure application programming interfaces (APIs) to facilitate seamless integration of financial services into non-financial platforms. At the same time, providers must navigate complex regulatory landscapes to ensure compliance with financial regulations and data privacy laws.

User-related barriers also exist, particularly around building trust and educating consumers about the benefits of embedded finance. To overcome these challenges, businesses must invest in secure and user-friendly technologies, adhere to regulatory requirements and implement effective consumer education strategies.

In the UAE, integrated financial services are gaining significant momentum. With the nation’s focus on rapid digital adoption and financial inclusion, it is becoming a key enabler of financial transformation. The projected compound annual growth rate (CAGR) of 30.1% for embedded finance in the UAE is driven by several key factors. Firstly, there is an increasing demand for digital payment solutions as consumers and businesses seek more convenient and efficient ways to transact. The rise of e-commerce has further fuelled this demand, with online shopping becoming a significant part of the retail landscape. Additionally, the popularity of 'by now pay later' services has surged, offering consumers flexible payment options and driving the adoption of embedded finance.

As the UAE continues to invest in digital infrastructure and foster a supportive regulatory environment, it has the potential to become a regional and global hub for fintech innovation. Promoting collaboration between financial institutions and tech startups – the 'coopetition' mentioned above - will be key to driving innovation and developing cutting-edge solutions. Additionally, initiatives, such as the UAE's Young Investor Programme by National Bonds, equip students with essential financial skills. These initiatives play a crucial role in fostering financial literacy and driving the adoption of embedded finance across the region. By educating consumers about the benefits and functionalities of embedded finance, the UAE can build trust and encourage wider usage of these solutions.

As embedded finance continues its rapid ascent, the question is no longer whether traditional financial institutions should adapt, but how quickly they can. Those that resist this shift risk missing out on the opportunity to serve broader customer segments and to remain competitive. Legacy institutions that cling to outdated models may soon find themselves outpaced by more agile, customer-centric players who embed financial services where consumers already are.

Embedded finance isn’t just a tool — it’s a test. A test of how willing we are to redesign financial services to serve more people, more intelligently, in more places. The institutions that embrace collaboration, intelligence and inclusion won’t just survive — they’ll lead. With a presence in 155 countries and over 150 million users, platforms like Botim can act as accelerants to financial inclusion — offering a launchpad for embedded finance and a strategic partner for those looking to shape the future of fintech.