Embedding Banking Where Business Happens

The idea of open banking goes back more than 40 years. In 1980, the German postal service in conjunction with a financial institution ran an experiment to determine whether people could conduct banking transactions online from their homes. A screen test was conducted using five external computers, and roughly 2,000 people were invited to participate.

The successful experiment led to the development of the Home Banking Computer Interface (HBCI) in 1998 and Financial Transaction Services (FinTS) in 2002. HBCI was then combined with screen scraping to form what is now called SOFORT, but in time screen scrapings were replaced by applications programming interfaces, or APIs, which are thought to be more secure and straightforward. Third-party APIs have since exploded, paving the way for ever-more innovations in the financial services industry.

Community financial institutions (CFIs) can “win the front door” in forging business relationships by meeting clients where they already work, not in a separate banking portal, but inside the software they use every day. Commercial embedded banking makes this possible by integrating banking services directly into nonfinancial platforms, such as treasury tools within an enterprise resource planning (ERP) system or invoice financing inside logistics software or other B2B marketplaces. With this model, financial services are accessed at the point of need rather than through a standalone banking channel, aligning with business owners’ expectations that their banking should be available wherever their businesses operate.

Global financial transaction volume within commercial embedded banking is expected to skyrocket from $5.9T in 2023 to $20.8T by 2030, with B2B accounting for $13T. Revenue growth is correspondingly explosive: $45B in embedded banking service revenue by 2030, and platform service revenue surpassing $74B by 2034.

CFIs should be evaluating commercial embedded banking now because the window to establish relevance is narrowing as fintechs, ERP platforms, and larger banks rapidly integrate financial services into the software environments where businesses already operate. As demand grows for seamless digital banking experiences, CFIs risk losing visibility, client relationships, and fee income if they remain tied to traditional channels. 

By positioning embedded banking as a core digital strategy early, CFIs can leverage APIs, partnerships, and SaaS-like delivery models to reach their clients more efficiently, accelerate product deployment, and integrate into new distribution channels. Those that can invest in this technology early could unlock new revenue streams through subscriptions, usage-based pricing, and revenue sharing, while strengthening client engagement and expanding their role within the commercial financial ecosystem.

CFIs can leverage APIs to embed their treasury management solutions, including account management, payments initiation, FX execution and working capital solutions, directly within ERP systems or side by side with third-party treasury platforms.

“Businesses rely on cash flow, complex payments and daily operations, causing finance teams to spend hours reconciling across various portals and reports,” Deloitte experts write. “Embedding banking tools into the systems where work happens increases speed, automation, and data intelligence for finance and treasury management.”

CFIs can go further and also offer embedded automated forecasting and AI-driven receivables matching, so commercial clients can reconcile incoming payments with outstanding invoices in real time and improve cash flow visibility. Moreover, CFIs can differentiate their embedded tailoring treasury management offerings by tailoring specialized financial solutions to specific industries, such as manufacturing, real estate associations, or legal professional services.

Industry-specific B2B marketplaces, like health care, construction, manufacturing, and logistics, are quickly spreading across the globe. Within each marketplace, platforms are partnering with FIs to embed financing and other banking services to facilitate purchases of products and services. 

For the FIs that participate, this can mean creating additional revenue streams, including payment processing fees, interest from supply chain lending, and subscription revenue to treasury management products.

One CFI that is already offering this service is the $3.6B-asset Encore Bank in Little Rock. It offers Encore Embedded Finance, with the implementation of ERP Banking in partnership with Koxa, a fintech that provides an API platform that allows commercial clients to access banking services directly from their ERP and accounting systems. Clients can initiate payments, view balances and transactions, and support reconciliation processes without “swivel-chairing” into a separate banking portal. Clients benefit from faster, more reliable treasury workflows without dependence on portals or file uploads.

“Our clients want banking to fit naturally into how they operate,” says Kala Forehand, Director of Treasury and Liquidity at Encore. “ERP Banking allows us to meet businesses where they already work—inside their ERP—while maintaining the security, controls and level of service they expect from Encore.”

CFIs can either build API platforms internally or partner with fintechs that offer turnkey API platforms and established relationships with ERP software providers and B2B marketplaces. When choosing the outsourcing route, CFIs must adhere to stringent regulatory expectations around third-party risk management, data sharing and operational resilience in embedded arrangements. Moreover, when the customer’s main interface is a non-bank platform, CFIs must also plan for clear Know Your Customer processes, transaction monitoring and dispute handling. 

Commercial embedded banking is quickly shifting from a forward-looking concept to a competitive necessity for CFIs. As financial services become embedded within the platforms businesses rely on every day, CFIs must decide whether to extend their capabilities into these ecosystems or risk being relegated to the background. Those that move deliberately (investing in the right partnerships, technology infrastructure, and governance frameworks) can expand their reach, deepen commercial relationships, and capture new sources of fee and lending revenue. In a market where distribution is increasingly defined by software, embedded banking offers CFIs a path to remain visible, relevant, and competitive.