Embedded finance offers far-reaching opportunities for banks, including greater access to the open market, yet the sector remains largely untapped by traditional institutions. FStech news editor Alexandra Leonards speaks to Jose Luis Navarro Llorens, BBVA’s Head of Open Banking and Embedded Finance Strategy, about how banks can stay relevant in an ecosystem of many players, exploring real-world applications, emerging challenges, and the transformative possibilities ahead.

While embedded finance is already opening new markets and revenue streams, enabling traditional financial institutions to compete with their agile FinTech counterparts, its full potential remains largely unexplored.

Nonetheless, the embedded finance ecosystem is growing rapidly, with global revenues forecast to reach $228 billion by 2028.

At its heart lies one simple aim: convenience. Everyday apps take centre stage while financial institutions often work quietly in the background. For banks to claim a share of this expanding market, they must learn to coexist with cross-industry partners – and accept a supporting rather than starring role.

Trust and security will remain critical assets for banks in this new landscape. However, maintaining relevance will require a shift in mindset as well as strategy.

Staying relevant in a digital-first world

Today’s younger, digital-native customers are reshaping financial services, shifting brand loyalty towards the apps they interact with daily – from social media platforms to digital marketplaces. In this emerging landscape, many consumers may prefer to conduct their financial transactions through Amazon, Instagram, or similar platforms, rather than through a traditional bank.

“The underlying financial services will still come from a bank,” explains Jose Luis Navarro Llorens, BBVA’s Open Banking and embedded finance strategy head, “but for the new digital-native customer, they won’t have just one bank.”

He describes a future where consumers adopt a "prêt-à-porter" model of banking – assembling services from a variety of providers to suit their lifestyle.

As consumers gravitate towards more unconventional methods of banking and payment, traditional institutions risk losing visibility – unless they embed themselves within these new ecosystems.

“With these ecosystems, there are only two options: you’re either in or out,” says Jose Navarro Llorens. “Banks must strive to be part of the ecosystem. At the centre may be a white-label product; we might be hidden, but we are there.”

Those banks that refuse to adapt risk becoming commoditised, reduced to backend service providers for other companies' branded experiences.

Success, therefore, lies not in dominating the ecosystem but in integrating within it.

“We’ve had to realise that the ecosystem doesn’t mean ‘BBVA’s ecosystem’,” he continues. “It is the ecosystem of the partners, the FinTechs, the BigTechs – and we are one part of it.”

While the pace of change may be slower than anticipated, Navarro Llorens sees echoes of the industry’s previous evolution: from physical branches to websites, then to mobile banking apps. He envisions a world where banks could become largely invisible to the end customer – known only by discreet endorsements such as ‘Powered by BBVA’ or ‘Powered by HSBC’.

The inevitable rise of the superapp

Another inevitable shift, according to Navarro Llorens, is the emergence of the ‘superapp’ – a single digital platform combining multiple services.

“It’s not something banks can resist; it will happen,” he asserts. “Superapps will be supported by financial services, and it’s probable that those financial services will be offered by more than one bank – so they will need to compete.”

In this new competitive environment, success will depend on differentiation: through speed of service, pricing, product range, and overall customer experience.

Tapping into the open market

Operating across continents presents BBVA with diverse challenges. In Europe, the market is mature, requiring sophisticated products to stay competitive; elsewhere, such as parts of Latin America, BBVA may face far fewer rivals.

“In Europe, we need to attract potential partners because they might say, ‘I prefer HSBC because they offer a particular API,’” says Navarro Llorens. “In Latin America, and in some other regions, BBVA might be one of only two banks.”

He highlights another challenge: banks’ traditional siloed operating models.

“That means that my brands, my customer, my space, my logistics,” he adds. “And actually, we spend a lot of money trying to attract people to our experiences or to our bank."

Acquiring customers organically is costly; reaching them through embedded finance partnerships with established platforms can be far more efficient.

For example, BigTech companies like Amazon hold enormous appeal, but opportunities also exist with lesser-known enterprises, including SMEs and ERP providers. Navarro Llorens emphasises that embedded finance must serve both retail and corporate customers.

One instructive example was DBS Bank’s 2020 partnership with Chinese electronics giant Haier, using APIs to offer digital supply chain financing to Haier’s nationwide distributor network. The initiative enabled distributors to secure financing for purchase orders within 24 hours – a model BBVA aims to replicate.

“You must strive for your community,” he says. “There are many hidden companies with valuable customer bases you can tap into that can help you reach the open market.”

Real-world applications

BBVA is exploring embedded finance across a wide range of use cases. In Peru, for instance, customers in remote areas can now pay for utilities at local convenience stores, rather than travelling to a bank branch.

“Thanks to embedded finance, we became the first nationwide collection network in the whole country,” says Navarro Llorens.

The bank is also embedding reconciliation APIs into ERPs, allowing SMEs to reconcile payments quickly and easily – provided they have a BBVA account.

Previously, online vendors had to shuttle between the ERP and the bank to confirm transactions. Now, thanks to APIs and real-time notifications, this process is seamless.
In Mexico, BBVA has partnered with Uber to offer drivers and delivery partners a digital bank account linked to an international debit card, enabling near-instant access to earnings and financial benefits.

Such initiatives stem from a deeper understanding of partner pain points. One food delivery partner, for example, struggled with drivers absconding with cash. BBVA developed an API enabling cash deposits via ATMs, automatically notifying the company when funds were secured.

“You realise that maybe the product we’ve build is not what they need, but they may need only one part of the product and it's already solved a problem,” Navarro Llorens reflects.
Shifting the banking mindset

Navarro Llorens acknowledges that embedded finance carries risks. For instance, when multiple companies collaborate to deliver a service, customer service can become fragmented.

He presents a hypothetical: a customer contacts a bank for support on a service accessed through Amazon, only for the bank to disclaim responsibility.

“To succeed, banks must change their post-sales mentality,” he advises, explaining that risk and compliance teams should be involved because they are operating on unfamiliar ground.

He notes that partners often seek banking expertise after encountering unexpected issues – even when the bank itself does not control the end-user experience.

“It’s a learning path that banks need to take to really adopt proper embedded financial services,” he says.

The role of emerging technologies

Technologies like generative AI are set to play a major role in supporting embedded finance.

Navarro Llorens says that through data-powered AI, banks can model better customer profiles or identify lending risks.

“So embedded finance, open market, all of it is data change," he continues. "The more data you have, you’ll need support from AI or machine learning."

A common lending problem for the banking sector is not truly knowing their customers.

“If I can gain access to data from third-parties, then I need to build a new risk model,” he adds. “I could build an alternative data risk model and for that you may need an AI processor.”

He continues: “You can build new storage on top of your traditional storage, giving you additional data. And we know cases where they take into account the social media life of their customers. It's a matter of learning how to use that data and that will for example be facilitated by AI.”

As banks gain access to more third-party data, AI-driven models will be essential to refine risk assessments and customer understanding.

Looking ahead, he predicts that blockchain – though still finding its footing – may eventually intersect with APIs in specific use cases.

“I think right now the problem with blockchain is that it is also trying to establish itself and trying to learn what it is really good for what is exactly is not that good for,” he continues. “And when we really know that and see it begin to appear in use cases, some of them will be surrounded by APIs – not the blockchain itself, but communication and notifications – in the end in it’s a matter of speed and contextuality.”

Building the future

Embedded finance is still emerging, with banking barely scratching the surface. Other sectors – from public services to logistics and manufacturing – are only beginning to explore its possibilities.

Yet forecasts suggest that embedded finance’s role will grow significantly in the coming years. Banks that fail to adapt risk being left behind.

To secure their place, banks must build strong relationships across industries, invest in data and API infrastructure, embrace emerging technologies, and reinforce their core strengths of trust and security.

Above all, they must accept that in the future of financial services, they are no longer the star – but they remain essential.

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