economy
When a ride-hailing app offers you a loan, or an online store gives you its own branded payment card, financial services are being woven directly into apps that aren't banks.
Embedded finance describes weaving banking and payment features directly into apps that aren't themselves banks, such as a ride-hailing app offering a loan or a retailer issuing its own branded card, with the financial plumbing typically provided behind the scenes by a licensed bank or fintech partner.
Shadow finance isn't the standard term for this practice, and it more commonly refers to lending activity happening outside regulated banking oversight, a different and riskier concept. Microfinance refers specifically to small loans aimed at underserved borrowers, a distinct concept from embedding financial products inside everyday consumer apps.
This trend lets companies that aren't licensed banks still offer sophisticated financial products by partnering with one behind the scenes, which is why a retailer or app with nothing to do with banking can suddenly hand you a loan offer or a branded card.
economy
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