U.S. companies are increasing their investment in embedded finance despite mounting concerns over fraud, regulatory uncertainty and integration complexity, according to a survey by Green Dot Corporation and Wakefield Research. The study found that 91% of embedded finance decision-makers plan to increase investment over the next three years, while 74% said the risks associated with offering financial services through nonfinancial platforms have risen over the past two years. The findings highlight how banking-as-a-service (BaaS) and embedded financial products are moving from experimentation toward core business infrastructure, with trust and accountability becoming central to expansion.

Embedded Finance Investment Grows as Fraud and Compliance Risks Rise

Embedded finance is becoming a strategic growth priority for U.S. businesses, but managing the risks of delivering financial services through nonfinancial platforms is emerging as a significant operational challenge. New research from Green Dot Corporation and Wakefield Research suggests that companies increasingly view embedded finance as a competitive necessity while reassessing how they manage security, regulatory compliance and responsibility for customer losses.

The survey of 250 senior decision-makers involved in embedded finance found that 89% consider banking-as-a-service and embedded finance a moderate or strong driver of business growth and competitiveness. Meanwhile, 91% plan to increase investment in the sector over the next three years.

The research, titled Embedded Finance: Smarter, Faster, Higher Stakes, was conducted between September 3 and September 21, 2026. Its findings point to a market increasingly focused on scaling established financial products rather than simply testing new business models.

Revenue growth is only part of the appeal

Among surveyed decision-makers, 54% said embedded finance helps generate new or recurring revenue. Other reported benefits include competitive differentiation, cited by 49%; customer acquisition, at 47%; and reduced customer churn, at 44%.

Embedded finance allows companies to integrate financial products such as payments, accounts, cards and lending into their existing customer experiences. Banking-as-a-service providers can supply parts of the underlying banking infrastructure, while brands incorporate those capabilities into their own applications, platforms and commercial workflows.

For retailers, software providers and other nonfinancial businesses, the model can create additional revenue opportunities and keep customers within an established digital ecosystem. For BaaS providers and financial institutions, it offers a distribution channel beyond traditional banking interfaces.

Investment plans reflect that strategic importance. The survey found that 75% of respondents intend to increase embedded finance spending moderately over the next three years, while 16% expect a significant increase. Less than 1% said they planned to reduce investment.

However, growth ambitions are accompanied by substantial implementation challenges. Nearly all respondents, 97%, reported at least one major barrier to integrating embedded financial services.

Security and regulatory uncertainty complicate expansion

Data security and privacy concerns ranked as the most frequently cited integration barrier, at 52%. Uncertainty about current and future financial regulations and technical integration complexity each followed at 43%.

Separately, 74% of respondents said the risks of offering embedded finance had increased over the previous two years. And 87% expressed concern that an unpredictable regulatory environment could limit their organizations’ ability to innovate.

These findings illustrate the operational demands of embedding financial services into nonfinancial businesses. Companies must coordinate technology providers, banking partners, compliance processes, customer support and fraud controls while maintaining clear responsibilities across the service.

Open banking and data portability present a more nuanced picture. Although regulatory change can create implementation costs, 64% of respondents viewed requirements such as Section 1033 of the Consumer Financial Protection Bureau’s framework primarily as an opportunity rather than a challenge.

The distinction matters because standardized access to financial data can support new services and improve customer choice, but businesses must still account for applicable legal requirements, implementation timelines and evolving regulatory guidance.

Who is responsible when customers lose money?

The survey identified another unresolved issue: accountability when fraud or financial losses occur through an embedded finance product.

Among respondents, 42% said the consumer-facing brand and its bank or BaaS partner should share responsibility equally. Another 32% assigned primary responsibility to the brand, while 23% said the bank or BaaS provider should bear primary responsibility.

The findings suggest that commercial partnerships have not produced a uniform view of how customer protection obligations should be divided. Actual legal responsibility will depend on applicable law, contractual arrangements, the nature of the product and the circumstances of a loss.

Customer understanding adds another layer of complexity. According to the survey, 29% of respondents said most of their end users have minimal or no understanding of which entity holds their money.

That gap can make transparency around fund custody, deposit insurance and the roles of banking partners especially important. Brands and providers must communicate clearly about where money is held, what protections apply and whom customers should contact when something goes wrong.

When evaluating BaaS partners, respondents placed similar importance on operational reliability, balance sheet strength, independent audits, custody and insurance clarity, fraud and anti-money-laundering controls, contract transparency, and regulatory standing.

Agentic AI enters the risk-management equation

The survey also points to growing interest in agentic AI for financial services. Respondents most frequently identified fraud monitoring, at 36%, and identity verification and know-your-customer processes, at 34%, as functions they expect AI agents to drive primarily. Payments followed at 30%, while budgeting was cited by 24%.

These expectations reflect interest in automating high-volume workflows and detecting suspicious activity more efficiently. However, deploying AI agents in financial services introduces questions around authorization, explainability, data access, human oversight and accountability for automated decisions.

Green Dot’s senior vice president and general manager of embedded finance, Renata Caine, said companies need to balance growth with compliance, customer protection and clear accountability.

For the embedded finance market, the central challenge is no longer simply connecting a financial product to a digital platform. Sustainable expansion will require reliable infrastructure, well-defined responsibilities and evidence that new services protect customers while delivering practical business value.

Market Landscape

Embedded finance and BaaS enable nonfinancial companies to integrate payments, banking and lending capabilities into existing customer experiences. As adoption grows, providers face increasingly complex requirements around fraud prevention, privacy, regulatory compliance, partner oversight and customer transparency.

Green Dot and Wakefield Research’s survey suggests that investment appetite remains strong, even as businesses reassess operational risks. AI-driven fraud monitoring and identity verification are emerging areas of interest, but clear accountability, dependable infrastructure and effective customer safeguards remain essential to sustainable growth.

Top Insights

• Investment remains strong: 91% of surveyed embedded finance decision-makers plan to increase investment over the next three years, according to Green Dot and Wakefield Research.
• Risk concerns are rising: 74% say embedded finance risks have increased, while data security, regulatory uncertainty and integration complexity remain significant barriers.
• Accountability remains fragmented: Respondents disagree about whether brands, banks or BaaS providers should primarily cover customer losses arising from fraud.
• Partner due diligence matters: Companies prioritize operational reliability, financial strength, independent audits, fund custody transparency and fraud controls when assessing BaaS providers.
• AI adoption is expanding: Fraud monitoring and identity verification lead surveyed expectations for financial functions increasingly handled by AI agents.

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