Financial technology is now entering its third act, marked by a significant shift in how platforms and businesses interact with financial services. The first wave brought democratization, with businesses gaining access to online credit and lending tools aimed at leveling the playing field. The second wave moved these products inside platforms, embedding payments and finance into everyday software workflows. Despite their impact, these steps left business owners managing multiple fragmented systems.
Today, platforms are in a race to embed financial services; as of 2021, 73% planned to integrate lending features into their software within two years. The opportunity is huge: Such integrations can increase EBITDA, retention, and user acquisition for platforms. Yet, most current efforts stick to static, product-first solutions rooted in earlier fintech phases. The real transformation is reaching its third act—platforms evolving into true financial operating systems (OS): intelligent, integrated, and predictive.
This third act is crucial for end users, who want to manage and resolve their financial challenges directly within the platforms they use daily, without juggling separate systems or applications.
ACT I: DIRECT-TO-BUSINESS FINTECHS
The first phase of fintech focused squarely on increasing access. Online lenders and challenger banks used bureau data and alternative signals to provide credit and unbundle financial services, making them accessible outside traditional institutions. Capital flowed more freely, yet these assets remained siloed: Businesses had to navigate a separate financial stack from their core operations, consuming valuable time and resources.
For fintech providers, reaching customers directly was fraught with acquisition costs and operational hurdles, often making profitability elusive.
ACT II: SINGLE EMBEDDED SOLUTIONS
The second wave introduced embedded products—payments, lending, accounting, and payroll—directly into existing platforms. Small and midsize businesses could access financing or manage payroll without leaving the tools they relied on for day-to-day operations.
Platforms experienced increased growth and retention, but the integrations were narrow. They often addressed only isolated events in the customer journey, like a loan for payroll, without considering broader impacts on cash flow, vendor payments, or inventory management.
Most solutions in this stage felt bolted on rather than truly integrated, providing businesses with options but not holistic or proactive solutions. Many fintechs still operate in this single-product mode, mistaking integration for innovation’s finish line.
ACT III: THE EMBEDDED FINANCIAL OPERATING SYSTEM
The third act marks a major leap. Instead of simply adding products, the financial OS embeds finance into the entire user workflow—making it not just about payments or credit, but intelligence.
In practice, these platforms anticipate cash flow gaps before they arise, deliver insights in real time, and proactively match users with the best financial tools or resources when needed. Every interaction adds context and intelligence, going far beyond what static loan products or one-off integrations can offer.
AI drives this evolution, analyzing unstructured data, predicting financial needs, and constantly improving the OS with every transaction. This approach doesn’t just create “stickier” platforms; it transforms the core experience by reducing the complexity of financial decision-making.
For platforms, fully integrating finance means owning the end-to-end workflow, becoming the trusted system of record and deepening user relationships over time.
STAKES FOR PLATFORMS
The competition to embed fintech at deeper levels is escalating. Platforms that linger in Act I or II will be overtaken by those embracing the financial OS approach. Users are tired of fragmented dashboards and single-point apps—they want systems that remove friction, automate financial decisions, and free up time for growth.
Companies that evolve into a financial OS don’t just provide services—they become indispensable, earning trust and increasing loyalty as financial intelligence compounds with each interaction.
THE NEXT ERA
Fintech’s evolution is about aligning closer to the workflows that drive real value for businesses and consumers. Act I expanded access; Act II brought capital into software. Now, Act III is defined by intelligence and seamless, proactive integrations.
Static tools may address temporary issues, but only platforms powered by AI and a true financial OS will define the future. The next era will belong to those that shift from product-centric models to embedded foresight, enabling businesses and consumers to focus on further unlocking their potential.
Luke Voiles is CEO of Pipe.
