📧 Embedded Finance = Customer Retention (Apple's strategy)

Dear Leaders,

Today's newsletter is special to me, I have worked in financial technology for the longest and instead of my usual PM advice column, today I write about a fintech trend.

I hope you find it valuable and I can keep writing more of these in the future. My inspiration particularly came when I stumbled upon an article about Apple Pay and then went down the rabbit hole of finding data, It's Apple of course their volume and numbers are impressive but. 

What they have done with the concept of 'Embedded finance' is a masterclass in Customer Retention and Brand building.
If your product doesn’t include embedded financial services, you are missing out on growth, revenue, and retention. Big time.

We’re seeing one of the most important shifts in modern business strategy: the rise of embedded finance—and the companies ignoring it are falling behind.

Let's Dive in. 

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 What is Embedded Finance?

Embedded finance also known as banking-as-a-service (BaaS) is simply the integration of financial services—like payments, lending, subscription management, bill payment, insurance, etc —into non-financial platforms.

Think:

• Uber letting you pay without switching apps
• Shopify offering capital to merchants
• Apple turning your iPhone into a wallet
• Walmart offering you BNPL (buy now pay latter i.e. micro loans) service

Car companies have offered financing (a type of embedded finance service) for decades, but it has traditionally been a disjointed experience—separate from the car-buying journey and often handled by third parties.

Finance used to be treated as an entirely separate workflow. That began to shift with the launch of digital wallets like PayPal, which marked a turning point in consumer behavior. Suddenly, people expected fast, seamless, in-app financial experiences—and that expectation has only grown.

Consumers no longer want to "go to the bank"—they want financial actions to happen seamlessly in the apps they already use.

📈 Why It’s a Big Deal

The embedded finance market is projected to reach $7.2 trillion by 2030, up from $2.6 trillion in 2022.

But the real power isn’t just in transactions—
It’s in customer retention, brand engagement, and revenue.

Companies that embed finance aren’t just monetizing users.
They’re turning daily financial actions into brand loyalty touchpoints. 

Creating powerful customer retention loops in the process.

CASE STUDY

🍎 Apple: The Gold Standard

They’ve mastered embedded finance to create a lock-in so strong, their customers don’t want to leave.

• Here’s how:
  • Apple Pay turns your phone into a tap-to-pay device.
    • 640 million global users
    • Apple Pay’s $6-8 billion estimate for 2025 would represent 6-8% of Services revenue, a small but growing slice. Its real value is driving transaction volume across Apple’s ecosystem, boosting hardware retention and Services uptake (e.g., App Store purchases via Apple Pay).
  • Apple Card offers seamless credit usage and Daily Cash rewards.
    • 12 Million Users in the U.S
    • The card’s direct revenue (interchange and interest) is modest—likely $1-2 billion annually—but it amplifies Apple Pay usage (2% cashback incentive) and ties users to Apple Wallet
  • Apple Savings Account: offered only to Apple card users
    • currently give 3.75% APR
    • Earns millions in Interest revenue.
  • Apple Wallet stores everything from tickets to transit cards.
    • By 2025, over 60 million U.S. users (aged 14+) are estimated to use Apple Wallet monthly for transactions

The magic? These tools aren’t standalone—they’re interconnected.
Buy something with Apple Wallet → Apple Pay → earn Daily Cash → spend it via Apple Cash.
All without leaving the ecosystem.

By offering these products, here is what else happening

🔁 Daily Engagement = Free Marketing

Here’s the genius:
Every time someone taps to pay or gets a Daily Cash notification, they’re engaging with Apple’s brand.

Compare that to traditional any other non-financial app, which might see weekly usage.
but Finance? It happens daily.
Apple turned financial interactions into mini moments of brand reinforcement.

That’s free marketing. Every day.

🧲 The Retention Power

Apple’s embedded finance strategy works. Here’s proof:

• Apple Pay users are 30% less likely to switch to Android.
• Apple Card users are 40–50% more loyal than non-users.
• They upgrade devices 20% more often and spend 18% more on the App Store.

Once your finances live inside a platform, leaving becomes inconvenient—and that’s the point.

💰 Revenue on Autopilot

Beyond retention, Apple makes serious money:

• Takes a cut from every Apple Pay transaction (~0.15%)
• Earns interest and fees from Apple Card
• Earns interest through their Savings account 

Apple’s total revenue in fiscal 2024 (ending September 2024) was $390.8 billion, with the Services segment—housing Apple Pay, Apple Card, and related offerings—contributing $94.5 billion, or 24% of the total, up from 22% in 2023. This segment grew 1.9% year-over-year, outpacing hardware growth, as iPhone sales (51% of revenue) plateaued at $199 billion.

And the kicker?
Apple’s financially engaged users generate 2.5–3x more lifetime value.

🤖 AI Is Supercharging This

Apple uses AI to:

• Categorize your spending automatically
• Detect fraud in real-time
• Make smarter credit decisions using alternative data

Who knows how AI will further shape this…

Voice-based assistants, predictive financial planning, and smart alerts—powered by AI?, and for sure all reinforcing the brand.

⚠️ What This Means for You If you’re building a product

and not thinking about embedded finance, consider this:

• You’re missing daily brand touchpoints
• You’re leaving recurring revenue on the table
• You’re forgoing customer retention strategies that your competitors are already implementing

Final Thought

Finance is no longer a separate industry.
It’s a feature, a retention tool, and a growth engine—for every company.

Whether you're in SaaS, retail, health, or logistics—
Embedded finance should be part of your product strategy.

Not just for monetization.
But for marketing, engagement, and long-term loyalty.

Don't let your product be a one-time-use tool.
Make it part of your customer’s daily financial life.

That's a wrap 
—Nazuk