Why Secure Third-Party Access Is the Cornerstone of Scalable Embedded Finance

• Embedded finance is booming, but secure, scalable third-party access is its biggest roadblock.

• Third-party risk is escalating, with indirect dependencies and credential misuse driving breaches.

• Manual onboarding and fragmented access controls introduce costly friction and compliance gaps.

• Legacy IAM tools weren’t built to manage third-party relationships; they fail at scale, delegation, and governance.

• Modern identity fabrics enable verified trust across every third-party interaction, unlocking growth.

In the last few years, embedded finance has moved from a niche innovation to a defining force in the future of financial services. In the U.S. alone, embedded finance accounted for nearly $2.6 trillion of total financial transactions in 2021.¹ By 2026, that figure is expected to nearly triple, exceeding $7 trillion and making up more than 10% of all U.S. financial transactions.¹ Globally, the market is forecast to reach $348.8 billion by 2029, growing at a blistering compound annual growth rate (CAGR) of 30%.² In Europe, embedded finance revenues could surpass €100 billion by the end of the decade.³

From embedded payments and lending to insurance, wealth management, and identity verification, financial products are becoming invisibly woven into non-financial user journeys. This seamlessness is exactly the point. Retailers offer installment payments at checkout. Employers embed earned wage access into human resources (HR) platforms. Rideshare apps provide driver insurance within their apps. These aren't one-off experiments; they're a structural shift in how finance is delivered and consumed.

Yet for every promising new use case, a consistent operational dilemma emerges: 

How do financial institutions extend secure, scalable, and compliant access to the many third-party (B2B, B2B2C, B2B2X) entities that make embedded finance possible?

To execute on embedded finance agenda, financial services providers must integrate with a wide constellation of external entities, fintech platforms, brokers, advisors, aggregators, service providers, and more. These organizations often require privileged access to core banking systems, APIs, and sensitive customer data. But managing their access is vastly more complicated than managing internal employees or individual customers.

1. Scale & Complexity: A typical financial institution maintains hundreds or even thousands of direct third-party relationships. Yet each third-party entity often relies on its own vendors, creating a long, invisible chain of dependencies. For every 100 third-party vendors, an organization could be exposed to as many as 6,000 or 7,000 additional entities.⁴ This complexity massively expands the attack surface.

2. Third-Party Risk: An overwhelming 98% of organisations today work with at least one third-party that has experienced a data breach.⁵ And 54% of companies have suffered a third-party breach directly.⁶ Often, these breaches stem from misconfigured access, orphaned credentials, or the over-permissioning of users who should never have had access in the first place. In fact, 63% of data breaches⁷ are linked to third parties with unnecessary access, and 40%⁸ involve compromised credentials. This risk is exacerbated by poor visibility into downstream relationships, inconsistent enforcement of security policies, and fragmented identity tooling.

3. Operational Friction: Many financial institutions still manage partner onboarding and access provisioning manually. External identity verification may rely on cumbersome paperwork or multiple email threads. As a result, onboarding can take weeks or months. Access controls are inconsistently applied across systems. Deprovisioning rarely happens on time. This introduces compliance risk, inflates operating costs, and delays revenue-generating activity.

For embedded finance to scale safely, this entire third-party identity problem must be reimagined.

The growth of embedded finance is most visible in banking. Fintechs integrate banking services like payments, lending, and account issuance directly into their customer experience (CX), often via APIs. But each integration requires the bank to grant access to sensitive data and infrastructure.

This makes speed-to-market essential. If onboarding a new fintech partner takes three months, the commercial opportunity may be lost. But if access is provisioned hastily or without sufficient guardrails, the security and regulatory consequences can be severe. A misconfigured API or over-permissioned partner account can be a gateway for fraud, data leakage, or worse.

Moreover, many banks struggle to enforce uniform security and compliance policies across a diverse partner landscape. Partners vary in maturity, geography, and risk profile, yet often receive the same blanket access. 

The result? An inconsistent and exposed access environment. Managing partner access effectively lays the groundwork for trust, security, and collaboration in the digital economy.

In the insurance sector, embedded models often rely on a network of brokers, managing general agents (MGAs), third-party administrators (TPAs), and benefit providers. These entities need access to underwriting portals, policy administration systems, claims platforms, and customer service interfaces.

Historically, access for these users has been granted manually and inconsistently, often involving different systems, processes, and entitlements across regions or business lines. This patchwork approach leads to unmanaged accounts, over-provisioned users, and audit headaches.

Even more critically, the insurance ecosystem includes extended supply chains. A broker might outsource certain functions to a service provider, who in turn works with subcontractors. This web of indirect access is largely invisible to the insurer, yet regulators increasingly expect institutions to have oversight of third-, fourth- and Nth-party risks. Regulations like the Digital Operational Resilience Act (DORA) in the E.U., in force since January 2025, mandate full traceability and governance of such external relationships.

Wealth management presents its own distinct challenges. External advisory firms require access to highly sensitive client data, including portfolio information, transaction histories, and performance metrics. Often, there is a need for complex delegation: one firm may have dozens of advisors spread across geographies, all with varying roles and levels of permission.

Legacy identity tools, especially those built for internal workforce use or direct-to-consumer platforms, struggle with this model. They aren’t designed to distinguish between firm-level and individual-level access. They don’t support hierarchical delegation, risk-based controls, or regional policy enforcement. As a result, wealth managers face compliance and audit challenges, particularly when trying to demonstrate role-appropriate access for advisors in regulated jurisdictions.

Most financial services providers still rely on identity and access management (IAM) solutions that were never built to enable third-party access at scale. Workforce IAM platforms are tightly coupled to HR systems and designed for full-time employees. Customer IAM (CIAM) platforms focus on privacy, scale, and CX for individuals, not businesses.

Neither approach addresses the realities of third-party access, and that's largely because the simple delegated access capabilities built for workforce IAM do not support complex relationship models across organizational and geographical boundaries. As a result, financial institutions are forced to cobble together manual processes, custom integrations, and brittle policy engines just to onboard partners, enforce governance, and pass audits. 

This approach does not lend itself to establishing verified trust across end-to-end, third-party access journeys, which is now critical to mitigating deepfake attacks and sophisticated impersonation methods used by malicious actors looking for the weakest point of entry. Managing third-party access in the era of embedded finance requires more than incremental change. It demands a mindset shift and a new identity fabric that secures and enables B2B identities.

Modern IAM platforms offer a purpose-built solution for third-party identity, access, and governance. This “identity fabric” approach unifies capabilities traditionally split between workforce IAM and CIAM. It provides a single, secure, and scalable platform to manage all external relationships, business customers, suppliers, brokers, agents, and fintechs alike. Identity fabrics enable federated identity models, allowing third-parties to authenticate with their own identity providers. It also supports bring-your-own-identity (BYOI), multiple passive/active biometrics, reduced onboarding friction, and extends continuous verification across the end-to-end user journey to establish verified trust across the entire third-party landscape. 

Fine-grained, policy-based access control (PBAC) ensures users get access based on their role, context, data sensitivity, and risk level. Delegated administration lets trusted partner admins manage their own users within predefined policies, reducing internal IT burden. Automated lifecycle management removes orphaned accounts when contracts end. And real-time audit logs provide full traceability, aligning with global regulations including DORA, FIDA, GDPR, ISO 27001, FCA/PRA guidelines, and more. The list goes on.

Embedded finance is changing the face of financial services. But its success depends on solving a challenge that many institutions still overlook: third-party access. Without the right identity foundation, partnerships stall, risks grow, and regulatory scrutiny intensifies.

Ping Identity gives financial institutions the tools they need to thrive in this new era. By modernising how third-party identities are onboarded, governed, and secured, financial service providers can unlock the full value of embedded finance.

In a world where your partners are your front-end, and your APIs are your new storefront, identity isn’t just a control point. It’s a competitive advantage.

1. Bain & Company – Embedded Finance Report 2022

2. ResearchAndMarkets – Global Embedded Finance Market Forecast to 2029

3. Lightyear Capital – Embedded Finance in Europe: Market Forecast

4. Ponemon Institute – Third-Party Risk Management Report

5. SecurityScorecard – Global Third-Party Breach Risk

6. Deloitte – Third-Party Risk Management Survey

7. IBM – Cost of a Data Breach Report 2023

8. Verizon – Data Breach Investigations Report (DBIR) 2023