An outlook on embedded banking in Germany: unlocking opportunities for financial SaaS

Germany is known for being a pillar of economic strength—yet so many small and medium-sized businesses (SMBs) still manage their finances like we did a decade ago. Personal accounts for business transactions, too many Excel sheets, and financial data scattered across apps. This is the modern-day financial inefficiency that’s all too common.

Open banking made some progress. It gave businesses and their financial tools access to more data—visibility into their financial world. But the reality is, that’s where the value ends. It didn’t solve the core problem. Businesses still have to rely on external banks to move money. And, let’s face it, nobody enjoys the constant re-authentications required from PSD2—a regulation that allows third-party providers to access bank data with customer consent.

So, what’s next? And how can financial platforms meet the core banking needs of their customers?

The demand for all-in-one financial platforms

There’s now a shift to embedded banking—and this is where it gets interesting. Instead of just showing data, embedded banking enables your customers to manage their business finances directly within your platform. Think: business accounts, payments, cards—inside your financial software. All of a sudden, you have a chance to own the entire financial experience. No more bouncing between apps, no more waiting on banks, and definitely no more frustrating reauthorizations.

Now, let’s talk about what this really means for financial software—like accounting, expense management, and treasury platforms—companies in Germany.

1. Navigating Germany’s regulatory landscape: BaFin isn’t a boring acronym

First things first: if you want to play in the embedded banking space in Germany, we have to talk about regulations. The “Bundesanstalt für Finanzdienstleistungsaufsicht”, more commonly known as BaFin (thankfully), is Germany’s financial supervisory authority. For any company dealing with money, it’s critical to comply with BaFin’s rules. And, rightfully so, they are strict.

But, and here’s the good part, you don’t have to do this alone. There are API-first solutions (like Swan) that have already solved this. In our case, we’re fully licensed, compliant with BaFin, and give you the peace of mind to embed banking features directly into your platform without having to become a bank yourself. We own the regulatory burden so you can focus on what you do best.

2. Meeting the new standard for user experience

The reality for many German businesses—especially freelancers and SMBs—is that they’re juggling multiple platforms to handle their finances. One app for accounts, another for payments, another for tax, the list goes on... This constant swapping between tools can be frustrating, time-consuming, and result in error.

And that’s where embedded banking comes in—by streamlining everything into one platform. No more hopping between apps. No more losing track of tax reserves or payments. Now, your users can handle everything in one place, directly within your existing financial software.

Take the example of tax reserves. In Germany, businesses need to keep track of VAT and income tax. It’s a constant worry, especially for small businesses and freelancers. So, what if there was a solution that could automatically calculate and set aside the right amount for taxes? That’s embedded banking doing its thing—taking the stress out of financial management, one automated tax reserve at a time.

As our Head of DACH, Florian Thiel, puts it:

“For businesses in Germany, managing taxes well isn’t just admin—it’s a matter of survival. Automating this process through embedded banking is a game-changer, allowing them to focusing on driving business, rather than just protecting it.”

3. Small businesses, big opportunities

99% of all German firms are SMBs, so it’s no secret that they are the backbone of the economy. Yet, they often don’t have the same access to sophisticated financial tools as larger businesses. In fact, many are still using personal accounts for business transactions—resulting in many financial blind spots.

However, with embedded banking, SMBs and freelancers all of a sudden get the same power as big enterprises. Software companies can open business accounts, issue cards, and automate the complex processes that used to take hours or days, so their SMB customers can say goodbye to cumbersome financial flows. No more manual tracking, no more worrying about making the right VAT payments at the last minute. It’s a simpler, more secure way of managing business finances.

And it’s not just about efficiency—it’s also about opportunity. As Florian points out:

“When SMBs have the tools to manage their finances like the big players, they can scale more effectively. That’s the power of embedded banking—it levels the playing field.”

4. A not-so-obvious revenue stream

Traditional SaaS businesses rely on subscription fees, but with embedded banking, there’s an opportunity to unlock new streams of income. Think transaction fees, interchange sharing initiatives, or even offering premium features like international payments or virtual corporate cards. By partnering with a compliant embedded banking provider, you can offer a suite of banking features that generate revenue.

Imagine offering a seamless experience to your users, helping them handle their payments and manage their accounts, while earning income from every transaction. It’s a win-win that will help both your customers and your bottom line. As Florian shares:

“Embedded banking doesn’t just improve the user experience—it unlocks a whole new world of monetisation opportunities that were previously off-limits for non-bank software companies.”

5. Making German tax less painful

Let’s take a quick dive into one of the more painful aspects of doing business in Germany—taxes. From VAT to income tax, it’s easy for businesses to lose track of what they owe. But what if it was automated? What if every time a transaction was made, the right amount of tax was automatically reserved?

Embedded banking makes this possible. No more scrambling at the end of the year to calculate your tax payments. It’s done automatically, in real-time. And for financial software companies, this feature can be a huge selling point, making your product indispensable to businesses that want to stay on top of their finances. As Tino Keller, co-founder of Accountable, shares:

“Freelancers shouldn’t have to stress about setting money aside for taxes—it should just happen. And embedded banking makes this possible. With Swan, we built a business account that automates tax reserves, so our users always know what’s theirs to spend. It’s banking designed for self-employment.”

Embedded banking is about more than just adding a new feature. It’s about building a financial ecosystem that businesses rely on. It’s about transforming standalone, complex, and fragmented tools into a seamless, integrated financial experience.

6. The future of payments in Germany

Germany’s payments landscape is rapidly shifting toward digital. While traditional payment methods like cash and card are still common, businesses are increasingly looking for faster, more efficient payment solutions.

With embedded banking, businesses can make payments directly from their software—no third-party apps, no swithing tools. This eliminates friction and speeds up transactions, saving both time and money. In the near future, we’ll see more German businesses using integrated payment systems as part of their broader financial management strategy. Florian shares:

“The future of payments in Germany is about speed and efficiency. Embedded banking not only brings that, but it also ensures that businesses can manage everything in one place—saving time, effort, and money in the long run.”

7. The competitive edge for early adopters

Let’s zoom out for a second. Where is all of this headed? The fintech landscape in Germany is rapidly changing. And the demand of digital banking services is fast growing. For companies in the financial software space, this is an opportunity to get ahead of the curve. Early adopters of embedded banking will have a significant advantage in the market. The next few years are going to be critical, and those who wait will likely find themselves playing catch-up.

The bottom line

Germany’s financial software market is on the brink of a transformation. Open banking laid the groundwork, but embedded banking is the real game-changer. It’s not just about efficiency. It’s about creating a financial ecosystem where businesses thrive—all within your platform.

For financial software companies, it’s time to step up and seize the opportunity—by offering a seamless, integrated solution that helps businesses manage everything from payments to taxes.

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