Why embedded banking works best when compliance comes first

Software platforms have the opportunity to become the central financial hub for their customers. Today, SMBs and freelancers expect to make payments, invoice, and manage expenses, all within a single place, without having to switch between tools.

They can do it by seamlessly integrating business banking (business accounts, cards, and payments) into their platforms. Yet, many software companies hesitate. 

That’s mainly because of local regulations and regulatory complexity, that usually mean months-long licensing processes, the need to build specialized compliance teams, and different requirements in every market.

Embedded banking can entirely change the game with compliant by default solutions that enable smart financial services business banking without the operational and regulatory hustle. 

The regulatory challenge: Why compliance becomes a dealbreaker

Product leaders looking to embedded financial services have several options. Control, speed, and cost vary significantly.

• Build everything from scratch and apply for an agent license. That means at least six months of processing time, hiring an in-house compliance team, and two to three years of development. Separate licenses are required for every market.
• First-generation BaaS providers also require agent status, bringing the same six-month waiting period and compliance costs. On top of that come high upfront fees and limited flexibility for customization.
• Lastly, acquire an existing service. That avoids licensing, but often introduces technical debt, outdated systems, and integration challenges. Also, merging teams and cultures can take years.

The safest choice is to partner with an embedded banking provider. That’s because they manage the underlying compliance, regulation, and security infrastructure, while platforms retain control over the product, user experience, and brand.

With embedded banking APIs, you integrate banking services seamlessly into your product. This partnership goes beyond APIs and documentation: it’s a full-service setup, often including go-to-market training for marketing and sales teams, plus operational support.

In most cases, partnership is the fastest route to market success. It’s the lowest-risk option (legally and strategically) and the most flexible solution for your product vision.

From roadmap to market success: providers like Swan bring not just infrastructure, but experience with dozens of European companies.

The Swan approach: Compliant by default

Swan is a licensed Electronic Money Institution (EMI), regulated by the French ACPR, with full passporting rights across the European Economic Area (EEA). As a partner, you leverage this license directly — without filing your own BaFin application, building an internal compliance team, or running separate risk management.

In practical terms, this means: no additional compliance hires, no higher ongoing costs, and no months-long approval processes.

More than 150 software companies already have our e-money license and Europe-wide passporting rights.

What Swan takes care of for you

Swan handles all regulatory requirements: licensing, KYC and KYB checks, AML monitoring, transaction monitoring, risk management, and reporting to supervisory authorities.
The compliance foundation is already in place and continuously maintained.

This also includes monitoring regulatory changes. When regulations evolve, Swan adapts its systems and processes accordingly.

Local regulations vary widely across Europe. In Italy, e-invoicing is already mandatory. Germany, France, Belgium, and Spain will follow in 2025/2026 with XRechnung and ZUGFeRD. In Germany, the obligation to receive e-invoices has applied since January 2025.

PSD3 introduces additional fraud monitoring requirements from 2026 onward. Swan aligns its processes with all relevant regulations — from Germany’s ZAG and Anti-Money Laundering Act to GDPR and local requirements in France, Italy, Spain, and the Netherlands.

In Germany, your customers benefit from local IBANs starting with DE, and their accounts are treated like German bank accounts, accepted by tax authorities and suppliers without additional checks. Most German firms require local DE IBANs.

Tangible impact: Freedom for real innovation

By choosing an embedded banking provider like Swan, companies can focus on their offering and their customers instead of navigating regulations. This means faster time to market, because compliance neither delays go-live nor increases operating costs.

More than 150 partners are already successfully integrating Swan’s flexible APIs. Some report up to 40% higher customer retention after integration.

These results are no coincidence. When banking features are seamlessly embedded into the product, daily usage increases significantly. Customers no longer log in just to use the core function; they manage their entire cash flow in the software they already use. That means higher engagement, more touchpoints, and stronger retention.

The more banking features a customer uses, the harder it becomes to switch to a competitor. Migrating business accounts is cumbersome, and reissuing cards takes time. This natural friction protects customer relationships.

Customer expectations have shifted. True differentiation is achievable — but the window is closing fast.

As more banking features become core to software platforms, compliance can no longer be treated as an afterthought. With a compliant-by-default approach, software companies can move faster without taking on regulatory risk.

Embedded banking works best when compliance is built in from day one.