Picture this: A customer buys a sofa through a popular retailer’s checkout, using a buy-now-pay-later (BNPL) option presented at the moment of purchase. Two clicks. Approved. But the sofa arrives damaged. She initiates a return. Over the next six weeks, she gets bounced between the retailer’s customer support line, the BNPL provider’s app, and the sponsor bank she didn’t know existed. Result: The return is processed late, the refund lags behind it, and consequently, a missed payment installment notification lands on her credit file. Outcome: A customer delighted by the seamless purchase experience disavows all future interactions with the institutions involved. Scenarios like hers are increasingly common. Nearly half of BNPL users, 47 percent, now report paying late at least once in the past year, up from 34 percent in 2024.
This is not a one-off customer experience. It is the structural condition of embedded finance today. The industry has built one of the smoothest sales experiences in financial services, yet has invested little into delivering a similarly seamless post-sales experience. That mismatch between sales and everything that comes after will decide how far the model can grow. As things currently stand, that mismatch has grave potential to inhibit growth for all parties.
How did we get here?
Embedded finance, in a nutshell, is the seamless integration of financial products delivered inside a non-financial customer journey. An installment loan offer at checkout. Travel insurance bundled with a plane ticket. A line of credit offered inside a payroll tool.
The embedded finance model grew in popularity because every party wanted what it offered. Platforms wanted financial products offered at the point of demand. Banks wanted access to the platform’s user base, without owning the front end. Fintech providers wanted access to distribution without having to pay for it. The technology investments followed the incentives: into enabling the lightning-fast approval speed and conversion rates that fueled the massive growth that followed.
That focus produced the polished pre-sale flow customers now expect. It also created an unspoken expectation that the rest of the customer’s journey would take care of itself. It does not.
Where the model breaks
After the sale, ownership splits across three parties: the platform that hosted the transaction, the financial institution carrying the balance sheet and the regulatory burden, and the credit or insurance provider running the product. Each holds a slice of the customer’s data and an incentive to be the second call rather than the first when things go wrong. None of them owns the outcome that the customer cares about.
I see the same problems surface time and again:
- Returns and refunds that span multiple systems: The refund timing and the loan payoff timing fall out of sync, and the customer is told she still owes money on goods she has already sent back or services she has canceled.
- Hardship and collections handled by an unexpected party: The customer’s emotional relationship is with the platform provider’s brand, but the financial obligation sits on a sponsor bank’s books, and the platform has neither the authority nor the appetite to negotiate on her behalf.
- Embedded insurance claims routed to unknown carriers: Coverage is sold inside a checkout, that then gets handed off to a carrier the buyer never interacted with directly and cannot easily reach when something goes wrong.
- Identity disputes and fraud cases that lack an end-to-end view: Each party in the value chain sees one piece of the overall picture, and the customer is bounced around and asked to retell the same story to three different parties.
This is not hypothetical. When BNPL intermediary Synapse Financial Technologies collapsed in 2024, roughly $85 million in customer deposits became unreconcilable between Synapse, its partner bank, and the fintechs built on top of it. Tens of thousands of customers were frozen out of their own money, with no single party able to say who owed what to whom.
When one or more of these problems arise, the customer sees one brand failing her. However, no single party owns the accountability for the failure and its resolution. One problem is reputational. The other is structural. They feed each other. The customer pays for both.
Read More on Fintech : Global Fintech Interview with Rob Young, Managing Director – UK at InDebted
Why this matters now
Today’s current and increasing pressures are making post-sale failures more expensive to ignore.
First, regulators. Recent supervisory guidance in the U.S.[1] and the UK[2] has moved toward expecting a single point of accountability even in multi-party arrangements. Distributed responsibility is now being treated as a regulatory gap finding, and enforcement actions are starting to follow[3].
Second, retention. A fast, frictionless checkout wins the first transaction. The post-sale experience determines whether there is a second one. For most embedded finance programs, acquisition is no longer the constraint; retention is. And the cost equation of retention is unforgiving: recovering a customer after a bad first experience is far more expensive than landing them was.
Third, the product mix is shifting. The next wave of embedded products is business credit, mortgages, and insurance with long claims tails. Each puts far more pressure on the post-sale layer than today’s operating models can carry.
Fourth, the macro environment. With inflation still elevated and the Fed back to raising rates after a three-year pause, with more signaled before year-end, the era of cheap growth is over. Operational drag that was masked by the post-pandemic growth-at-any-cost era is now visible in unit economics, and finance teams are starting to ask hard questions about it.
What to do about it
- Assign a named accountable owner for each customer outcome before the product or service launches; a steering committee will not do. Ensure the accountable owner has the authority to direct the other parties, with the contractual standing to enforce that authority written into the partnership agreement, signed before launch.
- Build a shared post-sale data layer with the same priority and attention devoted to pre-sale integration, so every party in the chain sees the same record of each case. Today most programs reconcile separate records after the fact, which adds cost and friction every time a dispute crosses a boundary.
- Design the servicing model alongside the product or service. The question of what happens when something goes wrong should be settled before the first transaction. In too many programs, servicing gaps are discovered in production, by which point the customer experience and the brand have already taken the hit.
- Treat the customer-facing brand as the first line of accountability, regardless of where the obligation sits on the balance sheet. Customers should not have to engage multiple parties for a resolution.
None of these recommendations are revolutionary. They reflect the standard operating discipline mature financial products follow. Embedded finance grew very rapidly and skipped the foundational steps needed to keep customers satisfied post-sale.
The competitive moat is forming at the back of the funnel, in the unglamorous work of returns, disputes, claims, and collections. But the bulk of investment is still going to the front. That choice will continue to look more and more expensive every quarter from here.
The next phase of growth in embedded finance will be led by those firms that treat post-sale as a product to deliver a post-sale experience as strong as the sale itself.
Sources:
-U.S.: Federal Reserve, FDIC, and OCC, Interagency Guidance on Third-Party Relationships (June 2023) and Joint Statement on Bank-Fintech Deposit Arrangements (July 2024).
-UK: Financial Conduct Authority, Policy Statement PS26/1 on Buy-Now-Pay-Later Regulation (February 2026), effective July 2026.
-Federal Reserve/Arkansas State Bank Department consent order against Evolve Bank & Trust (June 2024), following the collapse of fintech intermediary Synapse.
About Cognizant
Cognizant is an AI Builder and technology services provider, bridging the gap between AI investment and enterprise value.
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