Why SMBs Now See Software as the Engine of Expansion

For small- to medium-sized businesses (SMBs), embedded finance is no longer a fringe feature. It’s the price of admission.

In addition to adoption, rising expectations are reshaping the competitive landscape. As SMBs fold payments, lending and other financial tools into their daily operations, they are demanding more from their software providers, like faster innovation, proactive service and tighter integration that mirrors what consumers expect from banks.

The PYMNTS Intelligence report “Platform Power: The Growing Importance of Embedded Finance to SMB Success,” created in collaboration with Worldpay, 9 in 10 SMBs say access to embedded financial products is critical to their operations.

What was once a differentiator is now a necessity. As businesses move from survival to expansion in 2025, software has become a financial command center. Vendors that can’t keep up risk being replaced.

SMBs that once viewed technology as a back-office tool now see it as the backbone of growth. Management platforms that combine operational software with embedded payments, lending and data analytics are becoming essential to running and scaling a modern business.

Among the findings:

• Ninety percent of SMBs say access to embedded financial products and services is essential to daily operations, ranking financial tools second only to analytics among desired software integrations.
• Sixty-five percent of businesses say they are open to switching software providers, up from 55% a year ago, as they seek easier integration and better embedded features.
• SMBs using embedded financing tools report sales increases of 25% to 50%, underscoring the connection between digital finance capabilities and top-line growth.

SMBs are forcing technology vendors to evolve from service providers into strategic partners. Businesses want software that can automate internal processes and improve customer engagement. They expect embedded tools to simplify credit access, consolidate data and provide insights that guide real-time decisions.

That pressure is rippling across verticals. Healthcare firms need constant innovation to keep pace with regulations. Retailers want omnichannel payment experiences that match consumer expectations. Logistics providers seek automation to optimize supply chains.

Across sectors, SMBs are raising the bar, and 90% now want their tech providers to proactively alert them to new solutions, a signal that set-it-and-forget-it software no longer suffices.

This new standard is transforming customer loyalty dynamics. While 65% are willing to switch, those who are satisfied with embedded payment experiences tend to stay put, a finding that underscores how sticky well-executed embedded finance can be.

Nearly half of SMBs say they’re unlikely to switch providers when payment tools meet expectations, up from 39% in 2023.

Embedded finance, in other words, has become a retention strategy as much as a revenue driver. As Worldpay executive Matt Downs says in the report, the platforms that thrive “aren’t just offering basic functionality; they’re embedding comprehensive financial capabilities so seamlessly that their clients can’t imagine operating without them.”

SMBs are no longer passive consumers of software. They are shaping its evolution, demanding tools that anticipate their financial needs, reduce friction and fuel growth. For providers, staying ahead will mean thinking less like coders and more like bankers.

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