Varia Justicia

The rise of embedded finance, namely the integration of financial services into non-financial digital platforms such as e-commerce, ride-hailing apps, and marketplaces, has intensified collaboration between banks and financial technology (fintech) firms. This model expands financial inclusion but also enables digital shadow banking, in which intermediation functions occur outside the traditional banking system. This study examines the regulatory challenges arising from bank–fintech collaboration in embedded finance schemes and their implications for financial system stability. This study employed the library research method, reviewing various literature sources such as scientific journals, books, industry reports, and regulations related to the digital finance sector. The results of the study indicate that, although collaboration between banks and fintech can improve service efficiency and expand financial access, there are still challenges within the regulatory framework, particularly with regard to the supervision of digital financial activities, consumer protection, and systemic risk mitigation. Therefore, an adaptive and comprehensive regulatory approach is needed to ensure that innovation in the digital financial ecosystem can flourish in a healthy manner while maintaining the stability of the financial system.