alternative lending 1 November 23

Embedded lending, it’s the future and it’s here today

Maggie Gemmill
By: Maggie Gemmill
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A recent report from Juniper Research1 predicts that the total number of digital Buy Now Pay Later (BNPL) users will reach 935 million in 2027, rising from 364 million in 2022.  Here we explore how and why lendtechs are using embedded lending products such as BNPL  to offer their customers compelling services, and deliver value not normally found in traditional banks.

What is embedded lending?

Embedded lending is where a lendtech company offers its services through the platform of another financial or non-financial institution. For example, an embedded lender will integrate software that’s embedded into the checkout process of a B2B marketplace, making it quick and simple for a business to choose a credit product at the point of sale. Klarna is the most well-known example of embedded lending in everyday life.

In the ever-evolving digital landscape, embedded finance lending solutions have emerged as a transformative technology, providing significant  benefits to SMEs and consumers. By seamlessly integrating lending capabilities into existing platforms, these solutions offer streamlined access to capital, enhanced cash flow management, and improved customer experiences. Currencycloud supports lenders worldwide with software that is easily integrated into our clients’ environment, enabling Fintechs to embed their services into other platforms.

Swedish Fintech Froda, digital bank Lunar, and Visa recently joined  forces to launch an embedded loan solution for small businesses in Denmark. By integrating lending capabilities directly into the Froda and Lunar platforms, SMEs can access credit quickly and conveniently, allowing merchants to apply for and receive financing without having to leave the platform.

This streamlines the lending process, eliminating the need for separate applications and reducing approval times. Since being acquired by Visa in 2021 Currencycloud has continuously explored ways to leverage Visa’s products to enhance our product offering to lenders.

Embedding lending and personalized decisions through data

By using data within non-financial platforms, embedded lenders can tailor financing options based on a business' sales history, inventory turnover, or customer behavior.

SMEs can leverage data generated by embedded lending solutions to gain valuable business insights, make informed strategic decisions, and improve operations. Data-driven decision making is a core feature of embedded lending, enhancing its effectiveness and impact.

With embedded lending, customers can access competitive loan rates and flexible repayment terms in just a few clicks within a trusted platform. They don’t have to navigate multiple institutions or endure lengthy approval processes. It’s customer-centric and convenient, fostering customer loyalty and encouraging repeat purchases.

We spoke with our Product Director Annie Gilchrist about how the integration with Visa is adding value to the services we provide to banks and Fintechs: “It’s a really exciting time - the combination of Currencycloud’s expertise in embedded cross-border money movement, alongside Visa’s brand, influence and resources, means we are able to address client challenges together that we couldn’t have done alone. Lendtech is one such sector where we can have a positive impact.”

Currencycloud enables our clients to seamlessly integrate our APIs into their experiences, offering enhanced financial services to underbanked groups across the world. One example of this is Growth Lending. Says Annie Gilchrist, “With Currencycloud’s API embedded into its existing platform, Growth Lending’s processing speed has increased, meaning that payment runs are completed several hours earlier and clients have rapid access to funds.”

This is a perfect time for nimble Fintechs to leapfrog traditional banks to offer embedded lending. If you would like to understand more about how Currencycloud can support you as your business takes advantage of this trend, get in touch using the link below.

1. Embedded Finance Key Trends, Segment Analysis and Market Forecasts 2022- 2027. Juniper Research

Maggie Gemmill
By: Maggie Gemmill

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