Article | April 14, 2021
The rise of buy-now-pay-later in the consumer world provides a powerful example of what embedded finance at the point of need can do for brands.
Consumer debt ethics aside, B2C buy-now-pay-later providers can proudly point to the fact that implementing a BNPL solution can increase basket sizes for retailers by 20-30%. The concept, although around for years in various forms, has now been delightfully served as an option during the customer’s checkout process and the marketing has been simplified and on point.
Even as merchants must pay for the privilege of offering BNPL (keeping it interest free for customers) upwards of 4-6% per transaction, the benefits have been too good to resist.
Although let’s face it, regulation aside (there are significant hoops to become licenced in B2C finance), underwriting to consumers is easier than extending credit to businesses thanks in part for the need to understand factors such as business servicing capacity, shareholder control, bespoke pricing, industry risk and not to mention the exposure risks associated to loaning out more significant totals.
Therefore B2B lending speed and embedded innovation naturally lags behind B2C. That said, there have been remarkable steps forward over the last two years as more and more millennials and digital natives take over business buying decisions.
Existing B2B finance models
For many B2B suppliers or merchants, a referral programme to a business finance provider is nothing new.
The benefits can be obvious, especially as the alternative is to embark in to the dangers of offering trade terms and all the cashflow and collection troubles that come with it. By introducing business finance, suppliers can get paid upfront and those pesky risks evaporate.
When used effectively in a negotiation, financing offers can also allow suppliers to remove expected buyer discounts. Total order values and loyalty increase (as in the consumer world) and accessible finance even helps a buyer’s businesses become more successful — resulting in increased volumes of purchasing.
Still, referral programmes of this nature have their problems. Even with same day B2B funding available, finance applications can hold up the buying process.
This means suppliers who are keen to leverage the buyers peak interest, antagonising don’t close sales as quickly as they could and run the risk of the of the application declining or extra customer frustration and fatigue.
While the benefits for introducing finance in to the sales process still outweigh the negatives, more improvement in the experience can be achieved.
Imagine a situation as a B2B supplier or merchant where you can provide a pre-approved finance offer straight to eligible businesses through your own CRM.
This level of proactivity provides you with a powerful tool in drawing in loaded sale opportunities from customers who are primed and ready to transact. The advantage over your competition is significant as your customers already know they can painlessly purchase from you once they’re ready for more stock.
A new revenue stream also opens for your business as your FaaS provider hands you commission for each loan a buyer takes.
This example highlights the power of pre-approving customers in a proactive capacity. For this level of FaaS to work a customer permission gate is required, either as part of a customer onboarding/sign-up process or through invitation.
With a white-labelled or co-branded experience, buyers can securely connect via open banking through a third party (FaaS provider) and be reassured that no visibility of this data given to their supplier. Other business data sources (e.g. payment or accounting software) can also be connected at this point.
Through providing these connections through the supplier or merchants portal, buyers can sit back with the knowledge that they will be notified if and when they qualify to purchase goods or services on finance. Once pre-approved, sellers can push a message to their buyer from their CRM system along with any sales pitch or offer they like.
Convincing buyers to give this connection permission in the first place is a challenge that clever marketers and UX specialists will need to overcome.
Embedded at the point of need
Again, we only need to take BNPL as an example of an embedded finance solution served beautifully at the point of need. Buyers, motivated at the time to transact, are more likely to have the determination to apply for finance within the same CX process.
Unlike traditional loan referral schemes that remain disjointed with long and possess awkward handover points, through FaaS, an embedded financial product is especially attractive when done right. It can merely feel as a simple ‘way to pay’ option in the buyer experience. No application forms; no double entry of business data; no waiting.
The challenge therefore is to create seamlessness, integrated and quick decisioning. Again, still a relatively tall order for B2B finance especially the higher the loan total is (despite advances in innovation and same day funding).
The potential for more instant decisioning will need to be enabled through a) improvements in API sharing and open finance analytics to confident business underwriting and b) buyer adoption on online services and platforms.
This later point can already be seen in the growing gulf of funding accessibility between online and manual powered businesses.
For example an eCommerce buyer, generating rich volumes of data through online sales and excessive B2B Software-as-a-Service (SaaS) use has the perfect data points that can be integrated in to support lending applications. In contrast, a blue collar business, with a limited online presence and who only drops a shoe box full of receipts to their accountant every 90 days, will find it more difficult to provide the data required for quick decisioning.
The new normal
Embedded B2B finance is here to stay and serious FaaS providers are emerging.
More and more suppliers and merchants will be leveraging the power of this new technology trend to create a more successful, loyal and satisfied buyer. Through proactive pre-approvals, B2B sales teams can be armed with more empowered conversations and unique advantages over the competition.
Alternative business lenders operating as an embedded finance FaaS will also benefit by leveraging the scale of the B2B supplier and merchant channel, accessing more businesses through wider mass distribution.
Soon, simply plugging in an embedded finance solution in to your existing CRM system will become a painless experience. B2B lending products of the future, through speed of underwriting and integrated data points, will be commonplace as an attractive option during the sales process.a
Article | April 14, 2021
The platform economy is revolutionising the $50bn global deposits business. By separating the product provider and financial point of sale, banks can now choose whether they want to collect deposits for financing or offer deposits as a product, without one depending on the other. While the deposits business has not always been perceived as one of the most innovative areas of banking, it is now leading the charge towards a better connected and more functional industry. This is bringing massive benefits to customers and institutions alike.
Article | April 14, 2021
In the ongoing technological era, the outsourcing software development company transports their valuable resources to their core business model and helps businesses to save a lot of time and money. To survive the digital era for financial institutions helps to drive efficiency in Fintech companies. Moreover, software development outsourcing companies offer solutions that enable financial institutions to manage bulk data, tech products, and much more to build an efficient environment with their tech services.
The financial service industries are becoming a leader in software development and corporate new strategies for fintech businesses. Many companies are planning to use this working model that is specialized in all processes and seek more agility and quality.
Outsourcing software development to the fintech industry can bring many gains to companies, so, in this blog we’re going to look at them closely. According to research, investments in fintech are expected to reach $40 billion in 2021. Additionally, software outsourcing companies makes the development process smooth and improves the quality of data analytics in the industry.
Read on to know the benefits of outsourcing software development to the fintech industry and achieve the dedicated digital transformation goals of your business.
What Are The Benefits Of Outsourcing Fintech Software Development?
Expand your business development
The benefits of outsourcing software development services creates a pleasing and commending condition for the fintech industry. It becomes easier to execute actions and plan for the company’s expansion if the management focuses on the core business and internal quality processes.
Additionally, the development service provider also helps to sustain the growth of the operation without investing huge investments in infrastructure and technology.
Economies of scale
If you’re planning to internally develop a software application requires both money and time. And not everyone has an extended IT team with dedicated developers. In such situations, software development outsourcing companies become your partner. The services provided by software outsourcing agencies for fintech development helps businesses to achieve economies of scale and allow them to invest more time on core competencies and perform critical tasks.
However, software development outsourcing offers competitive advantages to fintech industries by minimizing costs, better customer service, and maintaining product quality with an affordable budget.
Optimize time for dedicated professionals and managers
Hiring outsourcing software development services helps businesses a practical and sensible optimization of the time of professionals and managers. If your business is planning to enhance the process of professionalism.
To such a degree, fintech industries can directly help to increase the capital and implement strategic tasks and analyze surveys that collaborate to make the right decisions. Thus, outsourcing software development helps to monitor indicators and supervise the possibility of risk to the company.
Risk Management/ Critical-path method
IT outsourcing software development service providers carry a lot of risks. So to grab the absolute advantages, an organization should build effective risk management plans.
Reducing the number of data breaches is one of the most important challenges faced by many fintech industries. This challenge is even more critical when you consider the information type such as salaries, credit card information, social security numbers, and much more which can be used by criminals for gaining profit. Various components and operations help to reduce risks and provide a successful path for outsourcing when you know the challenges and tackle the situation.
Increased profits through data analytics
Finance is the leading data collection and analytics industry that helps to increase software profit via data analytics. Popular investment banks like Goldman Sachs and JPMorgan have employed specialists who analyze data when issuing trading futures.
These fintech software development industries are now identifying customer data and helping them to increase sales and promote customer loyalty. To analyze creditworthiness and provide services to each customer they use credit scores and demographic data that also helps them to build analytics software with the Python programming language.
Reduce software server load via cloud computing
To implement cloud computing technology, the fintech industry has been reluctant to use web-based storage for bulk data which is vulnerable to hackers. There are few improvements in data security that have led banks to begin integrating modern technology into their core business functionalities.
To store sensitive business information related to accounting and communications, many banks are using cloud computing. In recent years, it is reported that the SaaS model is one of the best models that is implemented by fintech software enterprise to store emails, contact lists, and other important information online.
Faster product development
Hiring software outsourcing companies helps fintech industries to start your projects quicker and complete them before the deadline. The outsourcing enterprise implements traditional hiring processes for software development projects and instructs those dedicated developers to perform critical tasks who can start product development without investing much time on the hiring process.
The dedicated team of developers working at any outsourcing companies help to shorten the fintech software development lifecycle and work on multiple projects to quickly resolve common problems and reduce the overall length of the software.
The fintech enterprise is investing millions of dollars to build custom software according to their business requirement to survive in the new data-driven marketplace. Leveraging a fintech software development service is much bigger than just launching a system that enables the creation of innovative fintech solutions in the future.
Many of these companies are switching to fintech software development that provide a dedicated development team to perform critical and complex tasks of any software and reach their goal without distracting from their core missions.
Article | April 14, 2021
The effects of Coronavirus on humanity, and what it is doing to the health and well-being of those around us, is very clear. We see the devastating effect it is having on people’s lives, and the level of fear is growing each day. I do not wish to add to this with another article based on the risks posed to people if they go outside. For me, it is important to discuss ways in which life can be improved during this moment, and I hope to do just that. However, before I do, I would like to extend wishes of health, peace of mind, and give my thoughts and prayers to those who are dealing with the difficulties we are all facing together as human beings.