#embedded financing

How AI and Embedded Finance Are Powering Smarter Lending Platforms

The expansion of financial services in India has been facilitated by new technology and regulatory measures. India has experienced a tremendous increase in digital transactions over the last few years.

As a result, companies are utilizing cutting-edge financial technologies more frequently to provide customers with superior services.

Embedded financing, which refers to the smooth incorporation of financial services into other businesses, is a fantastic example of digitalization in the fintech industry. For companies wishing to implement embedded funding, KredX Pay Later is the perfect option.

How Does Embedded Finance Create Revenue Streams

According to Research and Markets, embedded financing in India would increase by 46% and reach USD 4,801.8 million in 2022. The key benefit of embedded finance for firms is the expansion of their revenue sources. Where it can be incorporated is covered in the list below:

Electronic wallets

The integration of digital wallets offers customers value and increased convenience. It also guarantees personalized services. They can only add or subtract credits, for instance, through the appropriate merchants.

Insurance

Businesses have the option to provide insurance coverage thanks to embedded financial companies. Instead of buying them individually, clients find it more convenient to get insurance straight from the service provider at the time of purchase.

Purchase Now, Pay Later (BNPL)

Business customers can obtain loans through the B2B BNPL program to pay for their purchases.

As a result, it raises their output and the revenue stream for vendors and retailers. Through its Pay Later service, the platform KredX provides a closed-loop financing option for B2B businesses.

Payments Embedded

Some companies concentrate on integrating embedded payment methods like secured cards, co-branded payment cards, and payment installation. For instance, automakers are incorporating payment methods that let customers purchase fuel without leaving the vehicle.

To sum up

Embedded Finance, also known as Embedded Banking, refers to the seamless integration of financial services into a non-financial service.

It is the utilization of financial services or tools (e.g. lending or payment process) by non-financial providers. For instance, an electrical shop offers point-of-service insurance for the goods offered at the store.

This model or infrastructure allows customer-centric digital platforms (i.e. anchor platforms) to ‘embed’ financial services into their operations.

Embedded Finance is primarily created to streamline financial processes for customers and allow them access to services whenever they need them. Few years back, consumers had to visit banks or financial institutes physically to apply for credit. With the launch of Embedded Financing, consumers can purchase and get credit in one place.

Types Or Examples Of Embedded Finance

Currently, businesses are actively integrating Embedded finance companies into their operations. Following types of Embedded finances are available in the market:

Embedded Payments

In Embedded payments, involved parties can integrate payment infrastructure and create a manageable payment flow within a platform or app. Payments are the first financial services embedded into the domain of non-financial services.

Embedded payments have become a crucial part of the E-commerce app or SaaS platform, where end-users can easily use this innovative feature. When individuals opt for this type of Embedded Finance for business, they can truly enhance the shopping experience for consumers.

Embedded Insurance

Embedded insurance refers to tying insurance with a purchase of a product or service. For instance, Tesla provides auto insurance both at online point-of-sale and in-showroom purchases.

Companies involved in Embedded insurance offer transactional APIs and technologies that enable the integration of insurance solutions with websites, mobile apps, and various partner channels.

Embedded Investment

Through Embedded investment, individuals can integrate stock market investing into vertical offerings. As a result, individuals can decide by making an Embedded investment and managing their money.

These variants ensure a seamless investment experience. Without leaving the platform, investors can use a single platform and invest their money in the stock market, mutual funds, and retirement plans.

Benefits Of Embedded Finance

Embedded Finance offers a wide range of benefits to its entities. These are as follows:

For Financial Institutions

Aids in building a more profitable business,

Open ways for attracting new customers,

Ensures improved underwriting

Enables enhanced loan lifecycle management

Allows more savings for customers

For Digital Platforms

Increases the customer lifetime value,

Multiplies customer retention,

Helps create a unique position in the market,

Provide companies with additional control over payment processes,

Removes several intermediaries and helps cost optimisation,

Helps scrutinise customer behaviours through insightful customer data and offers more customised services,

Offer companies with an additional revenue stream

For Users

Provides enhanced customer experience

Ensures increased access to financial services

Conclusion

One of the notable uses of Embedded Finance can be found in the innovative line of credit known as Buy Now Pay Later. This credit facility provides modern shoppers access to a wide range of products without paying anything upfront. The remaining bill amount is converted into easy EMIs..