Business challenges solved through embedded finance

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There are a wide array of advantages to leveraging embedded finance and just as many business challenges that can be surmounted using this emerging technology paradigm. Though embedded finance requires an investment of time, resources, and technological development, it is swiftly becoming critical for businesses to offer banking and other financial services to partners in order to drive retention and unlock new revenue streams.

With embedded finance, businesses can explore new opportunities by directly offering a broad range of services like financing, payments, card programmes, insurance, and many others. Large corporate entities can leverage transaction data, associated financial performance numbers, payment behavior tracking, and credit risk profiles to see where partner merchants will likely struggle. With access to a broader range of information, corporates can predict what their business partners might need or want more easily, thereby becoming more reactive to market demands.

Disruptions to your supply chain

Businesses can experience supply chain disruptions as a result of partner cash flow issues that arise from extended approval cycle times, rigid 90-day settlements, or a lack of banking providers that can price the risk appropriately. Embedded finance solutions, such as flexible financing options, allow customers to pay according to their cash flow restrictions or as part of supply chain financing programs that provide the flexibility necessary to keep these disruptions at bay. These solutions optimize supply chain operations and help businesses develop a stronger business ecosystem.

For more information on how embedded finance systems can enhance supply chains, we recommend reading “Market secret: Embedded finance is redefining supply chains”.

Difficulty building brand loyalty

Competition in the market is at an all time high and small- and medium-sized enterprises (SMEs) find it difficult to differentiate between large businesses or find everything they need in one place. As a result, they tend to switch to competitors with increasing frequency, making it hard for large businesses to create lasting brand loyalty. This can be avoided through attractive offerings that are nonetheless lock-in mechanisms, such as offering competitive loan terms and interest rates or by providing value added services like access to financial management tools. With embedded finance, businesses can offer customized financing where data analytics and artificial intelligence (AI) can comb through the wealth of information available, thereby evaluating creditworthiness and risk profiles more accurately. That means that business between SMEs and large companies can proceed smoothly without a great deal of friction, thereby increasing customer satisfaction and creating brand loyalty.

For some tips on massively increasing retention, refer to “Leveraging embedded finance to cultivate enduring supplier relationships”.

Lack of a scalable distribution model

Businesses must have a scalable distribution model in place to guarantee success. It is critical for businesses to choose reliable and scalable embedded finance solutions that will help meet their increasing demand, all while smoothly integrating into their existing infrastructure. New features or services can be quickly deployed through flexible APIs and seamless integration. By automating operations like loan approval processes or payment processing, businesses can improve efficiency and thus reduce the need for manual intervention.

To learn more about the relationship between product distribution and embedded finance, read “The top five ways to leverage embedded finance in product distribution”.

Integrating embedded finance can be a challenge in itself

Embedding financial services into existing platforms can be time and cost consuming to do in-house. This can result in delayed implementation and user frustration. To avoid this, businesses can luckily turn to corporate embedded finance platforms to answer these challenges since they prioritize security and use application programming interfaces (APIs) to minimize integration delays.

There are a myriad of challenges too numerous to list related to integration, so for more details on the “buy versus build” controversy, take a look at this article, “What it actually costs to build a fintech solution”.

Business today is about more than just selling products

Platforms like Toqio help businesses that want to go beyond just supplying goods to their customers. Embedded finance empowers large businesses to review transaction data from sales and payment processing activities related to their merchant network. With a 360° view of income channels, product performance, and customer demographics, businesses can identify growth opportunities much more easily.

Consequently, embedded finance platforms can provide underserved SMEs, in league with large corporate partners, with cash flow management tools where they can see and control their cash flow in real-time. These tools give these corporate partners visibility into their customers’ financial health, cash flow patterns, and liquidity needs all in one place. With this, businesses can provide tailored assistance and financing options like capital loans, cash flow forecasting, or inventory financing if needed to continue to build a more robust business ecosystem.

Overall, embedded finance offers businesses powerful solutions to improve efficiency, optimize operations, expand beyond the supply of goods, and truly understand their partners’ needs. By building solutions on platforms like Toqio, businesses can stay ahead in today’s dynamic marketplace while avoiding many of the pitfalls mentioned.