Improving loyalty and retention through embedded finance

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One of the biggest benefits of corporate embedded finance is the fact that it can be used to generate hyper-personalization for end users. The concept of hyper-personalization refers to providing a consumer or business the ability to customize products and services to such a degree that what is contracted is tailored meticulously to incredibly specific requirements. This is only possible in a real-time and modular digital medium, where a user can select from a wide array of offerings. Both of these characteristics are hallmarks of the Toqio platform experience.

Corporate embedded finance has the potential to enhance partner retention and loyalty significantly. Although embedded finance in the corporate digital sphere is championed by companies like Toqio, the concept is relatively new. Hence, we need to look at something closely related like the user experience (UX) trend of the last few years for guidance on what to expect.

Loyalty and retention in the digital domain

Examining digital UX has been an eye-opener for companies. According to numbers made public by Semrush, approximately 50% of existing customers are far more likely to purchase a new product or service. Those same customers are over 30% more likely to spend more on an average order or existing service. There are numerous reasons for this.

First and foremost, we have trust. Whenever users receive excellent service from a company, the amount of trust goes up, and it takes a lot to get them to switch to something else. They’re even willing to ignore cheaper prices or slightly better service elsewhere if they know that they are ensured of getting what they want where they are.

Second, there’s convenience. If making a change is a cumbersome process or will interrupt smooth operations, users tend not to switch because doing so would be counterproductive. Hence, we have the concept of “lock-in”, where users work within the same system they’ve become accustomed to since it’s familiar and it’s easier for them to expand within it rather than start from scratch elsewhere.

Third, especially with regard to the digital space, UX relies on creating easy to follow interactions with users. Usage learning curves need to be gentle slopes so that users can jump right in and get on with what they need to do. If the user interface (UI) or a business process is too difficult, they get confused and feel alienated. Making things as easy to understand and operate as possible for users is a key part of the UX process.

The retention cycle

Loyalty and retention in embedded finance

Focusing on UX within the realm of embedded finance, a platform like Toqio can give a company a simple way to improve retention by addressing the three primary concerns mentioned, namely trust, convenience, and easy of use. Curiously, only 18% of companies make concerted efforts to improve customer retention, again according to Semrush. This is in spite of the fact that the probability of selling to an existing customer is between 60% and 70% whereas the probability of selling to a new customer is only between 5% and 20%.

Several interdependent concepts need to interact for a company to launch a successful corporate embedded finance product.

Granular usage data

By leveraging embedded finance, companies gain access to highly detailed data related to their interactions with suppliers, distributors, and other partner firms. This can include information on spending patterns, transaction histories, preferences, and more. The sheer volume of data generated can provide valuable insights into individual user and company-wide behaviors, allowing companies to understand their business customers on a much deeper level.

How this manifests using Toqio: We gather detailed data on merchant transaction histories which can then be analyzed to determine buying patterns, popular items, peak hours, and more. By acting proactively on the data gathered, companies can easily optimize inventory, pricing, and operations.

Personalized experiences

Armed with comprehensive data, companies can create hyper-personalized experiences for business customers, allowing them to choose financial services from numerous options and providers. More than that, these experiences can prospectively go far beyond just financial transactions to encompass the entire business partner journey. Personalization can manifest in targeted product recommendations, customized financial plans, and tailored promotions that align with existing preferences and needs.

How this manifests using Toqio: By acting on gathered data, a company using Toqio can offer hyper-personalized products, features, subscription plans, or recommendations. Each specific offering can be tailored to the needs of the business partner, with specific triggers and actions defined in easily built or modified workflows.

Proactive need anticipation

Embedded finance enables companies to go beyond being merely reactive and waiting for a partner requirement to emerge. With advanced analytics and predictive modeling, companies can anticipate business partner needs based on cold, hard behavior data. This proactive approach means companies can offer relevant financial services even before partners explicitly express a requirement, enhancing loyalty further.

How this manifests using Toqio: Much like Netflix uses embedded finance data to predict user preferences and viewing habits, Toqio can do the same thing with regard to distribution, supply, and other logistics concerns. Toqio customers can offer services or new features based on past usage behavior, introducing partners to concepts and products they are likely to find useful, even before they know they need them.

Iterative improvement

A continuous feedback loop created by embedded finance facilitates gradual improvements to products and services. Companies can quickly identify areas to be improved through real-time data analysis and user feedback. By being agile and by adapting to user requirements, a dynamic and responsive relationship is created and solidified, demonstrating to partners that their evolving needs are being actively considered and addressed.

How this manifests using Toqio: This is something that Toqio already does naturally. We develop in two fashions. One, we address major new integrations and roadmap improvements with a monthly release. Two, we address minor issues and improvements as we go. Together, these create an iterative environment where we continuously improve based on customer requirements and needs. We act upon the data we gather and all our customers reap that benefit. Customers themselves can do the same thing by gathering data through the Toqio platform and making improvements to their specific embedded finance builds.

Value-added services

Beyond core financial services, embedded finance enables companies to implement supplementary offerings. This might take just about any conceivable form, from corporate budgeting tools to financial education resources to loyalty programs embedded within existing digital platforms, and many, many others. These value-added services enrich the partner experience and contribute to the overall value proposition, once gain reinforcing user loyalty.

How this manifests using Toqio: The Toqio Marketplace already offers several modules that can be added to a company’s embedded finance offering. If, according to gathered data, something new or unavailable is required, the Toqio platform offers a workflow editing tool that allows companies to build just about anything they can conceive of, complete with external integrations where Toqio is used as the orchestration tool connecting disparate systems. As an example, one of our customers used the platform to create a CO2 footprint calculator based on usage data!

Security and transparency

One of the most effective ways corporate embedded finance can foster trust among business partners is for the sponsoring company to evince a robust commitment to user data security and transparency. Companies that prioritize these concepts build trust with their customers, a critical factor in retaining and fostering loyalty. Clear communication about data usage policies, encryption measures, and privacy safeguards instill deep confidence in users.

How this manifests using Toqio: Toqio offers bank-grade security, and we ensure that everything we do is documented, audited, and fully compliant. Everything built on the Toqio platform is required to be the same, to ensure business ecosystems run smoothly and effectively.

Embedded finance is the best tool available for retention and loyalty

The integration of embedded finance empowers large corporations not only to understand their business partners on a profound level, but also to respond to their evolving needs quickly and efficiently, sometimes even before they know they exist. Through hyper-personalization, data analysis used to create predictive models, and continuous improvement, companies can create an ecosystem where partners feel valued and understood, fostering long-term loyalty and retention.

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