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  Let’s start with this question, what is Embedded Finance? According to Finley, embedded finance is when non-financial companies offer their customers access to credit through their technology platform. The customers can be individuals or businesses, and the credit can be offered by the company or by a third party.
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Many non-financial companies are looking for ways to generate revenue and increase customer loyalty by offering financial services. It will be a common practice for medical institutions in Nigeria to offer insurance services through digital or FinTech means. And this can only be done through embedded finance, which is the seamless combination of traditional financial services and another service. Embedded finance emerges when a non-financial website or app, such as a ride-hailing company or healthcare provider, incorporates a financial service, enabling customers to access financial services anytime, anywhere. In this article, I will show you how to use embedded finance to retain and grow your customers, while still generating more revenue.  One of the tremendous advantages that companies can get from embedded financial services is generating revenue. Your organization – no matter its niche – can generate revenue with embedded finance, through the means of lending, payment fees, and insurance fees, along with a wider range of customer data. Examples of embedded finance projects that companies can launch include the following:
  1. Insurance
If you run a retail business, for example, a large number of your business assets requires insurance, thus, you can offer your own insurance. For example, Tesla offers Tesla Insurance, and ride-hailing companies like Uber offer insurance coverage for drivers. For those in the aviation industry, they can provide their customers trip insurance when buying tickets for a flight. This enables your customers to acquire insurance directly from you at the point of purchase rather than shop around for insurance from a separate provider.
  1. Wearable Wallets
This embedded financial service is ideal for fitness companies. Fitness companies can incorporate payment facilities into their wearable devices to enable users to pay for goods and services on the go. 
  1. Financing 
Companies of any niche can offer financial services of loans to their users using the user’s revenue, income, and spending history. For example, retailers can get back their loans by deducting a certain percentage from the users’ income. 
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  1. Digital Wallets
Another way to retain customer loyalty and increase revenue is by providing customers with closed digital wallets. This will allow your customers to add or deduct credits through the issuing merchant only. Companies like Alipay, Flutterwave and Patricia offer wallet payments. 
  1. Branded FinTechs
Any business, ranging from traditional banks to retail stores down to medical institutions, can launch their custom-built branded FinTech, by enabling customers to access financial services, such as pre-paid cards, check cashing, money orders, and bill pay.
  1. Ride-hailing App Payouts
Ride-hailing companies like Plentywaka can enable drivers to get paid multiple times a day through an Instant Pay system. Also, ride-hailing companies can design their payment system with payroll apps.  
  1. Buy Now, Pay Later (BNPL)
Businesses of all kinds can offer BNPL services that can reduce purchase friction, especially when items are expensive. When a shopper chooses to use a BNPL option rather than use their debit card, they are practically taking out a loan to cover their purchase. To make this more customer-friendly as well as benefit your business, ensure that your BNPL options are clear. You could either want your BNPL program to require a credit check and specify the features you want, such as how many payments a purchase can be divided into and whether shoppers can select when to repay. A Final Word Embedded finance is all about creating an all-in-one experience for your customers. Rather than customers securing the services of two or more companies to meet their needs, those needs can be provided by a singular entity rather than splitting the operations among various components. For instance, as a car dealer, anytime a customer visits your website, he should be able to pay at once for ownership and delivery right on your website. Featured image source: Strategic capital
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This article was first published on 9th March 2022

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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