How Embedded Finance is changing the lending landscape in 2022

The advent of Covid 19 has forced everyone indoors—credit cards in hand — Southeast Asia has seen a dramatic rise in online spending. In fact, the region has added 70 million new online shoppers since the start of the pandemic — and running parallel to this increase is a growing desire for a one-stop-shop experience that is giving rise to several new forms of payment.

Among these new payment options, embedded finance has also gained popularity these days. Put simply, this is the integration of financial tools and offerings into a traditionally non-financial platform. For example, it could be an e-commerce company providing a pay later option, or a ride-hailing app offering car insurance. It is designed to streamline financial processes for consumers by making it easier for them to access the services they need when they need them. For businesses — ranging from retailers to telcos — embedding consumer financial services closely within their ecosystem aims to both boost retention and increase their customers’ lifetime value. With the value of the global embedded finance market expected to exceed $138 billion in 2026 and a digital-savvy population with one of the highest smartphone penetration rates in the world, Southeast Asia is a prime market for this growth.

 How Finvolv is helping the industry embrace Embedded Finance in the existing suite of services?

When it comes to embedded finance, the primary benefit is its ease of use for consumers, as it removes pain points - such as the need to seek credit or other financial services elsewhere. Finvolv allows any type of company or online service provider to incorporate retail banking solutions directly into its website or mobile apps. Products such as BNPL (Buy Now Pay Later) enable customers to continue their journey within the same journey irrespective of their journey origin. Ultimately, this makes it more likely for customers to complete a purchase and be happy with the overall experience - which is what every business is aiming for.

Embedded finance products such as BNPL have also been a primary source of Customer Acquisition for many financial and non-financial institutions providing them access to the behavioral pattern of any individual customer along with exposure to cross-sell multiple products through a single channel source. The first stage of availability is key, of course, but the next step requires businesses to ensure that the integration of financial services in their customers’ journey is as unobtrusive as possible. Reducing the amount of information someone needs to provide - and ensuring fewer breaks in the customer journey - is crucial to creating that ‘one-stop’ experience customers crave. Achieving this requires businesses to tap on advanced technologies like AI and edge decisioning to automatically process data as close to the purchase point as possible to save manual processes and time.

Finvolv is the key in solving the second stage of the embedded finance process providing its low code platform to configure and create processes with the lowest CTO and GTM in the industry. Finvolv platform is a modular platform with Stateless Architecture built providing access to different microservices in every capacity required in the process. Microservices such as Finvolv Studio can be used to create and define journeys for any kind of product in a low code manner wherein all pre-built components are available to make the functional journey. The rendering engine is another powerful microservice tool that helps you create hybrid forms which can be resized and reshaped various forms into any device as per the usage of the application reducing the duplicity which in turn reduces the time and effort. Also, any changes to be made within the journey can be done “on the fly” and can be processed without any downtime for the application. 

Integration of various services internal as well as external comprises the most critical and complex part of the journey. Finvolv covers this complex and time-consuming process with one of its most indigenous low code microservice modules - the Integration Broker Engine providing the institutions to onboard third-party APIs and Internal APIs with ease along with functionalities to customize, test and write their own pre and post-processing scripts. Integrations such as integration with partner platforms or aggregators can also be accommodated using Integration Broker Engine.

Other microservices such as AI/ML Credit Decisioning Engine for automation of decisioning in real-time, Identity and Access Management module for various dashboards such as for Customers, Merchants, Internal Users, Partners, etc can be configured using this module. On top of all this, we have in-house Analytics solutions which provide reports and dashboards providing insights for processes and customers.

At the end of the day, when consumers sit in front of their devices ready to purchase, they’re not necessarily explicitly looking for financial services. The demand begins with the search for digital goods and services - but has the potential to end in embedding finance in the fulfilment journey, ultimately becoming essential to the overall experience.