Irrespective of the industry a business serves, one common hamstring that binds organizations around the globe is their constant pursuit of generating more revenue and increasing customer loyalty. However, there is a limit on the number of products you can manufacture or the services you can deliver to constantly up your revenue.
Thus, a more efficient way to increase your revenue is to offer your customers a new convenience in their shopping experience. The future of businesses across the globe is to embed financial services in traditional environments to empower the customer to complete the entire transaction without leaving the platform. Pioneering this experience for your customers can not only enable you to earn more revenue but also increase customer loyalty, and in today’s blog post, we will explain how.
Bridging the Gap Between Brands and Banking
Embedded finance as an offering has been around for some time now. Retail chains and automobile manufacturers have been partnering with traditional financial institutions for decades to offer cobranded credit cards and loyalty programs. What is new is that embedded finance is now entering the digital world where customers no longer need to navigate between platforms to complete a single transaction but can do so efficiently within the same platform.
Essentially three stakeholders need to participate in orchestrating this convenience – the platform, the banking partner and the fintech or the enabler. At its finest, the enabler acts as a bridge between the brand and the bank and leverages its technical expertise to embed financial services in a traditional non-financial setting. Once implemented, customers can take advantage of an entire suite of financial services from within the platform – right from insurance and lending to integrated payments and savings accounts.
To understand this better, let’s take the example of a technology company like Tesla. Tesla is an automobile manufacturer which specializes in advanced electric consumer vehicles. Now as per law, every vehicle owner needs to purchase insurance to first protect their life while also covering own and third-party damages.
As of date, customers need to look elsewhere to purchase insurance for their cars, thus presenting an opportunity for Tesla. Simply by partnering with an insurance provider and embedding their services within their platform, Tesla can empower their customers with the convenience of purchasing insurance within their ecosystem. Implemented correctly, this will create a win-win situation for both Tesla and its consumers, as the former now has access to increased convenience while the latter will benefit from a new source of revenue.
The above is just one example of how companies can leverage embedded finance to bridge the gap between brands and banks and benefit from it; shared below are some additional use cases and examples.
Embedded Finance Uses Cases for Brands
Wearable Wallets
Wearable manufacturers like Fitbit can offer integrated payment solutions in their devices, such that consumers can seamlessly pay for products and services.
Embedded Lending
B2B marketplaces and eCommerce platforms can partner with embedded finance providers like CrediLinq.Ai to offer seamless financing for their business customers. Simply by sharing the merchant and seller transaction information, platforms can provide them hassle-free and affordable access to capital and efficiently bridge the SME financing gap.
Digital Wallets
eCommerce marketplaces can offer customers digital wallets which can be used to load and spend money within the platform and beyond. One example of this is AmazonPay, where consumers can load money from their credit and debit cards and further use the wallet to pay for their shopping at Amazon or outside retailers.Â
Ride-Hailing Services
Ride-hailing companies like Uber, Grab and Lyft can partner with insurance companies to offer their partners insurance for their vehicles and their services. This will enable them to efficiently safeguard their most significant asset – their driver and rider partners, while opening a new revenue stream for them.
Software Subscriptions
Technology companies which specialize in business software such as payroll and accounting can embed lending services within their platform, such that business users don’t have to look elsewhere for financing. By analyzing a business’s past payroll information, the lender can offer the business spot financing to meet their payroll obligations and, along with this, gain their loyalty and appreciation.
Travel Aggregators
Travel aggregators like Booking.com can partner with embedded finance providers to offer increased convenience to both their customers and partners. For example, it can offer travellers, travel and luggage insurance for their travel plans while offering its partners insurance for room bookings. Along with this, it can partner with integrated payment companies to offer its customers a seamless payment experience throughout their purchase journey. In this manner, travel aggregators can not only open up a new revenue channel but also increase customer loyalty in this extremely competitive market.
Embedded Loyalty Programs
Along with nurturing a new revenue stream for their business, another significant advantage of embedded finance is helping brands foster customer loyalty. Instead of offering offline loyalty programs in the form of loyalty cards, brands can shift to a completely digital experience.
For instance, brands can leverage digital loyalty programs, which are synced with their POS systems, thus enabling them to reward customers automatically for every purchase without having to repeat this process manually.
A good example of this can be found at Starbucks, which has a digital rewards program for its customers. By signing up for the Starbucks loyalty program, customers are rewarded automatically for every transaction and get bonus points on special occasions like birthdays and anniversaries. The best part – customers can seamlessly redeem these rewards online and offline and also keep track of them, as a digital ledger is always automatically maintaining records in the background.
Starbucks has been so successful with this approach that there is always a high demand for these loyalty cards, thus strengthening the fact why more businesses should embrace this approach.
Conclusion
The advantages of offering your customers – both business and consumers, an added level of convenience are numerous, as we showcased in this article.
Leveraging embedded finance can help you achieve this today. So, what are you waiting for? Get in touch with us today at CrediLinq.Ai and learn how you can offer embedded finance to your business customers around the globe. Click here to get in touch.
