In recent years, B2B embedded finance has become increasingly popular as an alternative business financing method. Today, business customers can seamlessly leverage their data to seek out loans from alternative lenders without leaving their native platforms. This has not only contributed to the increase in revenue for both the lender and the business but also empowered countless SMEs to restock their inventory on time and get their cash flow in order.
Now, while improvements on this front continue, in our opinion, the next step for B2B embedded finance will be to directly integrate into the CRM of large retailers, further increasing the convenience of buyers, and in today’s blog post, we will discuss exactly that.
The Current State of B2B Embedded Finance
Over the last couple of years, B2B embedded finance has revolutionised the way businesses approach alternative financing. Through leveraging their transaction data, business customers are now able to apply for loans from alternative lenders without leaving their native platforms. This process is often much faster and more convenient than traditional methods of seeking out financing, which makes it more attractive to many SMEs who need quick access to working capital.
Furthermore, as businesses no longer need to re-share their transaction data multiple times, it reduces the costs associated with loan processing and time spent on paperwork, enabling seamless application processes, helping lenders approve more applications in a shorter period of time, and the businesses to get faster access to capital.
As currently, most embedded lenders integrate on platforms via APIs, they can instantly access affordable capital without needing to go through the hassle of manual paperwork and data sharing.
The Next Step for B2B Embedded Finance
In our opinion and that of other industry experts, the next step for B2B embedded finance is to integrate directly into the CRM of large retailers.
This will be a game-changer for alternative lenders as they will have seamless access to customer data, which will further enable them to capture an in-depth view of the borrower’s creditworthiness. In addition to this, as most CRMs in the markets are already equipped to store and organise a vast amount of transaction and customer data of businesses, embedded lenders can arrive at immediate decisions, as the need for data scrubbing and correction is reduced. This will ultimately make it much easier for businesses to get the capital they need when they need it.
Moreover, by leveraging customer data, alternative lenders can pre-approve loans and offer instant financing on purchases made through the retailer. This could help increase consumer confidence in their purchase decisions and lead to more sales for retailers. Additionally, with pre-approved loans, customers have greater flexibility when making larger purchases as they don’t need to wait for approval or worry about whether or not they will be eligible for financing.
Finally, integrating directly into a CRM will allow alternative financiers to better understand customer behaviour and provide tailored options based on this data. By analysing vendor ordering and restocking trends, financiers can offer tailored financing products that suit the needs of each individual customer. This helps them build long-term relationships with customers and nurture loyalty for the long run.
Overall, integrating directly into the CRM of large retailers expands the capabilities of alternative financiers and provides a much more efficient financing experience for both customers and businesses alike. With more reliable access to customer data and improved pre-approval processes, customers will have greater confidence in their purchase decisions, while businesses will benefit from increased revenue and consumer confidence.
Use Case in Action
To understand the above scenario better, let’s take the help of an example. One of the best applications of this concept is when an alternative integrates its solution in the CRM of a large fashion house like LVMH.
Integrating into the CRM of a large fashion house like LVMH provides a win-win situation for both the company and its vendors. The reason behind this is simple, as a large fashion house, LVMH works with thousands of individual businesses across Bangladesh, Vietnam, and India to source their supplies. However, in most cases, they follow the industry standard cycle of 30 to 120 days to settle the vendor’s invoices, which leads to cash flow and capital problems.
Now LVMH’s CRM will already have the data on how many vendors they actively work with, along with other key information such as their order frequency, reviews and ratings, inventory status, turnaround, transaction history etc. These are the exact data points embedded lender’s analyse to assess the creditworthiness of a borrower. Thus, by directly integrating with LVMH’s CRM, the alternative lender gets direct and instant access to all this data, which they can further leverage to acquire an in-depth view of the borrower’s creditworthiness, pre-approve loans, and offer instant financing on purchases made through the fashion house.
For individual vendors, this means they have greater flexibility when making larger purchases as they no longer need to wait for approval or worry about whether or not they will be eligible for financing. Along with this, as the data is already present and stored in the CRM, rarely will the vendors need to share additional data with the lender, except for few exceptions like bank statements and credit bureau reports.
The best part of this arrangement is when customers are pre-approved for loans; they have greater confidence in their purchase decisions which will lead to increased sales for LVMH, thereby creating a more efficient financing experience for both customers and businesses alike.
Furthermore, by understanding vendor ordering and inventory restocking trends, financiers can offer tailored financing products which will cater to their exact needs. This will not only help in creating long-term relationships between the vendor and the lender but will also increase the former’s trust and loyalty towards LVMH, as they don’t need to approach an external lender to secure financing.
Overall, an alternative lender embedded into LVMH’s CRM system allows them to provide faster access to capital with less paperwork and hassle and enables them to capture an in-depth view of borrowers’ creditworthiness. With improved pre-approval processes and tailored financing options offered based on customer data, this creates an efficient and secure financing experience that benefits both the retailer and its vendors alike.
Conclusion
Embedded finance has come a long way in the last decade, and integrating directly into the CRM of large retailers is poised to be its next big leap forward. By having access to customer data and improved pre-approval processes, customers will have more confidence in their purchase decisions, while large retailers will benefit from increased revenue. This arrangement will provide vendors with greater flexibility when making larger purchases and will increase the retailer’s brand loyalty and appreciation in the market.
It’s clear that embedded finance is set up for success now more than ever before – so why wait? Investing in B2B embedded finance can help your business unlock new opportunities. Get in touch with us to learn how we can help you empower your customers with an embedded finance experience, today!
