The Benefits of Embedded Lending
Embedded lending offers a wide range of benefits to both SaaS companies and their customers. Learn how embracing embedded lending can help your business level up.
Embedded lending has emerged as the latest in vogue fintech trend, and for good reason. The fundamental business need for embedded lending is anchored on the fact that all companies — even digitally mature ones — must offer better value to their customers to remain competitive.
By bringing embedded lending into the fold early on, forward-thinking tech companies can increase the value they deliver to customers and drive further growth.
What is Embedded Lending?
As the name suggests, embedded lending occurs when access to capital is embedded into non-financial services or products, providing better options to customers that may otherwise be underserved by third parties like banks, credit unions, traditional lenders, etc.
With embedded lending, your SMB customers can conveniently access the vital capital they need to cover operational expenditures, secure new inventory, and so much more, allowing these businesses to grow and thrive.
The Benefits of Embedded Lending
Embedded lending offers a wide range of benefits, many of which stem from embedded lending’s ability to diversify your product offerings and make your customers’ experience with your brand more delightful. With embedded finance, SaaS companies can:
- Create new revenue streams: In order to scale or simply cover ongoing costs, many SMBs will need to borrow money at some point. Embedded lending allows you to monetize your customers’ financing through a revenue share program where you get a percentage of each loan originated from within your product. When you embed lending into your platform, you add a new offering to your existing suite of products and services. This provides a new revenue stream for your company while simultaneously improving your customers’ experience and their business outlook. It’s a win-win for you and your SMB customers.
- Since finding new customers will always be more expensive than retaining existing ones, churn can quickly morph into a costly problem. When you offer embedded lending, you provide customers with a contextual experience that ensures they have access to the capital they need, when they need it. As a result, your customer engagement and satisfaction levels stand to improve, which, in turn, reduces churn. Adding a simple, useful service like embedded lending to your existing platform not only drives customer loyalty and engagement, but increases product stickiness and your NPS rating.
- Stay ahead of the competition: There’s no denying that smoother, faster digital experiences are no longer a “nice to have” — they’re an absolute must in the eyes of today’s consumers. The SaaS companies most likely to stand out are those that digitally transform their platforms to increase the value generated for their customers, and embedded lending can be a competitive differentiator for SMB audiences. Consider turning to embedded lending early to get the edge over the competition and attract new kinds of customers seeking more convenient ways to run their businesses.
- Increase lifetime value (LTV): By offering financial products that support your customers’ needs through embedded finance, you can significantly multiply and increase the LTV of your existing customer base. Remember: Embedded lending expands the suite of services you provide to your customers, offering them more ways to engage with your SaaS company — all within the same platform. With additional avenues of engagement, customers will have less reason to look elsewhere for the services you now offer.
- Learn more about your customers: You will become more in-touch with your customers by gathering valuable data about them via the lending process. This becomes particularly relevant for SaaS companies seeking to eventually build their own capital programs. For example, Lendflow gathers key insights on SMBs’ behavior through the loan application process by being able to track what customers do, what data they enter, and where they might drop off. We also provide tools that help you evaluate the performance of loans originated from within your product to identify which SMBs are doing well and which are more likely to default. With all of this information in hand, SaaS companies become better positioned to transition from embedding capital to ultimately building capital programs of their own.
But it gets even better: Your business can reap all of these embedded lending benefits while maintaining full control over your brand and customer experience. That’s because a quality embedded lending partner will help you create a customized API to ensure your lending services feature your branding and fit smoothly into your existing user experience.
Maximize the Benefits of Embedded Finance
Embedded lending brings a myriad of benefits and growth opportunities to the SaaS companies that adopt it. From opening up new revenue streams, to reducing churn, and increasing LTV, embedded lending offers a pathway for forward-thinking companies to rise above the competition.
If you’re looking to scale your business quickly, it’s time to explore embedded lending. But not all embedded lending platforms are created equal, and you need a partner you can trust to seamlessly and effectively put capital into your customers’ hands. Lendflow was designed with SaaS companies like you in mind and can be tailored to your business needs — allowing you to reap the many benefits of embedded finance on your own terms.
Are you ready to deliver seamless, contextual financial experiences that delight customers and increase engagement? Contact us today to get started!
