Buy now pay later in the B2B space – what you need to know and how to get started
For the longest time, only B2C products and services had easy-to-use buy now pay later programs. Of course, B2B providers still offered their clients pay later options in the form of trade credit. But it wasn’t cheap or easy and very few could afford to run an in-house BNPL program given higher credit risks, management overhead, and overall operational effort. But technology evolves and it’s now easier than ever for B2B companies to implement and run an efficient and risk-averse BNPL program without spending a fortune on a custom software solution. What we’ll cover in this article Before we proceed, wanted to check if you (or your staff) would like this white paper with all you need to know to offer pay later financing to your customers in-house. Buy now pay later for B2B companies – current landscape In 2021, $84 trillion in B2B payments were processed. This figure is predicted to grow to more than $100 trillion by 2025. And while the consumer finance space is swirling with pay later options, the B2B space lagged until very recently. Main reasons listed by business owners on the fence and implementing B2B pay later options are: All of the above held true until recently when technology became more accessible and the younger & technology-driven users climbed the corporate ranks, generating a new wave of B2B pay later requests. The size of the opportunity and the soaring demand made the advent of pay later to the B2B space inevitable. So why did it take so long? Well, it took lending technology some time to digest the whole B2C BNPL space. And no wonder, because it’s huge. Valued at $90.69 billion in 2020, the B2C pay later market is projected to reach $3.98 trillion by 2030. But now the BNPL technology has matured enough and gained extensive B2C experience, it’s ready to automate the more sophisticated and complex B2B processes with the same level of efficiency. For a point of reference, Statista shows that the global business payments market is $125 trillion, while the global consumer payments market is only $52 trillion. The proportion of B2C vs B2B BNPL markets is likely even more drastic. In addition, according to The Federal Reserve Payments Study, for B2B transactions, the average ACH debit transaction was $31,118, and the average ACH credit transaction was $9,349. And the average consumer debit card and credit card transactions were $44 and $57 in 2018, respectively, according to Federal Reserve Bank services. But despite all the money in the B2B space, it historically required a full-fledged lending department to run a pay later program in-house. Business owners who didn’t have excessive resources or the time to invest in it, defaulted to delegating B2B finance to banks. Creating custom solutions to automate unique B2B BNPL projects was never a problem, as long as you had bottomless pockets. But the goal was to create a multipurpose, easy-to-implement and use pay later solution for B2B cases capable of handling a variety of business types and credit products. Today, B2B BNPL automation is readily available and requires no previous lending expertise to run as part of your business. Types of b2b pay later finance In our experience, industries that opt for B2B BNPL most commonly work in these areas: For most TurnKey Lender clients that come to us looking to offer B2B BNPL, it is quite simply a new iteration of trade finance or invoice factoring where the buyer needs to pay the full amount in 10-30 days. And BNPL we know from B2C looks like a simplified version of that arrangement. For example, you pay 25% down and owe the rest over three months or longer. The B2B buyers are already familiar with pay later and expect to have payment options at the checkout. So providing them with this option, not only exceeds their expectations but helps you build better longer-lasting relationships. A commercial pay later option helps the buyers improve their cash flow and they are far more likely to keep coming back to you beyond the first sale. A good example of a company that offers B2B credit in-house would be one of TurnKey Lender’s clients, a large manufacturer of complex medical equipment that works with hospitals, clinics, and institutions all over the world. As a business, they must make quick and correct decisions about the terms and conditions, approval or rejection of the pay later requests, collections and schedule management. Doing all background and firmographics research manually for such a company would be unscalable and would cost a fortune. With a custom configuration of TurnKey Lender’s AI-powered platform to automate all steps of the B2B pay later process, this company’s in-house program now runs smoothly on autopilot. The forms B2B buy now pay later may take B2B embedded credit may take other forms which aren’t common for B2C. Some of the models to amend pay later with include: The logic behind offering B2B BNPL in-house There’s plenty of reasons why BNPL is a must-have option when dealing with large deals. Businesses who consider implementing pay later options often do so because: And don’t forget the current reality we’re in – the buyer’s purchasing power decreased, businesses may have been forced to increase prices because of inflation and operational costs, and their own competition increased with global providers and expanding monopolies. Giving commercial clients an affordable and accessible installment plan addresses these problems. A B2B pay later option lets you charge a fair price for your product while addressing your own and your client’s cash flow challenges. According to data from Klarna, one of the biggest BNPL credit providers, implementing a pay later program in B2C space leads to: These percentages translate into a different magnitude of return on investment for B2B space. Challenges of B2B buy now pay later automation and solving them To achieve similar or better results, B2B pay later providers must solve a few challenges. Either themselves or by means of intelligent automation. This is
What to Look for in Loan Management System for Consumer and Commercial Lending in 2024
Loan management software is enjoying broader uptake as digital technologies continue to take hold, opening new avenues for business development to a host of non-traditional lenders in B2C and B2B settings. Digital loan-management software is a system that automates every step in the life of a loan, from application through final repayment, and does so far quicker and more accurately than traditional loan management. Before we proceed, would you (or your staff) like to see what IDC, Gartner, Deloitte, HP, and other trusted institutions say about Turnkey Lender loan origination and loan management automation. For example, old-style loan management begins with an assessment of the applicant’s creditworthiness is a time-consuming process that’s followed by more procedural snags such as calculating suitable interest rates, laying the groundwork for collections, and following up with borrowers as needed. By contrast, digital loan-management can assess and (where warranted) fund a loan in minutes — while bringing to many bear more “inputs” relevant to the specific applicant’s disposition to repay, including behavioral-finances “tells.” These innovations are part of a digital transformation that’s taking place as information technology takes over from analog technologies to become a primary change driver for business and society. Consider how, in the space of three decades, entertainment delivery has been shaped by available technologies, from broadcast television and radio to competing tape and disc formats to the streaming services of today, with each step offering more choice and easier access. Digital everything, everywhere With the advent of analogous capabilities in financial technology — plus incentives derived from Covid-era social distancing, and stricter record-keeping requirements in some jurisdictions — the digital-lending market is booming. Digital lending platforms supported transactions worth $5.6 billion, says market-analytics provider Valuates. By 2027, the researcher estimates this market will top $20.3 billion, for a compound annual growth rate of 16.7% over six years. In more concrete terms, fintech reached “mass adoption” rates with 88% of US consumers using it. In fact, more Americans use fintech than streaming-video services (78%), or social media (72%). But, as it’s a potential option in every scenario where payment is required, the market for digital loan-management software has much more growth in store. Early signs of the explosion to come include installment-pay options at online retailers like Walmart and Amazon. Far from being limited to traditional banking scenarios or big-ticket retail settings, in other words, digital lending can now stand as a payment option for virtually any purchase, anywhere. And just to provide a high-level overview of what a modern lending automation platform does, here’s the standard digitized loan life cycle inside TurnKey Lender. Beyond retail and banking, digital loan management is taking hold in settings as diverse as — but not limited to: From the evidence, digital loan servicing is nimble and adaptable enough to take a place not just where loans are made, but wherever delayed payment may be acceptable to buyer and seller alike. The growing attraction to digital loan-management platforms goes beyond their ability to render credit decisions in less than a minute, according to lending-tech pioneer Elena Ionenko. “Organizations understand what access to digital processes powering scoring models and business rules does to enhance risk assessment — even in highly uncertain environments,” says the co-founder and operations chief of TurnKey Lender, a digital loan-management provider with clients in more than 50 countries worldwide. “Straight-through processing for every stage in the life of a loan from onboarding to collections provides efficiency, certainly, and also a wealth of business intelligence.” The “big three” to look for in a lending-tech vendor TurnKey Lender says the organizations that use its loan-management software see a number of tangible benefits, including: So what does an organization need in its loan-management operations to promote customer satisfaction, enhanced administrative capabilities, fewer errors, and all-around curb appeal? For Ionenko, it comes down to “the big three, qualities or characteristics we’ve identified that make box solutions to loan management the most compelling offerings available today.” In Ionenko’s telling, the “big three” are: 1.Adaptability To work across a swath of industries in any number of settings, loan-management software has to be customizable. As a loan-platform shopper, you need a lending-platform provider with experience in many industries and a track record of success — backed by testimonials — in your specific field. Look for vendors that can articulate your pain points and demonstrate their fixes. Another important facet of adaptability is modularity. It may be that you require more emphasis on onboarding than decisioning — or vice versa — so that a full loan-management suite (and its costs) aren’t necessarily required. Look for a loan-management vendor that can help you cut to the chase. 2. Accuracy While the marquee attributes of accuracy in loan management are clustered around onboarding, origination, underwriting, and servicing, information gathering can contribute to a better understanding of customers in terms of individual behaviors as well as broader trends around customer habits, preferences, and pain points. 3. Overview At TurnKey Lender, these insights are sharpened by artificial intelligence capable of reordering thousands of inputs into digestible outputs that can help businesses manage inventories, design new product offerings, direct marketing efforts, and measure success. Past the “big three” characteristics, Ionenko recommends loan-management platform shoppers take a hard look at defining traits such as: TurnKey Lender’s loan-management platform can process up to three million loans a day. TurnKey Lender is used by an array of lender types, from community banks, to pawn shops, capital-equipment manufacturers, community change agents, and orthodontists. TurnKey Lender won first prize in the “Highest Satisfaction Product” category in the SoftwareSuggest Awards, alongside 50+ other awards. TurnKey Lender’s built-in API client promotes easy integration with the tools and data providers of your choice, not to mention the 75+ pre-configured integrations with popular payment providers, credit bureaus, SMS and email providers, and much more. “Where you see these qualities in play, and they’re backed by testimonials, strong word-of-mouth, and lots of return business, chances are you’re dealing with a software vendor dedicated to providing
Building an exceptional borrower UX as a digital lending business
Borrowers don’t want to meet you in person, and they don’t care about your office, your decor, or the quiet competence of your originators and underwriters. They just want loans, on good terms, and they want them fast. And to get loans fast, they know you have to apply. And the most efficient way to apply is virtually, from the comfort of their home, coffee shop or office. In short, the success of your lending unit is a function of the “digital borrower” experience you provide. This has two main aspects. User experience (UX) and user interface (UI) design of the digital lending process. The best digital lending software providers offer a personalized experience within an intuitive interface that accounts for the target clientele (retail, medical, commercial, etc.) and all relevant local laws and regulations The guts of the operation — that is, the quality of the software, business logic, cyber security, integrations, authentications, etc., the software maker provides Borrower portals must provide easy-to-follow access to: The online application processes Know-your-customer and anti-money laundering safeguards Instant credit scoring Information on fees Document generation E-signature capabilities Means of ongoing communication with lender Payments processing Rollovers Grace periods In this short video, you can see how easy it is to get results in TurnKey Lender’s borrower portal. Despite the availability of cutting-edge lending technology, most lenders still bug loan applicants for hard-copy paperwork and then make them endure signature approvals that can take weeks to complete. These lenders, meanwhile, are up to their eyeballs in risk assessment that they’re constrained to undertake without help from intelligent automation. Intelligent and responsive UI and UX is a must At root, borrowers are happiest with digital lending systems, like TurnKey Lender’s, that have been designed by developers who know all the answers to all the most important questions before the user even thinks to ask them. “In a TurnKey Lender customer portal, applicants quickly understand they’re being asked for only the most essential information, data that will help them get quick and complete responses based on fair and unwavering terms — and that this fair treatment is likely to continue through the lifecycle of any loans that may be made,” says Dmitry Voronenko, CEO and co-founder of TurnKey Lender. “The fact is, it’s now easier than ever for would-be borrowers to find lenders that accept applications, reach decisions, disperse funds, and collect payments, all online.” The “arms” race these days isn’t about functionality so much as providing superior UX. This characteristic is demonstrated by: Affordable and accessible credit precisely when and where it’s needed Ease of communication with the lender through the borrower portal Above industry-standard privacy and data security Robust compliance On the privacy and security front, TurnKey Lender’s information security policy exceeds regulatory requirements for data security by going above industry standards and best practices. TurnKey Lender has SOC2 Type I and SOC 2 Type II compliance reports and the globally-recognized ISO 27001 Certification. Similar to its all-in stance on cyber security, TurnKey Lender takes preventing fraud, terrorism, and money laundering very seriously. Its regulatory compliance is bolstered by automation, rigorous internal and external staff training, and enhanced due diligence that includes behavioral analysis. TurnKey Lender is also committed to humanizing every aspect of the digital lending experience. This doesn’t mean that we encourage our clients to seize on the marketing potential of communications within borrower portals to bombard customers with offers and incentives for the simple reason that they fall into specific profiles and demographics. Instead, we take account of the customer’s life stage, behavioral profile, and preferences to make communications meaningful, impactful, and welcomed. Getting it right matters Recent McKinsey findings suggest that customers — especially new customers — expect nothing less from their digital interactions, especially interactions as protracted as the lifecycle of a consumer loan tends to be. The same study finds that personalization makes customers more likely to follow up with repeat purchases and positive referrals to friends and relatives. “Consumers don’t just want personalization, they demand it,” McKinsey writes. “With store and product loyalty more elusive” — and about 75% of consumers having tried “new shopping behavior” in the previous 18 months — “getting it right matters.” The need for personalization in digital settings is further heightened by the finding that 80% of these consumers intend to continue with their new behavior in retail settings. The study also found that companies that “excel at personalization” — tailoring offerings and outreach to the right individual at the right moment with the right experiences — take in 40% more revenue from digital commerce than most businesses. Besides providing seamless UX, organizations that use TurnKey Lender get a complete, bank-grade lending platform humming away 24/7 behind the curtain. “When you sum it all up,” says TurnKey Lender’s Voronenko, “lenders who provide loan applicants with a positive and paper-free user experience backed by robust data capabilities are going to do better when it comes generating customer loyalty and making the most of up- and cross-selling opportunities.”
Data enrichment is the secret sauce in digital lending
In describing financial technology, it’s easy to forget that “what it does” is more important than “how it works” for most people. With that in mind, we can promise that this will be an easy read to help you understand what data and data enrichment do in digital lending, and how they make life easier for you, the owner or executive of a business that wants to extend credit to its customers as efficiently as possible. At TurnKey Lender, we start with an interface that’s actually a pleasure to work within. You immediately notice a layout that makes sense, with things exactly where they should be. In this environment, you feel supported, a sensation that quickly translates into confidence and better performance. That’s the work of the industry’s best designers, analysts, and developers, all focused on delivering a superior experience to the business, its employees, and its customers. Your data needs enrichment “Out of view, beneath user-friendly UX, run rivers of data, performing complicated credit calculations, weighing industry-standard ‘if/then’ scenarios, and carrying accumulated insight from automated task to automated task,” says Elena Ionenko, COO and co-founder of TurnKey Lender. “But the data can’t do its job without enrichment.” Data enrichment — sometimes data “augmentation” — is the “process of enhancing existing information by supplementing missing or incomplete data,” according to ScienceDirect. Typically, this enrichment is achieved by using external data sources and internal artificial intelligence and machine learning to make (and learn to make better) decisions using available information and a growing array of best options. Machine learning is a subset of AI, a device or process that takes into account aspects of its environment to make decisions or predictions, mimicking human cognition. Machine learning supports AI by using algorithms and statistical models to perform many specific if-this-then-that type tasks at once, drawing on patterns and inferences rather than explicit case-by-case instructions. That is, machine learning takes “training data” and constructs mathematical models that bring “thinking” to nuanced processes requiring multiple inputs from vast datasets such as determining a would-be borrower’s suitability for a loan of a specific size, type, and duration. A use case (and more definitions) Another term that crops up in conversations about AI is “deep neural network.” This sits at the intersection of multiple incoming datasets and the decisions or inferences to apply the most relevant formula for the task at hand. Imagine, for example, that the input in question is a gallery of photographs depicting every tree species known to man — around 73,000, as it happens, an easy lift for TurnKey Lender’s AI. Now let’s suppose the task is to grade timber for its suitability in making a particular type of handcrafted furniture, which calls for hardness, high polishability, and a dark natural color. The neural network might start by distinguishing hardwood from softwood trees (which may be eliminated from consideration) before sorting for other suitable characteristics. That’s what makes these brainy systems so “deep” in the first place, and makes them so valuable as an aid to accuracy. So it’s no surprise that the need for data enrichment is going through the roof. The volume of “big” data in data-center storage went from 25 exabytes in 2015 to 403 exabytes in 2021. One exabyte is equal to a million trillion — 1,000,000,000,000,000,000 — bytes. 45 million Americans have little or no credit history This sort of volume starts to make sense when you understand that determining creditworthiness is a complicated process calling for millions of data points to be assembled, sifted, read, understood, and double-checked to make any one of the myriad decisions required to measure creditworthiness. And these are all tasks that used to be attempted manually, keeping teams of underwriters, loan managers, reporting officers, unit managers, and business owners extremely busy. Now, most credit checks are performed automatically, requiring only high-level supervision. As a result of automated AI, organizations that deploy data enrichment can: Reduce risks Eliminate human error Lower operational costs Grow customer lifetime value Meanwhile, every business has a significant data layer that is rarely used to its full potential, an oversight that can block their access to some 45 million US adult consumers with “thin or nonexistent credit history,” according to the New York Times. New ways to view loan applicants Meanwhile, your business throws off reams of proprietary information — typically transactional data, telecom data, customer histories, etc. — that can be used in credit scoring, woven into application forms, or used to measure customer responsiveness and gauge customer preferences. In point of fact, many businesses overlook the fact that data on the habits and behaviors of existing customers can provide insight into a loan applicant’s creditworthiness, augmenting the data a traditional bank can get hold of. Tip of the iceberg More concretely, traditional data points include: Credit scores Biographical data Fraud prevention Financials Firmographics (employer status) Behavioral traits Transaction history Collection records Alternative scoring data, meanwhile, uncover: Mobile device usage and mobile network E-commerce purchases, trends Social networks Psychometrics Spending and bill-pay habits Skip Tracing Mileage/driving habits Education (down to grades, majors, degrees, and of course institutions) Any data that can shed light on a loan applicant’s ability to repay is fair game if it can be digitalized. Even when so formatted, however, data in such quantities can’t be handled by any one human — or even a whole squad of them. That’s where automated AI-driven scoring and decisioning come in to gather, sort, and manage large data flows for use in guiding credit decisions and other functionality rather than letting them stew unused in vast, opaque databases. “Without enrichment capabilities, the vast arrays of data we can access nowadays might as well be buried in the desert,” says TurnKey Lender’s Ionenko. “Our deep background in AI and data enrichment gives lenders a better picture of loan applicants than they’ve ever had before, and the means to service accounts and manage whole loan portfolios in ways that make low-risk lending more accessible to consumers than
Embedded lending revolution – preparing your business to finance clients in-house
Embedded lending as a concept is often buried in convoluted marketing explanations. When in reality, it’s nothing more than an installment consumer loan that a provider of goods or services is offering their client themselves instead of delegating it to a third-party lender. And with the vast majority of buy-now-pay-later programs, you don’t even need the capital to finance the purchase, just the capability to originate and collect installments on the applications. Because of how long banks and alternative lenders had a monopoly on credit, embedded lending is the biggest change in the digital space since e-commerce. On a high level, it means that a platform like TurnKey Lender allows any retailer, manufacturer, or service provider to offer Buy Now Pay Later credit products to their clients in-house without delegating profits to a bank. Your business can and should ride this wave. In this webinar, Dmytro Voronenko, CEO and Co-founder of TurnKey Lender explains the embedded lending phenomenon in simple terms, shares what is possible in the embedded lending space today and what the future holds for business owners who embrace this change. The insights you can watch or read below are based on the experience of TurnKey Lender’s clients, industry trends, and the journey of the business owners and borrowers benefiting from embedded lending already. At the start, Dmytro highlights that “all the industries need to recognize that a huge paradigm shift is happening throughout the economy. Embedded lending becomes more and more available to any business, not just the specialty lenders and big business.” The biggest consequence of the embedded lending revolution is that any business can offer independent financing without banks, without the need to attract capital. It’s much easier for the client and often fully automated. This becomes possible because of the autopilot capabilities of embedded lending ensured by FinTech providers like TurnKey Lender. To show just how quickly embedded lending is taking over the digital space, “the whole FinTech market used to be around $20b a few years ago. And with embedded lending available, it’s at least 10 times bigger.” The fact that large players like Apple and PayPal are tapping into the BNPL space shows how important this phenomenon is going to be in the new economy, possibly replacing many of the traditional credit products and models like credit cards. “More and more digital companies like Shopify, Strive, or QuickBooks start to offer capital opportunities to their customers and what will happen in the next 10 years is that any company will be able to do that. Mainly because of software platforms becoming available and easy to use. In the past, to start lending you needed to dedicate yourself to this business, to have a team, proprietary software, significant investments, and expertise. Now anyone can extend credit to their customers in-house.” Before, to get a loan, a client went to a bank or a leasing company. Now, thanks to BNPL availability customers know that they can have this financial product exactly at the point of need, exactly in the form they want it. And as you know, customers often prioritize convenience even over price. Examples of e-commerce giants like Shopify who enter the Buy Now Pay Later space to allow shop owners to embed credit into their operations is a reflection of the benefit embedded finance brings and the demand already present in the market. Especially as businesses at the point of contact have much more real-life data about clients which helps inform the credit decision and come up with the right credit terms. The benefits of embedded lending or buy now pay later already extend to businesses in a wide range of industries. Most such credit products don’t have to be originated and serviced through a bank. Given that the business owner has the resources to make an accurate loan decision with low risks, there’s no need to delegate customer relations and profits to a third-party lender. This applies to retailers, manufacturers, healthcare providers, franchise providers, and much more. By offering credit in-house you not only tie the client to yourself for future business but also overcome income seasonality and make more money on each sale over time. Just some of the examples from our clients include the following: Read more TurnKey Lender case studies here. “Embedded lending enables things which weren’t possible before. For example, Habitat for Humanity builds houses for families in the communities and they finance those houses themselves, interest-free. And once deployed in one country, they can easily migrate to other countries they work in.” Buy now pay later providers vs in-house buy now pay later Many companies don’t realize how simple embedded lending is these days. This is why many businesses still resort to delegating credit to a bank or a specialty lender who are happy to finance the BNPL loans because of their low risks. This is also why many business owners choose to partner with BNPL providers who finance the clients and handle relations with your customers on their end. But the interesting thing about running a buy now pay later operation in-house is that as a business owner you already have the product, you have the staff on the payroll, you are handling expenses in any case. So for you, it’s important to have the pipeline moving and when it comes to the BNPL purchase, you don’t need to finance the clients like a lender does. You just give them the product or service and get paid over time. This means that you don’t need a lender’s capital to offer BNPL. A lender and their funds in this case are the unnecessary middlemen. If you do Buy Now Pay Later in-house, you can use the unique data your business has about the client in decision-making and upsells. In our experience, up to 10% of customers are lost to competitors when sent to do business with a buy now pay later provider. A third-party buy now pay later provider doesn’t
ATMs Are Poised to Become a Compelling New Frontier for Digital Lending
Automated teller machines, ATMs for short, have been around since the early 1960s — and, strange to consider, the very first ones only made loans. But these everyday machines are poised to facilitate digital lending trends in an ever more connected world. Of course, ATMs are now known for dispensing cash from users’ savings or checking reserves rather than making loans. But that could change very soon, giving banking kiosks a dynamic new purpose in an increasingly competitive marketplace. And that’s thanks mainly to digitalization. In recent years demand has begun to catch up with technology, opening the way to digital lending through a range of portals, not just hand-held devices and newfangled cash registers. “By converting ATMs into lending machines that a customer can use to apply for a personal loan, get a decision in seconds, and receive the funds either as cash-in-hand or as a direct deposit, ATMs can extend the reach of banks and non-bank lenders alike,” says Elena Ionenko, co-founder and COO of TurnKey Lender, a provider of financing software to e-lenders around the world. “Some ATMs are doing it already,” she adds. “And our cloud-based, no-code, one-stop, AI-powered Enterprise platform was specifically conceived to put lending technology wherever it’s needed.” History, evolution, and impact of ATMs starting more than 60 years ago Despite the loan-making focus of an early version of the ATM, adding these machines to the broad financing matrix is an innovation that makes more sense now than ever. Coming a few years after the deposit-only “Bankograph” machine debuted in New York in 1961, the first dispensing ATM, called the “Computer Loan Machine,” made three-month cash loans to credit-card holders before it faded from history, seemingly within months of roll-out. Perhaps it didn’t help that credit-card holders were rare in those days. Meanwhile, cash-dispensing machines slowly gained traction, appearing first in the UK, then in Sweden, and in Australia by 1969. That year, US inventors began tinkering with networked ATMs that allowed for withdrawals directly from bank accounts, aided in terms of security and convenience by the introduction of personal identification numbers. Remember, before then, cash dispensed by these early ATMs were technically loans, redeemable within a set period to the credit provider. Fast forward to the present, and there are roughly 42 functioning ATMs for every 100,000 adults worldwide — a total easily topping 2 million, according to the US-based ATM Industry Association. And most of them facilitate cash withdrawals from bank accounts, balance queries, and, quite often, deposits of cash and checks. Though the ATMIA asserts the total number of working ATMs has increased yearly since 2008, other sources tell a different story. In this view, ATMs are in decline, reflecting consumers’ growing comfort with online banking from home — a development accelerated by recent coronavirus lockdowns. So, as more people use their computers and phones to conduct routine banking tasks, banks have been closing branches, and taking in-branch ATMs out of commission in the process. Hiding in plain sight: ATMs are poised to advance a broad-based digital-lending transformation Meanwhile, the steep fees these machines sometimes levy can leave consumers feeling vexed. And banks that deploy them are constrained to pay between $1,000 and $10,000 per machine, not counting ongoing maintenance costs. Contrasted with the ubiquity of internet-connected mobile devices, these drawbacks seem poised to make ATMs as rare as coin-op phone booths. But this view may be wrong. The very thing thought to spell the ATM’s demise — digital technology — could give it a new lease on life. Provided it has an RJ45 jack, an ATM can access the internet and conduct banking business at the behest of authorized users and make cash loans. And these days, most ATMs come off the assembly line with the gear needed for hard-wire or wifi connectivity already installed. Designed to deal with complexity, TurnKey Lender’s Enterprise edition is also well suited to the task of enhancing ATMs. The Enterprise version is configurable to the exact needs and specifications of any organization and scalable to the needs of businesses large, small, and in-between. Further, the platform comes with a decision engine that, thanks to AI, can be set to take account of behavioral inputs — such as spending and bill-pay habits — as well as traditional data gleaned from questionnaires and credit-bureau reports. And crucially, an ATM equipped with TurnKey Lender financing technology can reach a decision in minutes rather than the days or even weeks it can take using a traditional underwriting engine. This, TurnKey Lender’s Ionenko explains, means “the lender can set its credit-scoring parameters to reflect the needs of specific customer niches in specific locales.” Smarter ATMs usher in less risk, more flexibility, and happier customers overall Extending the benefits of digitalized lending to ATM interfaces confers five principal benefits to banks and other lenders looking to make better use of new or standing ATMs: Cutting credit risks with AI-driven credit scoring Eliminating cumbersome paperwork and unnecessary human error Replacing outdated processes with software that’s customizable to the needs of the enterprise Reducing the cost of running a lending business Reducing time to market In addition, ATM-based lending can impress consumers with: Faster approvals Lower fees Better interest rates Queries that don’t impair credit scores On-premise ATM deployment, a given for banks and credit unions, can also help non-banking businesses extend credit without flagging a direct connection between the business itself and the lending. For example, medical, veterinary, and dental practices that wish to keep the healthcare and lending sides of their business separate, may direct clients who want financing to an on-site ATM linked to the practice’s lending platform. In this way, these businesses can enjoy a degree of discretion along with the benefits of: Not having to split fees Freedom to set rules, terms, and conditions A flexible, white-label environment Access to AI-sorted analytics to hone and enhance marketing efforts Continuous improvement to the underlying technology “For us, equipping ATMs to make loans in a best-of-breed technical
Why Some Lenders Are Still Stuck Using Spreadsheets for Almost Everything
Odd as it may seem, many lenders still use spreadsheets and emails to manage entire loan portfolios. Despite a widespread push toward digitalization in banking services, some companies still cling to procedures they view as tried and true in the face of upheaval. Even lenders with clear and detailed plans for renovating their technology stacks can inadvertently put themselves at a disadvantage by clinging to outmoded technologies. But this isn’t a knock against spreadsheets. Those versatile tools have a range of applications, from record-keeping and file storage to analysis and calculation, and many businesses still put them to good use. At TurnKey Lender, we have quite a few spreadsheets too. Still, adhering to manual-input forms and other legacy tools can make systems maintenance and improvement far more difficult than it needs to be. Further, “while comprehensive technology reviews and updates are vital to platform development and oversight, quality assurance, and business analysis, lenders find that their efforts to keep operations in fighting trim can be impeded by cumbersome in-house workarounds,” say Dmitry Voronenko, CEO and co-founder of TurnKey Lender, a leading provider of lending software and services with clients in more than 50 jurisdictions around the world. “In effect,” Voronenko adds, “taking a DIY approach to behind-the-scenes lending processes automation puts most creditors at a disadvantage they may not even grasp until they go through meaningful digital transformation.” Explore TurnKey Lender Why make innovation more difficult? We can get a better appreciation of lenders’ DIY dilemma by looking at the top challenges companies face — including those that have tackled digitalization as a strategic priority. According to IT-staffing firm TEKsystems, organizations in this vanguard confront a litany of obstacles on the road to digitalization, among them: 38% struggle to cope with evolving complexities in technology and resist “siloed mindset and behaviors” 26% complain of too many competing tech priorities 26% see significant gaps in staffing for in-house tech positions 24% worry about meeting security concerns and compliance requirements 23% run afoul of change management and other internal impediments to implementation 23% say existing business processes are too rigid 23% claim company brass doesn’t support their efforts enough 20% see economic headwinds denting IT budgets 17% fret about a lack of specifically earmarked funding for digitalization 16% see a clash of digital and traditional business priorities If companies that have been identified by TEKsystems as digital-transformation leaders complain of such obstacles, what must it be like for laggards who are committed to using in-house tech to achieve digitalization? In a word, they’re sunk. Here’s the problem. Well over 80% of spreadsheets used in business contain errors, according to a 2009 study — based on “a century of human-error research” — on the role spreadsheets played in the financial collapse of 2008. About half of spreadsheet models used by large businesses have “material defects,” the study asserts. The report contends that the mid-2000s credit derivatives market was largely built on “opaque financial instruments based on large spreadsheets with critical flaws in their key assumptions.” In plainer terms, the study suggests that many firms underwriting credit derivatives prior to the financial crisis were operating in the dark without knowing it. As a result, many were caught off guard when the collapse came, having had a low-ball sense of the amount of risk they had taken on in the run-up. Old thinking, half measures, and cost paralysis Let’s be clear. Lenders absolutely can make, find, or buy spreadsheet templates to: Record payments Calculate late fees/pre-payments Manage escrow Create notices But why on earth would they want to? Sure, spreadsheets have been go-to tools for decades now, and in business scenarios where IT has to work with product development they’re often a quick way to achieve functionality — not necessarily a sustainable way, but a quick one. Organizations that provide financing to their customers and still rely on spreadsheets do so for several reasons. First, they may be trying to save money. In this view, spreadsheets function as a gateway technology to full-on, budget-altering digitalization. They may also be reacting to lending-platform demos they’d seen years earlier featuring ugly and cumbersome interfaces. Or they simply fear the learning curves associated with deploying new technology. In fact, the technology has advanced so much in the past 10 years or so that lenders using a BaaS — “banking as a service” — provider like TurnKey Lender for their loan-management operations are in a realm where the old look and feel of such systems is moot. It’s rather like the evolution of professional websites. Twenty years ago, a company keen on having its own website might hire some coders and set them to work on a unique web platform. Now companies can achieve better results in less time for less money using a plug-and-play provider like Wix, Squarespace, or WordPress. Sure, a company can always build its own website from scratch, but, in most cases, why would it? In this light, ruling out lending platforms from a market leader like TurnKey Lender is like launching a website developed entirely in-house — one whose customizations are easily matched by any reliable vendor out there. Too much for spreadsheets to handle Of course, a lending platform is going to cost more than a spreadsheet, in the short run. But, armed with better gear that provides customization, modularity, and push-button scalability, the lender will work more efficiently, and be more responsive to customers than it ever could working from a homemade, Excel-based platform. In plainer terms, it’s hard to imagine a lender using spreadsheets to automate all lending steps, as they certainly could using a platform like TurnKey Lender to cover: Loan origination Risk evaluation Credit decisioning Underwriting Collateral management Debt collection Loan servicing Reporting Security Supervision Compliance With TurnKey Lender providing bank-grade functionality around these mission-critical tasks, lenders are positioned to: Cut credit risks, thanks to credit scoring fueled and enhanced by artificial intelligence Replace outdated processes with software tailored to the needs of the enterprise Eliminate unnecessary paperwork
APIs, KPIs, and the Future of Embedded Finance
You can access a world of financial services from hundreds of companies if you have a working smartphone and access to applications. For example, continuing with well-known brands, you can receive a point-of-sale loan from Amazon, a checking account from Google, and a credit card from Apple. That’s only the tip of the iceberg. Payments, insurance, investment, and even wealth-management services are now available for download and use on your phone. Buy-now-pay-later (BNPL) and e-commerce services, also known as embedded lending, Buy Now Pay Later finance, or POS financing, are offered not only to consumers at big-name retailers but also to shoppers at mom-and-pop stores and in a variety of B2B contexts. What makes embedded finance possible in the first place? The future of finance appears to be in our hands, literally. For example, venture capital firm Lightyear Capital predicts that BNPL activity will skyrocket in the first half of this decade, with gross revenue rising from around $1.4 billion in 2020 to $15.7 billion in 2025. While the coronavirus pandemic has been a catalyst, it has also helped that the technology it depends on was getting traction before Covid-19 came into view. To be sure, media mentions of “embedded finance” increased more than one hundred times between early January and November 2020, according to CBInsights, but little of this vogue for embedded finance could have occurred without viable technology — much of it linked to the power of “application-programming interfaces,” or APIs. APIs are software interfaces that allow different apps to communicate with one another. If you own a smartphone, you’ll understand how important they are: they’re the reason you can quickly check the weather, order pizza, hail a cab, or text your mother. APIs add functionality to business operations by allowing a software suite grouped around coordinated functions to work with an organization’s core or “systems” software. APIs are also a component of “open banking.” Open banking is a financial-information-exchange mechanism that grants permission-based access to consumers’ financial data from financial institutions via APIs to third-party financial-service developers and suppliers. From who gets to be a customer to who delivers the underlying services, open banking has the potential to alter everything about banking. In the marketplace, open banking has also proven to be an organic equalizer. According to the Brookings Institute, non-banks originated 53% of US mortgages using new labor-saving technology, but 64% of these home loans were provided to black and Hispanic homeowners. Factors contributing to the rise of embedded finance Besides leveling the playing field, APIs are synonymous with “the agility you need to compete as a lending-tech provider these days,” says Elena Ionenko, co-founder and head of operations for embedded-finance pacesetter TurnKey Lender. “This comes down to how configurable you are, how ready you are to support any lender anywhere in the world at any moment.” In addition to the increasing use availability of APIs, the market was primed by six other forces for the rise of embedded finance — among them: Trust in embedded finance exhibited by consumers and businesses alike gives meaning to the trends and developments described in this post. In fact, they trust it as much or more than bank services, with 42% of US household decision-makers claiming to use at least one non-bank fintech app — and that was before Covid. As consumers’ trust in embedded technology increases over time, purchasers have come to expect it. Disruption, especially by non-banks that offer credit directly to consumers and businesses on the back of ever-improving technology. As hinted above, a slew of non-banks with big brands — like Google, Apple, Amazon, and Meta — are seizing market share that once belonged exclusively to banks by facilitating the underwriting and issuance of credit. Digitalization converts manual business processes to digital business processes — in lending as well as in other processes. What once required manual inputs and (literal) carbon copies (shared via interoffice envelopes), now require a single e-notation that can be shared instantly across all related applications within and outside the BaaS — “banking as a service” — suite. Declining revenue from traditional banking services has put financial companies on notice. In response, they are ferreting out new ways to make money. Hopping on the embedded-finance train saves traditional institutions time and money on manual grunt work, and opens the door to nimble new business lines. Buzz around the BNPL concept is getting traction. When you make life easier for people by embedding “instant credit” options across e-commerce platforms, they notice. Artificial intelligence allows creditors and other BaaS users to incorporate behavioral markers derived from permission-based inputs such as spending habits and the ability to meet other financial obligations. That’s in addition to old-school (and still valid) inputs loan applications and credit-bureau scores. This makes a company’s lending operations simultaneously more inclusive and less risky because it gives lenders the clearest view of would-be borrowers possible. Along with payment advances (such as entering a store, taking what you want, and having the cost instantly taken from your account), integrated finance enables an increasing number of non-financial organizations to provide credit and other banking services in ways that improve consumer experiences. Keeping track of embedded-finance outcomes And while the customer’s experience is paramount, new and traditional BaaS providers should keep tally of other key performance indicators such as: Onboarding rates Where compliance allows, all-digital account sign-ups that are encrypted, secure, and feature ID verification and e-signing capabilities can do a lot to boost onboarding rates Time to funding With consumers used to fast turnarounds for everything from app-summoned ride-shares to online food orders, this one can be a real competitive differentiator Application-completion rates The longer it takes to get an approved loan funded, the more likely a would-be borrower is to abandon the application altogether. That means no sale Access point preferences Understanding how your clients apply for credit — company website? smartphone app? chatbot? — can help you standardize input and processing requirements for a more uniform customer experience, even when
How to Choose the Right Lending Automation Software for Your Business
Traditional lending, with in-branch origination and manual paper-based processes, has collapsed with social distancing becoming the new norm. Now offering credit digitally is a matter of survival for lenders, not a nice-to-have. We surveyed 40+ decision-makers in the credit industry and even before the COVID crisis, 57.1% of lenders were actively working to start/continue the digital transformation of their business to meet the customer demand for intuitive and fast credit.
Five Myths Keeping Banks From Winning in a Transformed Financial-Service Landscape
Propelled by technological innovation and social-distancing strictures imposed by the coronavirus pandemic, the banking industry is in a state of rapid transformation. By 2026, nearly one in four top decision-makers in the financial-service industry expects “substantial” or “significant” industry transformation, according to Gartner, a US technology consultancy. In fact, one in five expect the industry to change out of recognition by then — especially with reference to: Business growth (faster) Value proposition (more attuned to clients) Revenue mix (less purely transactional. More service-oriented) Sales and service channels (more online, especially mobile) Technology, operations, and processes The customer experience (faster, more accurate service delivery, aided by intuitive interfaces) Talent (more aligned with forces of rapid change such as artificial intelligence and decentralized finance [download] Meanwhile, two-thirds of commercial bankers Gartner surveyed say their digital strategies are too crude for the realities of a tech-driven marketplace, and they feel poorly equipped to “navigate or lead needed change,” according to Gartner. Only 21% of the survey pool express “high confidence” in being able to achieve strategic goals with legacy processes and systems. “Saying what needs to be done is easy,” observes Dmitry Voronenko, co-founder and CEO of TurnKey Lender, a leading provider of financing software to banks and non-banks in more than 50 markets around the world. “Getting it done is something else entirely.” In Voronenko’s view, executing a strategy calls for “a 360-degree understanding of the issues and obstacles” in play — and there are few more substantial bars to understanding than deep-seated myths. With this in mind, we present the five primary myths keeping banks and other businesses from making the changes they need to make. [related-solutions] Myth #1: As competitors, fintechs are nothing to worry about The work fintechs have done in the past decade or so to overcome perceptions around “the bank value proposition” is paying off. Particularly when it comes to payment products, consumers are just as likely to pick a fintech startup as they are to choose an established bank. While 44% are more likely to consider using bank-dependent payment products, 54% say it’s a toss-up. Meanwhile, 57% of Gartner’s survey sample have used a retail fintech service in the last six months, as opposed to just 43% who haven’t. Myth #2: “Relationship primacy” will save the day In fact, having a cornerstone financial-service relationship with a customer doesn’t pay off to the extent bankers have been trained to assume. Gartner’s new research shows the percentage of current, multi-product relationships are profitable to the following extent. Product type Percentage of customers with product types Percentage of profitability in product type per relationship Checking account 100 47 Checking account and debit card 95 47 Checking account, debit card, savings account, and credit card 82 49 Checking account, debit card, savings account, and credit card 62 52 Checking account, debit card, savings account, credit card, and mortgage 56 25 Myth #3: Customers have begun to care less about human support Recent developments on that front are mixed — a fact traditional banks can use to their strategic advantage. Bank-branch transactions were trending down and self-serve interactions were on the rise before the coronavirus pandemic. As a result, many observers assumed that lockdowns would herald the demise of branch banking altogether. That assumption has proven incorrect — so far anyway. While branches took a hit in the first months of the public-health crisis, demand for in-person interactions in banking had bounced back by late 2021. In December 2019, Gartner found that 53% of bank-customer interactions took place online. By October 2020, seven months into the pandemic, in-person bank transactions had shrunk to 46% — only to snap back to 53% in December 2021. This suggests that ingrained habits die hard. Before bankers start taking victory laps, however, it’s telling that bank-provided mobile-app usage went from 23% at the end of 2019 to 30% in October 2020 to 28% — a modest decline — in December 2021. The most useful takeaway from this data point? While a segment of customers has turned back to in-person banking in the later stages of the pandemic, app-based banking remains more popular than it was before Covid-19 barged into our lives. In fact, the biggest loser during the pandemic (so far) has been website banking — likely because most consumer-oriented fintech offerings feature superior functionality in apps rather than website formats. In other words, besides everything else going on in fintech, mobile is beating laptop/desktop even more than it’s edging out in-person interactions between consumers and businesses. Myth #4: What constitutes customer-centricity never waivers Patently, it does. Machine learning and artificial intelligence are turbo-charging customer insight while enabling functionalities that are redefining what it means to be customer-centric in a digital age. Between 2015 and 2022, banks saw a 53% hike in technology submissions, with ML and AI proposals leading the pack. The focus of ML and AI initiatives should be functionalities aimed squarely at improving customer service, such as: Natural language Deep learning Facial recognition New mobile-device apps Real-time delivery/execution Because these and other AI innovations let financial-service providers “mine” data to sharpen their understanding of customers, even down to behavioral insights and predictions, technology has changed the formula for client-centricity in two ways. ML/AI allows for greater and more precise customization Instead of the mixed messages and redundant communications bank customers complain of, they get accurate, real-time information — the kind of time-sensitive information that can help customers avoid overdrafts and get their bills paid on time. Myth #5: Decentralized finance is just a fad Four in 10 CFOs plan to use cryptocurrency or stablecoin within the next few years, according to Gartner. In other words, if banks lack the strategy and don’t have the infrastructure in place to accommodate such planning, these financial decision-makers will simply go elsewhere — whether to another bank or a fintech company. If banks don’t in fact want to be in the crypto business, fine — but if they’re watching trends, and noting that 13% of
Digital Lending ROI: Positive Return on Technology Investment
Many lenders, especially credit unions and small local banks, lag behind when it comes to financial technology. It’s a short-sighted business strategy. Cost-benefit analysis shows a positive ROI when digital lending technology delivers a borrower-centric experience and drives operational efficiencies. Digital lenders earn incremental revenue from new accounts (especially Millennials who have a higher lifetime value) and cost savings from process efficiencies. This technology lag represents a wide gap between lenders and today’s consumer. According to a Pew Research Center study (2018), consumers of all ages, income, and ethnicity are embracing technology at an accelerated rate. 95% own some type of mobile device. 77% carry their smartphone everywhere they go. And 22% are smartphone dependent, meaning their smartphone is their only resource for communication and Internet access. Mobile Ecosystem Forum (2017) released a report that shows 61% of consumers use their smartphone for some type of banking activity on a regular basis. This figure jumps to 83% (men) and 73% (women) when the survey question asks how often they conduct their banking from any type of mobile device. Statistics on SMBs (small to mid-size businesses) show a similar pattern of behavior. The top 50 global banks own 68% of the SMB market, and only 13% of these companies apply for loans with a local bank or credit union. The primary reason for this ongoing dependence on big banks is the misperception that they’ll get more sophisticated digital and online banking services. It’s a lost opportunity for community banks because research shows this group has a strong preference for local resources. Let’s Get the Facts Straight There are two misconceptions impacting the lending industry in a negative way. Misconception #1: Consumers believe big banks are light years ahead of community banks when it comes to technology-driven ease and convenience. Fact: Big banks may be further out on the technology curve than local banks and credit unions, but they’re still way behind digital lenders. It looks like big banks are doing a much better job than community banks when it comes to promoting the online products and services they do offer. Misconception #2: Lenders believe technology upgrades require a large financial investment along with a multi-year implementation schedule. Fact: There are a number of SaaS (software-as-a-service) platforms created specifically for lenders. They’re known as lending-as-a-service platforms or LaaS for short. These platforms are customized for each subscriber to reflect their brand as well as their products and services. LaaS platforms are hosted in the cloud, so all maintenance and upgrades are performed by the provider’s developers. It’s a turnkey, fully managed service at a low cost, and lenders retain full ownership and control over their customer data. Recently we published a case study on Meritrust Credit Union. The results speak volumes about the value of an online lending system. They were able to increase the number of booked loans, increase the average dollar amount per loan, and cut funding times dramatically. To put it in a soundbite – their digital platform substantially improved profitability by increasing revenue and decreasing costs. [related-solutions] Improve Portfolio Profits Fintech platforms improve portfolio profitability by: increasing the number of accounts booked increasing the longevity and lifetime value of each account improving credit quality. Lenders who use digital technology can increase the number of accounts booked in two ways. First, they expand their prospect pool to include younger, more tech-savvy Millennials. Digital loans are more attractive to this group. Plus the automated underwriting system closes more loans because it closes loans faster. Remember these borrowers tend to submit multiple online applications, and their business often goes to the first approval they receive. Second, technology-driven credit scoring approves many applicants that traditional lenders reject. Digital lenders use alternative scoring methodologies to enhance traditional credit bureau scores, which allows them to approve applicants with thin credit files. Digital lenders increase longevity and lifetime value of new borrowers in two ways. First, by attracting younger applicants who will remain a bank customer for a longer period of time. And second, by using technology to collect and analyze data on customer behavior in real-time. These insights provide lenders with more opportunities to upsell and cross-sell products like pre-approved instant loans to current customers. Retention experts tell us that every link between the bank and borrower increases loyalty and lifetime value. It’s the first step towards converting a borrower to a brand advocate who recommends you to family and friends and posts positive reviews on social media. We mentioned earlier that alternative scoring models can increase the number of new accounts. These models do double duty. They provide more accurate applicant profiles, which drives more precise account pricing, which increases portfolio yield. Decrease Operational Costs Fintech platforms decrease costs by reducing process inefficiencies. They: automate application submission and review replace paper documents and branch visits with secure online exchanges use omnichannel communications options to accelerate application response time. Remember our Meritrust Credit Union case study. When they automated the lending process they tripled their productivity. Their operational analysis group reported that the new system effectively eliminated 120 clicks compared to the older application procedures. The traditional review process requires a large number of paper documents, and almost every application needs at least a few revisions after the first pass. This is a time-consuming process with plenty of human error. Fintech platforms with pre-populated forms provide a faster, more secure transfer of information with fewer errors. A process that used to take weeks, can now be completed in a few days. Or even the same day for pre-approved offers to existing customers. Applicant response time can be shortened from 1-2 days to an instant exchange when consumers are able to reply via a mobile device, instead of coming into the branch during banking hours. Digital Lending Will Become a Commodity Today’s consumer believes there’s no difference between bank brands. They see financial services as a commodity-driven marketplace where price becomes their primary decision point. As more lenders begin to deploy technology-driven products and services,
Embedded Finance: Increase Your ROI and Customer Loyalty
There’s a revolution underway in how consumers and businesses pay for goods and services. The catalyst for this change is embedded finance, an innovation that makes lending a versatile and secure part of everyday commerce. This means financial services — including lending — can be offered to consumers as a routine part of making purchases. Organizations whose embedded finance of choice is lending can expect to add incremental value from new accounts — especially in a service-as-a-software approach where the modular technology is paid for via subscription, and lending fees don’t have to be shared with third parties. In addition, leading-edge financial-service automation includes artificial intelligence. “Besides making digital lending decisions faster and more reliably than manual processes, artificial intelligence allows companies to analyze the arrays of behavioral data their embedded-lending activities generate, giving them insights on marketing campaigns, seasonal trends — even staffing and scheduling considerations,” says Dmitry Voronenko, co-founder and CEO of TurnKey Lender, a lending SaaS provider with enterprise clients in more than 50 countries worldwide. [download] Saas lending and the internet of everything Whether the transaction involves a family paying for its winter heating fuel in monthly installments year-round, an earth-moving business spreading equipment payments out over time, or a furniture retailer working to overcome medium-sticker hesitancy, embedded lending is a fundamental game-changer. Learn More: TurnKey Lender Standard Platform Capabilities (With a Bonus White Paper) Non-financial organizations aren’t the only entities looking to SaaS lending to smooth the way to increased business activity, either. In fact, credit unions and community banks are among the most enthusiastic adopters of SaaS-borne lending, viewing it as a way to improve legacy lending platforms and take part in the ongoing digital transformation that’s altering how business is conducted. If you think that’s an exaggeration, just consider the numbers. “The embedded finance industry is expected to grow steadily over the forecast period, recording a compound annual growth rate of 23.9% during 2022-2029,” according to industry-report publisher Research and Markets. Meanwhile, embedded finance revenues are slated to increase from $242 billion in 2022 to $777 billion by 2029. This explosion is the result of an innovation around service delivery — the SaaS model, an extension of the “internet of everything” that has transformed telephones into interconnected libraries, and time pieces into dynamic healthcare “wearables” that can monitor vital signs 24/7. For businesses, this process of making familiar objects “smarter” — the concept at the heart of the internet of everything — has made points of sale essentially ubiquitous, while software integrations and artificial intelligence equip organizations of every kind to extend credit with confidence and security. The modularity of TurnKey Lender shows another facet of the savings potential of embedded lending. Simply, with TurnKey Lender, companies take only the parts of the solution they need — and they pay less for it, with full confidence in the interoperability of their lending automation with pre-installed systems software such as GNU/Linux, Microsoft Windows, MacOS, and other SaaS applications including Salesforce. Credit cards and credit scorers are taking note Return on investment for a state-of-the-art “buy now, pay later” lending can come in many forms, including: 40% higher profitability 10% to 25% higher lending-approval rates 35% decrease in “bad debt rate decrease” 44%+ growth in sales conversion 280%+ boost in operational efficiency 25% improvement in decision accuracy 460+ applications a second in an environment that scales seamlessly 67% increase in average customer lifetime value [related-solutions] This view is supported by a recent JD Power report that suggests consumers favor retailers and banks that provide digital-powered payment. Another report, this one by William Mills Agency, says 73% of US adults have begun using digital-banking services in light of the coronavirus pandemic. Embedded lending is also in the vanguard of a trend that’s seeing credit cards — a consumer staple in the US since the early 1970s — lose ground to digital financing. According to the Balance, consumers who prefer BNPL to cards do so for the following reasons. 45% say it’s easier to make payments 44% say BNPL is more flexible 36% praise BNPL’s lower interest rates 33% say approvals are faster and easier 22% have low credit limits on their cards And the credit bureaus are following this consumer trend in a bid to stay relevant. In recent months, the “big three” consumer-credit raters — Experian, EquiFax, and TransUnion — have started tracking embedded-lending data in their credit reports, creating opportunities for more consumers to establish or extend credit scores that reflect their success in meeting financial commitments, not just a shrinking portion of them. And it’s unlikely these colossal companies would take this kind of trouble if BNPL wasn’t already making their snapshots of creditworthiness less pertinent to would-be lenders. A deeper understanding of these trends — and a good way to understand ROI on digital-finance capabilities — comes from the realization that technology is making lending less of a product and more of service — hence the term “banking as a service,” or BaaS. An air of inevitability BNPL is coming into its own as a core financial enabler for e-commerce, as giants like Amazon and Shopify demonstrate. Those e-retailers offer financing for most if not all purchases. What You Need to Know About In-House Customer Financing & 4 Business Types That Will Benefit From It Soon, say experts like Matthew Harris of Bain Capital Ventures, it will be hard to find online sellers that lack installment options. When this saturation is achieved, “there won’t be ‘fintech’ companies as such,” Harris writes in Forbes. “Over time, many or even most technology companies will need to incorporate embedded financial services in order to win in their segments” — an observation that applies as readily to Main Street businesses as multinationals. “One reason ‘fear of missing out’ has become a popular phrase in business circles is that there’s a lot of upheaval around innovation these days as developments — like the internet in the 1990s, mobile devices and big data in the 2000s, and