Embedded Lending Transforming the Logic of Consumer and Commercial Credit 

“Offering installment payment plans to your customers through embedded lending ‘is the best single decision some companies can make,” says Dmytro Voronenko, CEO & Co-Founder of lending software maker TurnKey Lender.

What if there were a way to win a substantial, and recurring, chunk of new business? What if this method further required no additional marketing, no rebranding, no strategy do-overs, no cost cutting, and no new products? And, what if, in addition to sending more income your way, it resulted in greater customer loyalty and obvious competitive advantages?

The answer is embedded lending. 

Embedded lending is powered by software that integrates with the systems companies already use to synchronize and track their operations. Modern platforms are robust enough to process loans throughout their life cycles from approval to settlement, and flexible enough to initiate lending at any point of sale, from e-commerce portals and in-store registers to car lots and doctors’ offices.

Offering installment payment plans to your customers through embedded lending “is the best single decision some companies can make,” says Dmytro Voronenko, CEO of lending software maker TurnKey Lender. “They can see sales increases in the neighborhood of 30% to 50%, vastly improved buyer engagement as a result, and more repeat business.”

Fintech Is Making Finance More of a Service, Less of a Product

Companies across different sectors are rapidly capitalizing on the opportunities offered by embedded finance.

• Solar loans & leases for providers of solar panels & batteries: Embedded finance is turning green, literally. Companies are now able to offer their customers affordable, customized financial products, empowering them to make environmentally conscious decisions. By leveraging the power of Loan Origination Systems, these businesses are making clean energy accessible to everyone.
• Affordable SME & consumer credit products: Community-focused lenders are leveraging embedded finance to provide affordable credit products to SMEs and consumers. They have created an end-to-end digital journey for their customers, from loan origination to loan management, which has not only made credit accessible but also streamlined the lending process. For instance, one lender reduced their application abandon rate from 90% to 10% by leveraging embedded finance.
• Medical procedure financing: Embedded finance is helping healthcare providers offer their patients financing options for their treatments. This has not only improved patient satisfaction but also delivered 7-figure growth for the providers.
• Telecom industry: A fascinating example comes from the telecom industry where Globe Telecom extended affordable credit products to millions of its prepaid mobile customers. By integrating financial services directly into their existing platform, Globe Telecom was able to create a seamless and intuitive customer experience.

To use SaaS to seize market share from old-line banks by providing financial services to mass-market consumers, starting with the lending piece.  And it would be amazing if they stop there. Meanwhile, TurnKey Lender’s embedded lending is garnering praise based on direct experience from business leaders around the world.   

• With help from TurnKey Lender, “we’re becoming a digital lender, which is what we need to do to survive,” says Steven Cornell, president of National Iron Bank in Salisbury, Conn.  “It completely automates everything.” 

• For Patrick McFall of Money Managers Inc. in the Bahamas, the choice of TurnKey Lender’s embedded lending technology “was pretty much a no brainer. The product is sold, and the price is right.” 

• As an SaaS provider, TurnKey Lender has been a good fit for Thrive Refugee Enterprise in Parramatta, Australia, which turned to the lending-tech provider about two years ago to improve its reporting capabilities. “We have been pleased with the outcome,” says Gus Nehme, the non-profit’s business development director. “We’ve been able to capture and record information, which allows us to keep on top of delinquencies, which is of course extremely important to us.” 

• Jon Lam of Calgary, Canada-based Windmill Microlending describes TurnKey Lender’s loan-management platform as “compact and cost-effective,and their development team as “good to work with and very responsive.”  

“Nothing that has precipitated the new wave of banking software solutions in the last 10 years has gone away,” says TurnKey Lender’s Voronenko. “In fact, some of these factors are still in their earliest phases of development, which is compelling organizations around the world, banks and non-banks alike, to take action on this front before it is too late.”

The Forces Propelling Our Embrace Of Embedded Lending 

For smaller banks and non-banks – including a range of decidedly non-financial players eager to provide online and physical purchase-point BNPL services – embedded lending offers a fast track to faster growth.  

Embedded lending software has to be robust enough to process loans at all stages from approval to settlement, and flexible enough to initiate lending anywhere there’s an internet connection, from e-commerce portals and in-store registers to car lots and doctors’ offices. Chiefly, the underlying technology is “embedded” in the sense that it works with the software most companies already use to coordinate and track their operations.  

For some companies, “embedded lending is a complete game-changer,” says Dmitry Voronenko, Co-Founder of TurnKey Lender, pioneering in the lending software space. “We know first-hand of companies that have seen sales hikes of 30% and more, improved customer loyalty, and more repeat business – all directly attributable to being able to provide financing on the spot.” 

Embedded finance is further stimulated by:

• The need for continual growth – Considering the revenue opportunities of providing lending automation and other BaaS offerings, getting in on embedded lending looks more like a necessity than a luxury going forward.  
• Digitalization – Converting business processes to digital formats instead of paper and manual-input spreadsheets allows companies to extend financial services to clients more efficiently than ever before, making them a low-cost value-add to customers. The modularity of digital processes also allows for more customization and additional chances to keep expenses in line.  
• Higher trust – Consumers trust fintechs as much or more than they trust banks, with 42% of US household financial-decision makers claiming to use at least one non-bank fintech app, according to McKinsey.  

Embedded Lending: a Keurig Machine for In-House Financing

In this light, it’s easy to see a world where in-store and e-commerce sales are enabled by lending software integrated with each company’s system software. This applies equally to realms where financing is a common feature today, like the car business, and to areas on-the-spot financing is rarer, such as middle-market retail and healthcare.

TurnKey Lender’s Voronenko provides a striking analogy. He says a company that partners with a third-party lender to provide credit to its customers is like the guy who always buys his coffee.

“You go to the cafe everyday and you ask the barista for a coffee, and you’re very happy to pay five bucks for it,” says Voronenko. “And then one day you realize the only thing your barista does is press a button – one button – out of the machine comes the coffee, perfect every time. And then you notice he uses coffee beans from the nearest supermarket.”

Working with TurnKey Lender means you stop going to the cafe and “you buy the same coffee machine, and you can have your coffee whenever you want for 50 cents a cup,” according to Voronenko. “Companies that view lending as such a tough undertaking that it’s necessary to partner with a bank are missing out on the power and savings inherent in embedded fintech.”

Harris echoes this view from a “smart money” perspective. He says he and other venture backers are turning their “attention to investing in companies that use financial technology as an ingredient versus a primary business model.”

Adds Voronenko: “Embedded lending means any company that can connect to the cloud can get access to a vast and secure infrastructure for lending, and immediately start financing its customers. It’s literally a matter of turning a key, and you’re a lender.”

To learn more about TurnKey Lender and how to get started with embedded lending, reach out here.