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EB platforms have accumulated natural transactional data that allows them to offer financing services to capital-constrained e-tailers. This makes them an excellent option for those looking to take control of their finances.
Digital lending platforms use cutting-edge technology to offer a unified and streamlined credit experience for both lenders and consumers. Leveraging advanced algorithms and a deeper analysis of a more comprehensive array of borrower data points, these platforms can identify creditworthy borrowers that traditional lenders may have overlooked. This has led to more equitable and accessible credit outcomes for small businesses and individuals.
One such platform model is the multi-lender marketplace. This lets consumers see which lenders offer financing for their unique credit profile. This way, a potential borrower can avoid the frustration of multiple rejections of their loan request that could result in a poor customer experience.
Online shoppers want diverse point-of-sale financing options to meet their specific credit profiles so they can shop confidently and convert. Denial of access to financing can lead to abandonment and lost sales. Conversely, granting Buy Now Pay Later access can increase customer lifetime value (LTV).
Jifiti is transforming the world of point-of-sale financing with its powerful software and data solutions. Our white-labeled BNPL solution offers retailers, lenders, and customers a seamless and unified lending experience. With granular configuration and meaningful visibility into loan products and data, our end-to-end PoS financing and lending platform is a powerful tool to drive sales and growth. Contact us today to learn more about how our omnichannel solution can improve your business!
Embedded Financing Platforms
Embedded financing platform is a new financial technology that merges financial tools with non-financial platforms like e-commerce stores or ride-hailing apps. This allows users to access financing options like loans, payments, savings, and insurance without having to leave the platform they’re on – a major convenience for them and a powerful way to increase engagement and loyalty for the business.
This is facilitated by APIs that act as digital bridges between different systems, enabling them to interact with each other. This technology can help businesses create hyper-personalized financial offerings based on user data, including purchase history, browsing behavior, and demographic information. Ultimately, this can lead to more personalized product suggestions for customers and a better experience overall.
For example, ride-sharing apps like Uber and Lyft offer embedded banking services for their drivers. This lets them receive instant earnings payouts, track their finances, and access credit cards or loan products. The emergence of these technologies also means that businesses no longer need to build their own payment processing or banking infrastructure. Instead, they can partner with solutions like Rapid to make it easier for them to integrate creative forms of payment and lending into their end-user experiences.
Ultimately, embedded finance helps bridge financial gaps and bring formalized financial services to underserved communities. As this technology grows, we expect to see more products offered across industries and platforms.
Peer-to-peer (P2P) Financing Platforms
P2P financing platforms work like marketplaces, connecting individuals who want to lend their money with people or businesses needing a loan. Often, these online platforms offer higher interest rates than savings accounts and certificates of deposit. A well-curated portfolio of loans could earn an investor 10% or more annually.
For borrowers, a P2P loan can be a convenient option to meet financial needs, especially when credit cards or bank loans are not appropriate or available. In many cases, these websites offer a faster turnaround than traditional lenders. They also sidestep the rigorous minimum credit score and debt-to-income requirements that banks and third parties enforce.
During the lending process, a borrower creates an account on the website, fills out a financial profile that determines risk factors, and sets a default rate. Then, a pool of investors can make offers on the loan. Once an agreement is reached, the platform handles the funds transfer and monthly payments.
The most common P2P loans are personal loans, which can be used to finance anything from a new car to a home improvement project. However, some sites specialize in other types of loans, such as business loans and student debt consolidation. In addition to enabling borrowers to receive funds quickly, these online systems can offer flexible repayment terms and low interest rates.
Embedded Payments Platforms
Embedded finance combines banking and commerce business models in a new way. It has shifted the traditional value chain to one that typically features four main participants: the end customer, platforms that own the customer relationship, payment and data enablers, and a regulated entity that oversees complex regulatory and technology requirements (see Figure 2).
Amazon’s “Buy Now” express purchase button is the most well-known example of embedded payments. This provides a seamless, quick checkout experience that eliminates customers needing to provide their shipping and payment information. The streamlined user experience enables Amazon to achieve higher conversion rates and drive revenue growth by accelerating the pace at which customers complete purchases.
Platforms and marketplaces that embed payments also benefit from a smoother user checkout experience. This leads to reduced customer acquisition costs and higher average revenues per user, accelerating revenue growth and enabling platforms to invest more in developing new customer services.
Point-of-sale (PoS) lending is another example of embedded payments, which provides financing for purchasing goods or services at a retail location. The lender typically charges interest on loans over 6- or 12-month terms. This model is beautiful for small businesses, which can qualify for a PoS loan through a credit profile built on existing customer transaction histories.
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