Embedded Lending Explained: Reshaping Customer Experience

In the next blog in our ‘Embedded Lending Explained’ series we focus on how embedded lending is reshaping customer experience. With people spending more time online, digital customer experience is climbing up the priority list of every business as it is a differentiator in the world where the next virtual store is only a click away. Be it for work or pleasure, customers are continuously engaging on social media, playing games, watching videos, searching for products and services, and, most importantly, buying stuff online. How can embedded lending help businesses stand out from their competition and increase buyer loyalty, growth, and brand advocacy? Steve explains all.

But first, if you want to understand what embedded lending is all about, check out the first blog in this series from our Co-founder Paul as he explains all.

What is the impact on customer experience?

With consumer buying behaviour shifting online, businesses need to reshape their product. Offering embedded lending, (also known as white label lending) at the point of purchase improves the buying experience. Too often, especially for larger value items, customers need to leave their buying journey to arrange finance. To improve the experience, access to finance needs to be available at the time of purchase. This removes the need to break the buying journey by providing a full end to end journey- It’s smoother, faster and easier.

Consumer mindsets have changed. Although data security is a consideration, in my experience most consumers are willing to share personal information online- including financial details- with third parties, especially if it is a brand they trust and even more so if they are buying the product or service from them. Embedding lending into the buying journey offers great convenience and sets businesses aside from competitors.

On the flip side, from a business point of view having a unified end to end journey keeps customers engaged and increases revenue. Customers can make their purchase at the ‘moment that matters’ and won’t get distracted when leaving the transaction to arrange finance. For large ticket items, providing the option of paying with a loan gives customers flexibility, choice, and in many cases, better credit options than alternative payment types.

Embedded finance for home improvement is a good example where you may need to pay many suppliers a variety of amounts and at various times throughout the project. This is now possible by embedding a lending offering into a home improvement provider or marketplace, removing a headache for both the customer and the supplier.

What is the impact on loyalty, growth, and brand advocacy?

Businesses that deliver excellent customer experience can reap the rewards of immediate and impactful benefits such as a high loyalty, sales growth and increased brand advocacy which will ultimately deliver greater commercial return. If the buying journey is simple, quick, and painless, customers are likely to share this experience with friends and family. Positive word of mouth delivers greater sales and further opportunities for cross and upsell.

When a business has a user-friendly interface, that has been created through a customer-led design process, it is simply easier for the customer to transact with them.

It is important to consider the customer throughout the journey, including the need for funding. Customers are often irritated when they are redirected to other applications or forced to visit financial institutions to complete their purchase. Smoother transactions are the path to increasing conversion rates and business growth therefore embedded solutions provide new avenues to serve existing customers while purposefully creating a positive experience that will lead to elevated levels of customer satisfaction.