Accelerating revenue growth with embedded finance: webinar highlights

Embedded finance in the B2B (business-to-business) world has the potential to unlock new revenue streams for merchants and marketplaces by better using data to extend credit or more favourable terms to businesses that might otherwise struggle to access finance.

In a recent webinar, Hokodo’s VP of Marketing, Lucy Heavens, was joined by our VP of Operations Sania Kudaibergen, Citi’s Director of Partnerships and Strategic Innovation Opeyemi Olomo, and Anthemis investor Sophie Winwood to discuss how companies can embrace embedded finance to improve the B2B buying experience, increase engagement and drive revenue growth.

Here are five key takeaways from the discussion.

1. Understanding the pain points

As digital transformation continues to reshape the consumer e-commerce landscape, the online B2B shopping experience frequently still involves offline payment processes. Often this is because there are issues around data reconciliation, making it complicated and time-consuming for businesses to get the right financing support when they are making a purchase.

For small business owners, cash flow management is always top of mind. Many small businesses have minimal amounts of cash on hand to deal with financial emergencies, which means the speed at which they can access financing when they need it is critical—embedded finance can help businesses access credit faster. It also enables buyers to access financial services without leaving the platform they are using, enhancing convenience and streamlining the entire user experience.

2. Boosting buyer engagement

Embedded finance is helping to improve the checkout experience for B2B customers by giving buyers instant access to financial services such as credit when they are paying.

“In an ideal scenario, when the business customer is checking out, they wouldn’t even notice that there’s anything going on in the background—if they’re eligible for credit, they will see how much credit they’re eligible for, and if not, then they might not even see this option,” Sania explained during the webinar.

Embedded finance solves two problems, says Opeyemi—corporate buyers want to pay as late as possible to manage their cash flow, while sellers want to receive funds quickly to manage theirs. Being able to offer credit creates more value for buyers, increasing customer loyalty and creating new revenue growth opportunities.

3. Using data to drive revenue growth

Transaction data from embedded finance payments can help build up detailed buyer profiles that give merchants more insights about them, increasing their chances of accessing credit.

“If we get into the weeds of their daily processes—which is what embedded finance will bring—you can actually access their data a lot easier to be able to provide them the financing that meets their needs,” says Opeyemi. That means sellers are able to leverage data about their customers in a way they couldn’t before, potentially driving new revenue opportunities. Embedded finance data is also enabling sellers to offer more personalised services, such as creating offers at checkout that are tailored to that particular buyer.‍

4. Getting the tech right

Making embedded finance work smoothly for buyers can require complex wiring on the back end.

“It’s quite complicated to integrate with different systems because at the moment we don’t have a high level of standardisation,” says Opeyemi.

How much work that involves for merchants and marketplaces will depend on their existing tech stacks. Sania explained that, if they are using, say, Shopify or Magento, then merchants can usually access third-party plugins to get the services they need. By contrast, an API integration often takes more work on the back end to get all the systems talking to each other.

And while the end goal is to provide a frictionless checkout experience, taking time to get the underwriting and know-your-business processes right is crucial.

“We’re dealing with money and credit—it’s the most important thing you can do in a business,” Sophie says.

5. Starting your embedded finance journey

Given how fast embedded finance is growing, knowing where to start can be daunting. For Opeyemi, it is all about improving the customer experience.

“Companies should try to understand the user journey—what are the friction points?” he says. That means ensuring embedded finance solves those friction points and doesn’t add additional layers that could be frustrating.

Merchants also need to understand their own needs before picking an embedded finance provider, says Sania.

“The better idea you have of what you need and what your customers need, the better you can use these criteria when you’re speaking to all the different providers to understand who can best serve you and your customers,” she says.

To learn more about how embedded finance can help your business unlock new revenue streams, watch the full webinar here or hit play below.