By FintechOS - March 6, 2024
Navigating Embedded Finance: Profitable Strategies for Credit Unions and Regional Banks
Embedded finance is already shaking up financial services. How can regional banks and credit unions tap into this new opportunity?
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Retail Banking
Retail Banking Overview
Gain new customers by creating experiences and products quickly and easily
Account Opening
Create journeys powering customer acquisition
Personal Lending
Design and launch personalized products quickly to meet customer needs
Mortgage Automation
Build tailored mortgage offers to win new customers
Small Business Banking
Small Business Banking Overview
Grow your small business customer base
Account Opening
Engage and onboard small businesses using frictionless digital journeys
Small Business Lending
Create relevant loan products to meet the specific needs of different business segments
General Insurance
General Insurance
Meet the need for new forms of cover and high-quality digital experiences
Small Business Insurance
Create personalized propositions that meet the unique needs of small businesses
Pet Insurance
Increase share of wallet with cover customers love as much as their pets
Embedded Finance
BNPL and Embedded Lending
Deliver lending products directly to where they are needed
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Platform Documentation
Comprehensive documentation for the FintechOS platform including release notes, APIs, and SDKs
Retail Banking
Retail Banking Overview
Gain new customers by creating experiences and products quickly and easily
Account Opening
Create journeys powering customer acquisition
Personal Lending
Design and launch personalized products quickly to meet customer needs
Mortgage Automation
Build tailored mortgage offers to win new customers
Small Business Banking
Small Business Banking Overview
Grow your small business customer base
Account Opening
Engage and onboard small businesses using frictionless digital journeys
Small Business Lending
Create relevant loan products to meet the specific needs of different business segments
General Insurance
General Insurance
Meet the need for new forms of cover and high-quality digital experiences
Small Business Insurance
Create personalized propositions that meet the unique needs of small businesses
Pet Insurance
Increase share of wallet with cover customers love as much as their pets
Embedded Finance
BNPL and Embedded Lending
Deliver lending products directly to where they are needed
Resource Center
Get insights from the latest customer case studies, whitepapers, webinars, and more
Customer Case Studies
Learn what our global customers are saying about the value of FintechOS
Platform Documentation
Comprehensive documentation for the FintechOS platform including release notes, APIs, and SDKs
The underserved informal SME sector is estimated to have a $2.9 trillion demand for finance. How could banks fully reach this market?
The SME market is mostly informal because small businesses don’t keep formal record-keeping activities (e.g. financial accounts or audited financial statements). Therefore, many informal SMEs are unbanked – this prevents banks from using electronic data to assess cash flows.
An IFC’s MSME Finance Gap study (2017) found that 40% of micro, small and medium enterprises – or the equivalent of 65 million enterprises in emerging markets – need an estimated $5.2 trillion to develop and support their businesses. “In addition, the informal sector remains largely underserved with a roughly $2.9 trillion demand for finance”, the study shows.
Hence, “a significant opportunity for financial institutions to increase their small-business banking infrastructure and cater to this market segment”.
But how to unlock the full opportunities of the SME market?
“Better digitization strategies” – through technology adoption – are needed, according to the IFC.
Catalin Dediu, Vice President of Product Management at FintechOS, addressed this topic – The SME Financing Challenge – during Amsterdam Fintech Week event. You can read below the main take-aways from his keynote speech delivered:
#1 Use the Right Tech to Unleash Internal Data
Banks are well placed to reimagine their core lending products by, for example, offering short-term “top-up” loans to SME customers that can be applied for and approved in a matter of minutes. For that, banks must use existing data and advanced analytics to refine a product to meet a specific, targeted need.
#2 Tap into the Power of Tailored Recommendations
Several banks have achieved a ten-fold increase in their data-driven recommendations’ success rate, while others have managed to boost new sales by over 30%. Where Relationship Managers (RM) have worked in tandem with these engines, banks have seen the number of RM-customer interactions increase by more than 50%.
#3 Tap the Power of Automation
For traditional banks, lending has emerged as a priority area for digital innovation because it represents an opportunity to tackle high costs, boost customer experience and catch up with the newcomers setting the pace of change.
An end-to-end automated digital loan origination process can reduce “Time to Yes” to under 10 minutes, give SMEs the experience they need, and reduce lending costs by 40%..
#4 Make use of Ecosystem integrations and value-added services
33% of SMEs are already using, or have expressed an interest in using, a range of services to help them run their businesses, improve customer service, and boost sales. Banks will need the ability to connect with inter linked businesses from across a diversity of sectors. To do this they should embrace the use of API-enabled platforms designed to allow multiple stakeholders, from providers to end-users, to seamlessly connect, interact and exchange value.
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MAIN PHOTO Credit: Unsplash
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You can register here to watch the recording
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Amsterdam Fintech Week (XFW) gathers all stakeholders and players active in the ecosystem of digital finance. The goal is to connect players within the European Fintech space and to involve key stakeholders to participate.
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For more findings on this industry, ➡️download our whitepaper “Seize the Moment: How Data and Tech Can Bring an SME Lending Surge for Bank”: https://info.fintechos.com/whitepaper-sme-lending
On the same topic ➡️ The 4 Steps to Future-Fit SME Banking
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Related articles:
What’s Gone Wrong with Traditional SME Lending – And How to Fix It
SME Banking: Weathering the Storm
What’s Gone Wrong with Traditional SME Banking
FintechOS is the global leader in fintech enablement, on a mission to make fintech innovation available to every company. As the world grows increasingly complex, FintechOS strives to simplify and accelerate financial technology so anyone can build, launch, service, and expand new products in weeks, not months or years. The FintechOS platform empowers banks, credit unions, and insurers of any size to grow revenue, lower operating costs, and achieve a faster time to value without dependency on core infrastructure and costly tech talent. Headquartered in New York and London, FintechOS has partnered with some of the world’s best brands, including Groupe Société Générale, Admiral Group, Oney, eMag, Deloitte, EY, and PWC.