How embedded finance improves customer experience and increases stickiness
Keeping customers continuously coming back to your product is the key challenge for many businesses. Make your customer experience flawless and they won’t want to go anywhere else.
Digital platforms have undoubtedly changed so much about how we live. How we shop, travel, eat, and get around - all have been opened up by the digital economy. For businesses, this also applies to accessing contractors, suppliers, bookkeeping and many other aspects of their operations.
However, in recent years there has undoubtedly been a saturation of the market. There have never been more B2B SaaS companies and digital platforms across all sectors, each aiming to become a key feature in the operations of the businesses they support.
So, what can businesses do to increase their ‘stickiness’ - the factor that keeps their clients using their product or service again and again? Making customer experience absolutely impeccable is the best approach, and with embedded finance, this can be achieved in more ways than ever before.
How embedded finance energises customer experience
Embedded finance describes integrating financial services directly into a business (whether that business is financial or non-financial) without the business needing to become regulated or build new financial infrastructure. From payments and banking to lending and insurance, all financial services can be embedded, enabling businesses to drastically enhance their offering.
So, what does this look like? Let’s take an accounting software business as an example. Instead of simply providing tools to create invoices and keep track of funds, the business could integrate a variety of financial features, such as providing all parties paying in and out with accounts, to automate reconciliation.
With the financial services embedded, the user is not being redirected to another business for handling payments - they remain on that platform. Not only this, but they are now giving the platform entirely new data fields. For the accounting software business, they can use this new data to form a more complete picture of their customers and what they need, and design a system which directly serves them. Their offering therefore becomes much stickier, as it is more tailored to what their customers really want.
Alternatively, a B2B SaaS platform which helps businesses manage their suppliers may want to embed a payments system which can handle escrow payments. For example, construction companies make high-value purchases to suppliers for raw materials. Due to the size and fragility of these materials, transportation can take a long time.
Cash flow can therefore be an issue for construction companies, as they are making large payments and then have to wait a long time before their materials arrive. What if something is missing, or broken, or the incorrect order arrives? The company then has to go through a difficult dispute and refund process, instead of doing the work their customers are expecting.
Instead, they can use a payment system which sends more of the agreed payment when ‘milestones’ are reached (one payment at the point of purchase, one when materials enter the country, and one when all items are received and checked). This gives the construction company a far better experience as cash flow issues are eased while the supplier is not taking more risk that their high-value goods will not be paid for.
The SaaS platform is therefore far more advantageous to use for both parties. When trading in the future, are they more likely to sell directly, choose a competitor, or stick with the business which protects their payments and eases cash flow? It’s an easy decision.
Embedded finance can therefore either make an existing customer experience smoother by improving its efficiency and cohesion or make the customer experience more enjoyable through additional features - or both. Either way, customers get more from the service than before and more than they can get elsewhere, and therefore stickiness increases.
The added effects of embedded finance
In a competitive space, increased stickiness would be reason enough to consider embedded finance, but in reality the benefits it provides go far further than this.
Firstly, additional revenue streams can be created. Whether that be from new services such as accounts or access to real-time payments, which come with a fee attached, it’s up to the business and what would benefit their customers. Accounting software may offer their customers the chance to embed payment links into their invoices, charging them a fee to access that tier of features which will help them get paid faster .
Businesses can also strengthen the connection they have with their customers. Not only are they giving them more reasons to use their service, but by ensuring that everything is designed and branded themselves, the business is far easier to identify with and recognise.
These features can themselves create further knock-on effects. By demonstrating multiple ways to generate wealth, and a brand that has strong customer recognition, businesses may benefit from increased investment opportunities, which can help them scale faster.
The most important aspect of embedded finance is that it enables businesses to improve customer experience depending on what their customers actually need. It is not new technology simply making things faster or more personalised, it is a bank of services which can be added and removed when a business needs them, all via API.
For UNIPaaS, that integration takes a matter of short weeks. That’s a very short amount of time to blow your competition out of the water.