Finding the perfect partner for embedded finance

Over the years, our lives have become more and more digitised. Most experiences now involve some form of online interaction, whether that’s buying a new car, food shopping, banking or booking a holiday. As consumers increasingly use online services, their expectations of what these services can deliver for them also increases. The COVID-19 pandemic forced brands to increase their online presence, or even adopt online-only approaches, which will in turn have raised consumer expectations. People now want to access all the services they want under one roof, leading to an online ‘convenience store’ of highly integrated digital services and products becoming the future for many brands.  

As demand for this digital convenience store grows, lots of different businesses are looking to make use of embedded finance to better serve their customers’ needs. For example, brands such as John Lewis recently announced their own ‘buy now, pay later’ function, working with BNP Paribas to offer a loan at the point of sale.

Embedded finance can create a potent partnership, marrying innovative financial service companies with household names. Done right, it builds on an existing brand’s reputation and customer loyalty, and gives the feeling of an integrated service, without needing to start from scratch.

We believe the key to successful embedded finance starts with finding the right partner. As with any relationship, your chosen partner will need to meet your specific criteria. But before brands start engaging with these potential partners, we’ve identified three key areas it’s important to consider.   

Do they have the technological capability to deliver the products you want and support future scale?

Ensuring your partners have the technical capability to deliver the products you want to help you grow and adapt, as your customers’ needs change and evolve, is crucial. The tech behind the business you partner with needs to integrate smoothly with your own, allowing for an easy customer journey, as well as coping with high volumes of customer traffic. Challenger, tech-first brands can therefore prove to be useful embedded finance partners.

Zopa, for instance, uses progressive AI/Machine Learning models to enable automated credit and affordability assessments. Across credit cards, loans and auto finance, this means we currently process more than 5 million credit applications every month, providing guaranteed offers within an 8-second timeframe.

At the end of the day, an embedded finance partnership is in place to improve and enhance your customers’ experiences in the long term. Speed, agility and technological capabilities are key to making that experience one your customers will remember.

Do your values align?

Finding an embedded finance provider shouldn’t just be about whether a provider can deliver for you from a practical perspective. You should also look at whether they share a similar ethos, attitude to customer service, and vision for the future. You don’t want to partner with a brand that may undermine the reputation you’ve got with your customers or clients, and you want the partnership to grow and develop as your customers’ needs evolve.

To help understand a business’ ethos, it’s worth reviewing their website, corporate strategy and thought leadership, as well as keeping a close eye on the media for any reputational issues which may be off-putting to customers. TrustPilot scores are a publicly available indication of how your customer may be treated by an embedded finance partner. You should also ask for their latest Net Promoter Scores (NPS) - Zopa’s scores for its personal loans are consistently high, at 88 – 90, reflecting the levels of customer satisfaction with our products and experience.

Most importantly, brands will really need to engage with their embedded finance partners, assessing their culture and understanding whether there is compatibility, and a commitment to collaboration.

What do your customers need from a financial services provider now and in the future?

When you’re partnering with a provider, you need to be thinking about the future: how your clients’ or customers’ product needs will develop over time, and what you’d like to offer them. You should ensure that your partner is aware of and able to deliver in line with your product roadmap. You should look for a partner with a data focussed approach, including the crucial ability to interpret data and use it to meet evolving customer demands. At Zopa, we’ve built a bank that’s able to quickly respond to customer needs, making new feature rollouts easy to test, integrate and improve when needed.

Embedded finance is rapidly driving a new approach to innovation, as corporate appetite for collaboration and customer demands for a one-stop digital shop increase. It has the potential to change customers’ digital experiences and the way they interact with online services. Finding the perfect partner is just the first step towards a more integrated digital future, that will change the way we spend, save and borrow forever.