Embedded finance key to SME recovery and rebuilding economy

• Our data shows how embedded finance leads to speedier and more successful loan applications for small businesses
• Half of applications through embedded finance partners receive a decision within two minutes, and are 58% more likely to be successful than direct applications
• Nearly 30% of all loan applications to iwoca now come through embedded finance partners
• As big banks reduce their risk appetite, embedded finance will make it easier for small and micro businesses to access finance, helping to speed up the economic recovery
• We have over 20 embedded finance partners including accounting software platforms and neo-banks, with more set to be announced before the end of the year

Fast and successful loan applications

Our exclusive insights bring to life the benefits of embedded finance, highlighting how our small business customers receive faster lending decisions and are more likely to be successful in getting the finance they need.

In Q1 2021, our data shows that 50% of customers who applied through an embedded finance partner received a lending decision in less than two minutes, compared with 12% of direct applications. In addition, small business applications via embedded finance partnerships are 58% more likely to be approved than those that applied to us directly.

Read on to find out how embedded technology can transform the customer experience for SMEs applying for finance.

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Embedded finance technology improves process for lenders and small businesses

We’re an industry leader in using embedded finance to support small businesses, with nearly 30% of all loan applications to iwoca now coming through embedded finance partners. Businesses can access loans from us through a range of platforms such as accounting software and digital neo-banks including Xero, Tide and Funding Options. This makes the process of applying for finance far simpler for SMEs as loan offers are readily available in the services they use day-to-day.

In addition, these platforms hold much of a company’s financial information - such as cash flow and trading performance data- that a lender would need to review a loan application. This allows us to make faster decisions and to tailor products to a customer’s individual needs, which translates to greater chances of getting approved for finance.

Access to finance will be key in helping SMEs get back on track following the impact of the COVID-19 crisis. However, with the closure of the Bounce Back Loan Scheme many high street banks are likely to reduce their lending to small and micro businesses as their risk appetite narrows. Alternative lenders can fill this gap, with embedded finance integrations providing small businesses with simple access to the finance they need.

Colin Goldstein, our Commercial Growth Director, said: “The technology behind embedded finance has huge potential for SMEs, and the possibilities to embed finance are vast. Small businesses are already benefiting from embedded finance through faster and more successful loan applications.

“iwoca has led the way in developing embedded finance products, and well over a quarter of businesses we are now serving come through our embedded finance partners. Accelerating this should be a central pillar to rebuilding our economy, and we look forward to working with more partners to help their small business customers get the finance they need.”

We’ve been at the forefront of innovation in embedded finance in the UK, becoming the first alternative lender to offer lending through an API. We launched our own OpenLending platform following the £10 million Capability and Innovation Fund award from the Banking Competition Remedies in 2019, which allows partners to integrate seamlessly with our lending API. We have created over 20 embedded finance partnerships, with more expected to be announced over the coming months.

Data

All data on lending through embedded finance partners vs direct applications is sourced from our proprietary lending data (Q1 2019 - Q1 2021).

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