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Embedded Value-Added Service

The final blog in the embedded ecosystem series is about embedded value-added services and how they can build and maintain strong customer loyalty.

Embedded Business Management

This blog dives into embedded business management and its role in helping small businesses run their businesses when they don't have dedicated resources to help.

Embedded Lending

This blog looks at the evolution of embedded lending and how it has gained traction for both businesses and consumers needing access to more flexible finance options.

Embedded Deposits

This blog looks at embedded deposits and how non-bank financial services providers are meeting the demand of their customer base.

Embedded Payments

Liberis are experts in embedded finance but there is an entire embedded ecosystem out there! Over the next 5 weeks, we will be releasing a new blog each week that will dive into the full embedded ecosystem and the many different facets of it that businesses can avail of. First up is Embedded Payments where we will discuss its evolution, from traditional payment methods to online payments to embedded payments.

Importance of Financial Inclusion to Small Business: Role of Embedded Finance

The importance of financial inclusion for small businesses to grow cannot be underestimated. Partnering with an embedded finance provider can make a monumental difference to businesses overcoming the challenges of obtaining this crucial finance to reach their goals.

Building Trust Between Partners in Embedded Finance 

Trust is an essential part of any business partnership. Both parties must be fully aligned on their vision and goals for the partnership. Our latest blog explores some pillars that help build the foundation for a positive, all-inclusive partnership.

Revenue-Based Finance: Small Businesses Black Friday Funding Foundation 

Get the funding you need from your trusted acquirer, bank or platform partner to cope with demand! Our latest blog discusses the benefits Revenue Finance can bring small businesses during very busy shopping periods and where they can get it!

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Embedded Finance

Embedded Business Management

The benefits of embedded finance – the seamless integration of financial services by non-financial companies into their digital experience to deliver new, innovative, and streamlined customer experiences – are typically viewed through a B2C lens. But the scope of this finance revolution extends beyond reducing the friction that impedes online financial transactions to breathing new life into ambitious businesses admin processes.

Embedded business management uses the banking-like services offered by nonbanks model to embed a different kind of convenient service into a business’s infrastructure: accounting tools.

Traditional accounting

According to research by salary benchmarking site Emolument, the accounting profession ranks fifth in a roundup of the most boring jobs. It might be yawn-inducing, but this crunching of numbers is vital to the successful operation of a business – and must move with the times to be effective. Traditional manual accounting processes have evolved during the digital revolution from physical books using a written ledger of transactions to spreadsheets. But even these electric documents can become confusing, time-consuming, and error-strewn – making them outdated amid the emergence of embedded business management.

As a business grows, its financial data evolves with it, becoming more complex and increasing in volume. Small and medium enterprises (SMEs) typically don’t have the resources to create a dedicated function to conduct laborious – but vital – accounting processes. This leaves them with three options: conduct them in-house when there’s time, exposing the business to errors and delays; outsource them to an expensive third-party provider, placing strain on tight budgets; or think beyond antiquated accounting methods by embedding them into the business infrastructure.

Embedded business management

Embedded business management empowers SMEs to focus on what they care about most without worrying about the admin, which is automated and consistent. This means less effort, less time and lower costs when running a business compared to using clunky manual processes. Unshackled from repetitive admin and time-consuming processes, business owners can use their resources more proactively.

This subset of embedded finance has many beneficial branches of its own: from embedded payroll that allows business owners to set a single pay rate, to embedded bank feeds that automatically appear in accounting software, to embedded accounts payable that automate purchase orders when stock levels hit certain limits.

These core functions are often delivered using an enterprise resource planning (ERP) cloud solution: a suite of integrated applications that collect, store, manage and interpret data to gain resilience and real-time agility – and position for growth.

Examples of popular embedded business management experiences that are helping to streamline SMEs’ accounting processes include:

  • Clearbooks: intuitive online accounting software designed for UK-based small businesses, contractors, freelancers, and sole traders.
  • Bench: APIs let financial institutions and SaaS partners embed their platforms with an integrated financial solution like bookkeeping and tax services, providing SMEs with actionable insights to grow their business.
  • Tide: Limited companies save time with accounting integration, centralised invoicing and expense cards for easy expense management.

Embedded business management functionality is brimming with benefits:

  • Saves time: manages time-consuming manual bookkeeping and accounting processes automatically.
  • Convenient accounting: cloud-based software allows you to connect from an internet-enabled device from anywhere, at any time.
  • Syncs financial data: siloed business data that’s stored across multiple platforms is synced via an API, so you can compile financial records quickly and easily.
  • Improved accounting security: data is secured in the cloud under layers of high-end encryption algorithms, making your records easy to retrieve when you need them.
  • Integrate with other business apps: integrates accounting application software with other apps like CRM solutions, reporting applications, and information management systems.
  • Generates financial reports: built-in reports – such as your income statement, balance sheet, and cash flow statement – are automatically updated. This provides key insights and facilitates informed decision-making.
  • Data accuracy: the software automatically refreshes your business’s financial statements and reports to reflect any changes you make, keeping your data error-free.
  • Provides detailed insights: provides you with a transparent view of your business’s financial posture, helping you to produce focused reports and make informed strategic decisions.
  • Streamlines tax filing: standardised financial statements and accurate data simplify the tax filing process and your ability to calculate available tax credits.

The future of embedded business management

Research by Bain Capital suggests that payments and lending will continue to be the largest embedded financial services but will be bolstered by the growth of adjacent value-added services, including tax and accounting. As the pace at which organisations transition to digital-first admin processes continues to accelerate, embedded business management functionality will become ubiquitous across the business landscape.

What’s next

It’s almost that time! Next week we will publish the final instalment of the embedded ecosystem blog series – Embedded value-added services – which will look at how nonbank financial services companies can embed things like insurance into their service offerings and how it’s become instrumental in increasing customer loyalty.

Embedded Finance

Embedded Lending

Born out of a desire to disrupt the traditional banking model in the wake of the 2008 financial crisis, challenger banks – or neobanks – kicked off the finance revolution. This disruptive rebellion has inspired another new breed of provider to take to the banking battlefield and challenge the old guard across a broad spectrum of services: non-financial organisations.

Empowered by the rise of embedded finance – the integration of traditional financial services or tools within a non-financial organisation’s infrastructure – businesses and their customers are benefitting from streamlined financial processes that reduce friction when accessing products and services online. Today, embedded finance pervades online transactions – but you might not even realise you are benefitting from it because of its power to smooth the customer experience.

A subset of this new distributed approach to providing financial services eliminates the need to rely on high-cost third parties – typically a financial institution – within the lending process: embedded lending.

Traditional lending

There was a time – not so long ago – when you had to arrange a meeting with your bank manager and physically go into your local branch to apply for a loan. The lack of lending options meant banks – which held the monopoly over the lending space – were judge and jury of who was creditworthy. While the internet has given rise to a new wave of digital lending options – and diluted the role of the bank manager – traditional financial institutions continue to rely on outdated, labour-intensive legacy processes and narrow credit-decision criteria.

Take small and medium-sized enterprises (SMEs), for which restricted cash flow can be an existential threat. According to the World Trade Organisation, they represent over 90% of businesses and 60-70% of employment worldwide. Despite the vital role they play in economies across the globe, many struggle to access the funding they need to keep operating and growing.

Traditional institutions’ rigid lending framework prevents SMEs from accessing capital because they are considered too risky. This myopic view stems from a range of factors that are typical among them, including:

  • They lack formalised governance processes
  • They lack publicly available information
  • They often operate in emerging sectors
  • They often have insufficient assets to be used as collateral
  • They produce low credit scores

These lending hurdles are exacerbated by the banks’ clunky and costly client support infrastructure and convoluted application and assessment processes. Even if a loan is eventually authorised amid these time-consuming constraints, it might be too late for an SME that has a time-critical need for capital.

Embedded lending

Embedded lending gained traction in the face of pandemic-induced lockdowns that shuttered businesses and strangled household incomes; a trend that has been perpetuated by a general demand for a frictionless, digital-first lending experience. This process of integrating credit or financing products into non-financial businesses, such as online retailers or marketplaces, allows customers to access finance at the point of need from a non-financial brand they trust – removing any interaction with a bank or other lender.

Using a customisable API (Application Programming Interface) or white label solution, digital brands can integrate embedded lending options into their technology ecosystem or e-commerce platform. This dynamic offering can be tailored to meet their specific customer needs, ensuring brand integrity remains intact. The entire lending process subsequently becomes faster, simpler, and frictionless, allowing applicants to focus on using the funds, rather than applying for them.

This convenience fosters the point of need access to capital that SMEs crave, improving their cashflow management; while consumers can access flexible payment structures that enhance their online transaction experience. Embedded lending’s innate ability to provide businesses and individuals with access to useful, affordable and responsible lending products and services underscores the role it plays in driving financial inclusion.

Buy Now Pay Later (BNPL) is an example of B2C embedded lending: a type of short-term financing that allows consumers to make purchases and pay for them at a future date. For example, Clearpay is a payment service that lends customers a fixed amount of credit to make purchases instantly before paying for them in four interest-free automatic instalments, made every two weeks.

Revenue-based finance is an example of B2B embedded lending: an alternative funding option that allows SMEs to access funding based on their overall business revenue – not just their credit history. For example, Liberis offers a revenue-based lending model driven by an intelligent data engine that automatically forecasts business transaction revenues and makes a personalised and preapproved offer – with 70% of businesses receiving their funding in less than 48 hours.

The benefits of embedded lending are being felt throughout the modern lending ecosystem: businesses and retail customers benefit from a seamless lending experience that unlocks access to funds quickly and cost-effectively; brands that embrace it benefit from a competitive advantage by augmenting and enhancing their offering; and innovative lenders are ‘inserted’ into the moment the customer identifies a funding requirement.

The future of embedded lending

According to a World Bank report, the world’s SMEs have unmet finance needs of approximately $5.2 trillion a year, around 1.5 times the current lending market for businesses of this size. Against this backdrop of escalating demand for finance without friction, embedded lending is well-placed to go from strength to strength. For example, the proliferation of BNPL within the B2C space has inspired e-commerce platforms to offer lending solutions to their business customers in the UK – a trend that is expected to gather pace.

Research by Bain Capital estimates that by 2021 around $12 billion in B2B loan transactions were made via embedded finance, which it expects to increase exponentially to between $50 billion and $75 billion by 2026.

Driven by increased customer loyalty and brand value, embedded lending in the B2C space has rapidly evolved from a burgeoning value-added service into a ubiquitous facilitator of streamlined lending experiences. According to Bain Capital, around 10% of point-of-sale transactions are made via embedded finance, resulting in a transaction value of around $43 billion. By 2026, this market is expected to grow to between $80 billion and $90 billion – and there won’t be a bank manager in sight.

What’s next

Tune in next week where we will be discussing embedded business management. Many small businesses don’t have the resources to create separate functions for important tasks like accounting. Embedded business management is the part of the ecosystem that can accommodate this allowing small business owners to focus on what they do best, growing their businesses.

Embedded Finance

Embedded Deposits

Astonishingly, customer-centricity – an approach to doing business that focuses on providing a positive customer experience at the point of sale to drive profit and gain competitive advantage – has traditionally been an afterthought when delivering financial interactions. This short-sighted outlook left consumers resigned to their fate: to accept the disconnect between themselves and the company they’re doing business with; a gap that’s bridged by a third-party bank they are redirected to, creating an extra layer of friction.

This clunky process is increasingly unacceptable in the modern financial services landscape, where tradition has been replaced by innovation – and customer-centricity is a prerequisite. Embedded finance has disrupted the involvement of third parties through the disintermediation of financial interactions. This seamless integration of financial services by non-financial companies into their infrastructure is not limited to streamlining the payments process; other core interactions have been enhanced by embedding them behind these organisations’ apps and websites, including bank accounts – known as embedded deposits or embedded banking.

Traditional banking

Customer retention has never been a huge concern for traditional high-street banks – until now. Their general model is simple and effective: get someone to create an account when they’re young and assume they will bank with them for life because the hassle of changing to another similar high-street institution isn’t worth it.

With their choice restricted to a few brick-and-mortar providers that held a monopoly over the banking space – and offered the same services under different brands – consumers’ access to financial services was limited. Since the global financial crisis of 2008, however, the tide has turned amid the emergence of a broad set of tech-driven financial companies (fintechs). This new breed of provider aims to fundamentally address outdated financial services by offering access to innovation that supersedes the traditional methods used by incumbent banks – a trend that has been accelerated by the pandemic after consumers’ reliance on online functionality increased profoundly.

The conventional banking infrastructures flaws have been amplified in the face of this fintech revolution: slow in undertaking digital transformation, legacy infrastructure that lacks agility, strict regulatory standards, poor customer service, and the emergence of disruptive banking models.

Throw in the odd scandal – notably Payment Protection Insurance (PPI) mis-selling – that’s dented the public’s faith in them, and the banks’ grip on the industry has been prized loose. Take TSB for example, which in November 2021 announced that it was shutting 70 bank branches across the UK the following year as more customers switch to online.

Embedded deposits

The emergence of disruptive banking models has paved the way for embedded deposits to reshape the banking landscape: the process of incorporating specific banking tools – such as debit cards and checking accounts – into non-financial companies’ products or software, forming part of a larger bundle of services. When banking is embedded into a non-bank environment, it streamlines the customer journey while building more secure, fluid experiences into the tools they already use, increasing retention. By bringing banking to the customer, it creates simple, linear journeys that can be completed without opening a banking app or website.

Examples of popular embedded deposit experiences that are helping to drive a new era of flexible banking include:

  • Shopify: The Canadian multinational e-commerce company’s banking feature aims to encourage small business owners to create a separate bank account for their company, rather than use their personal checking and savings accounts or set up a business account with their bank.
  • Worldpay & FIS: The British/American payment processing company and technology provider makes it easy for vendors’ customers to pay for products online using their digital or mobile wallet of choice – essentially a new breed of agile bank accounts – helping drive conversions, accelerate checkout, and boost revenue.
  • Starbucks: The Starbucks app offers deposit and credit products provided by investment bank and financial services holding company JPMorgan Chase, allowing customers to store cash and earn rewards for in-store purchases. In the US, a quarter of store transactions now occur via the app, with the retailer holding as much cash in its app and on its cards as some banks hold in deposits.

While fintechs still dominate the conversation, banks are starting to engage in the embedded banking space. Once considered upstarts in this previously rigid sector, the banks are viewing fintechs as potential co-collaborators to help establish their own digital footprints – commonly known as banking-as-a-service (BaaS). For banks, this can open the door to new revenue streams and expansion into unbanked customer segments. But there is still a long way to go for these traditional players: according to the 2021 Economist Impact report, a little over a quarter (27%) of banks and credit unions surveyed believe their organisation has the necessary technology tools – “to a great or large extent” – to create new digital products and services internally or externally.

Embedded deposits have empowered small businesses to take control of their banking. The monopoly once held by a handful of institutions in the banking space has been broken by the choice and convenience that’s inherent to fintechs. No longer an afterthought, customer-centricity is now a cornerstone of this streamlined approach to banking.

The future of embedded deposits

According to recent research by Finastra, embedded bank accounts and payment cards are poised for 30% growth by 2024. This trend is echoed by Bain Capital research which estimates that by 2021, US consumers and businesses spent $3.60 trillion on their debit cards and $3.55 trillion

on their credit cards – with 3% and 4% of these transactions for debit cards, and less than 1% for

credit cards, conducted using embedded banking services. By 2026, Bain Capital predicts that the nonfinancial services market penetration for debit cards could increase fivefold to around 15%.

What’s next

Don’t miss next week’s blog instalment! We will be looking at how embedded lending (our speciality) has changed how businesses and consumers have been able to obtain more flexible finance options that traditional banks and lenders have been unable to provide.

Embedded Finance

Embedded Payments

Put simply, embedded finance refers to banking-like services offered by nonbanks. This seamless integration of financial services by non-financial companies is a reaction to consumers’ demand for a more digital-first experience, particularly in the wake of the pandemic. One branch of this vast finance revolution has the power to streamline the previously clunky online payments process: embedded payments – but it has been a long journey to reach this inflexion point.

Online payments

Legend has it that in 1994 an order for a large pepperoni pizza made history when it was placed on Pizza Hut’s new website, making it the world’s first online purchase. Three years later Coca-Cola laid claim to the first mobile payment when it allowed customers to pay for their drinks by sending text messages from their phones. Since then, online payments have become part of our everyday lives amid the exponential growth of the internet and our subsequent reliance on e-commerce.

There’s no doubt that online payments have been a game changer for businesses of all sizes – practically consigning cheques to the history books and spurring conversations about a cashless society. Take Pizza Hut for example: by 2008 its online sales topped $1 billion and by 2013 they reached $6 billion. But in an age where speed and convenience are consumer prerequisites, there is always room for improvement.

Traditionally, online payments have been handled by third parties – either large financial institutions or payment processors. This additional layer of friction means financial transactions are separate processes, with customers directed outside the service. Forced to use these third-party integrations to facilitate payments, vendors experience a disconnect with their customers, creating a disjointed user experience.

Embedded payments

A growing expectation among e-commerce consumers that digital ecosystems should encompass every aspect of the transaction process means the middleman’s days are numbered. This has prompted an appetite among businesses for embedded payments solutions that provide the payment autonomy they need to achieve financial independence and enhance the user experience.

An embedded payments strategy – which can be tailored to businesses of all sizes – seamlessly integrates payment processing into the e-commerce shopping journey, eliminating the need for a third-party payment provider or banking service. This empowers businesses to take control of the different payment processes they are exposed to – such as wire transfers for one-off purchases of goods and services and Automated Clearing House (ACH) transactions for managing direct debits – and to harness real-time payments.

With the user experience consolidated under a single brand when making payments, businesses can access a wealth of compelling benefits:

  • Create new revenue streams
  • Quickly onboard new merchants
  • Improve the customer experience
  • Streamline operational processes
  • Offer tailored suites of products with zero friction to adopt
  • Improve customer retention
  • Offer greater pricing flexibility

A quick look at the World Bank’s definition of financial inclusion underscores the role embedded payments play in driving this important concept: “Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.”

Accessing an autonomous payments network that seamlessly sends and receives money internationally by streamlining processes is no longer a pipe dream for businesses and consumers.

As forward-thinking organisations rethink legacy systems and invest in digital transformation, they are embracing the opportunities afforded by embedded payments – and with third-party friction removed from the equation, it’s never been easier to buy a pizza.

The future of embedded payments

The embedded payments industry embodies everything good about fintech: speed, agility, flexibility, convenience – and it’s going from strength to strength amid consumer demand for streamlined processes, with revenues expected to increase from $43 billion in 2021 to $138 billion in 2026. As embedded payments become ubiquitous throughout the online payments landscape, market research firm IDC predicts that 74% of online consumer payments globally will be conducted via platforms owned by nonfinancial institutions by 2030.

Two new trends could accelerate this market growth: embedded B2B payments and the opportunity for financial institutions to work with fintech partners to support the growing demand for embedded B2B payments. The growth of banking-as-a-service and open-access APIs are presenting businesses with the ability to leverage B2B embedded financial services technology to customise payment solutions for their needs. The IDC report states that 73% of financial institutions around the world have payments infrastructures that are ill-equipped to handle payments for 2021 and beyond. Fortunately, fintech has created a new opportunity for banks to modernise their payment services.

What’s next

Next week we will be looking at the emergence of embedded deposits and how they have become a central offering of non-bank financial services companies to meet the demands of their customers.

Embedded Finance

Embedded Value-Added Service

Embedded finance is often defined as financial services on the consumers’ terms. This amalgamation of traditional financial services with non-financial companies creates seamless experiences for customers by streamlining their access to services like payments, loans, and accounts – but it isn’t the only type of embedded system making a wave out there.

The battle for customer loyalty and retention online has also prompted a demand for value-added services to be embedded into their experiences – such as fraud management, know-your-customer, compliance, insurance, and loyalty rewards. By plugging non-traditional offerings into their platforms using APIs and harnessing the “better together” proposition, businesses can enhance the customer journey by creating new value for them.

The rise of value-added services

Not so long ago the high street was king when it came to shopping. Businesses could peddle their wares in physical stores without worrying much about creating new value for their customers – for whom choice was limited compared to today. The exponential growth of the internet this century has not only sounded the death knell for the high street following a shift online; it has reshaped the battlefield for customer loyalty and retention amid an explosion in competition and changing demands.

For a business to appeal to new and existing customers and remain competitive in a crowded online marketplace, it must think beyond its core offering and add value to the relationship. One way to achieve this is to offer auxiliary services that customers will find valuable and will complement their core services.

Take banks for example, which have traditionally had a myopic view of service provision. Having spent decades building their products and services and offering one-stop banking for small businesses and personal customers, they have become hampered by a siloed approach that’s no longer viable. The modern consumer wants a relationship with their bank that extends beyond standard transactions and balance checking to the integration of complementary services – and the fintech disruptor banks are showing the legacy players the way.

Embedded value-added service

As businesses are required to work increasingly hard to compete online, they must think outside the box and consider value-added services – or risk losing customers. A value-added service is a feature that can be embedded into a core product to enhance the user experience or a service that can function as a standalone product or feature – and they’ve become fundamental to customer loyalty and retention in the highly competitive online business world.

The fintechs that are driving the growth of embedded value-added services excel at understanding the customer and creating offerings specific to their requirements. This valuable insight is reimagining the scope of the businesses they support. With their blinkers removed, these businesses don’t have to rely on generic one-size-fits-all bolt-ons; they can embrace additional services that are complementary and add value to their customer’s experience.

Examples of embedded value-added services that are helping to complement businesses’ core offering include:

  • Square: The payments company has expanded its appeal by adding a range of add-ons like email marketing and payroll support.
  • Starbucks: The world’s largest coffeehouse chain adds value to its customer experience through its customer loyalty points programme. To earn loyalty points – or, in Starbucks’ case, loyalty stars – customers must order or pay using the Starbucks app. They can redeem those stars to get free drinks, food, and even merchandise.
  • STET: This automated clearing house offers fraud scoring as a value-added service for all payment types it processes.

By focusing on their customer needs and embedding value-added services, businesses can strengthen existing relationships and build new ones – and the benefits are compelling: customer loyalty, customer retention, competitive advantage, stimulates demand for core products and services and can generate additional revenue.

The future of embedded value-added services

The value-added proposition is not a rigid selection of services that businesses are forced to choose from; it’s a dynamic process that can be tailored to meet their customer’s unique requirements. This fluid landscape means existing value-added services are constantly being enhanced and new services are being developed and embedded into the native customer journey.

Embedded loyalty programmes that offer consumers rewards and incentives such as discounts, vouchers, cashback, and reward points are a prime example of how this constant evolution is driving growth: the number of loyalty programme memberships is forecast to grow by 33% from 24 billion worldwide in 2022 to more than 32 billion in 2026. It’s a similar story in the mobile embedded value-added services market – services offered by telecom providers to customers beyond core services like SMS, voice, and data – which was valued at $655 billion in 2021 and is expected to reach a value of $1133.85 billion by 2029.

Life at Liberis

Life at Liberis with Stephen Queen

What’s your name and what do you do at Liberis?

My name is Stephen Queen I am a Global Operations Manager!

When did you join Liberis and what were your first impressions?

I joined in April 2022, and from my first day, I was blown away by how welcoming and genuinely helpful people were! I made the mistake on day one of not reaching out to anyone on the dress code, so showed up in an entire 3 piece with tie clips and everything and was greeted by my colleague Lewis in his casual t-shirt and jeans 🤦‍♂️. From day one, it was immediately apparent that this was a business full of incredibly talented people, all moving in one direction.

What makes you proud to work here?

There is so much about my role that makes me proud to work here; the work that we do within our team in Global Operations to help the business become more efficient and be operationally ready for the stream of exciting projects we have coming up gives me real satisfaction in my role. However, the overruling pride is the fact that I believe as a business, we provide a fantastic product that fills a substantial gap in the funding market. We are positioned perfectly to do this. I’ve seen merchant stories discussing the value they get from our products to help them grow and thrive in some difficult circumstances.

What are your stand-out memories of working at Liberis so far?

From a work perspective, I have really enjoyed working with our Nordics team on a process review to make their already impressive work even more efficient and effective! It is so interesting to work with people across different countries and cultures. I have learned so much from it! I have also thoroughly enjoyed working on our Robotic Process Automation (RPA) pipeline, learning that not all robots look like the tin man and the incredible process improvements they can achieve!

Socially, the Liberis summer party is a massive stand-out. Getting to meet Liberites from all over the globe in person was great, and the venue was stunning! Team GlOps winning the inaugural Liberis five-a-side tournament was surprisingly easy, cruising past Commercial in the final and look forward to retaining our title next quarter🤪!

Since working here, what ways have you developed – personally and/or professionally?

Personally, I have seen a massive change in myself over the past 6 months. Joining Liberis was the first big change I had made in my career, which was a scary jump to make coming from a role I was safe and comfortable in, but I have learned that pushing yourself out of your comfort zone is the only way to grow and to achieve your potential. Being part of something so new and exciting has had a noticeable impact on my life outside of work; I am much more energetic and keen to do things in my personal life!

Writing this blog, I have looked back on the past 6 months and found it incredible how much I have learnt in such a small time. This was a completely new role to me, with my previous experience being focussed on data, and have had to pick up lots of domain knowledge on Operations, how to ask the right questions, and learning tools to structure process improvement projects. In addition, the scope of my work has been so broad I have developed massively in terms of soft skills. In operations, we have touchpoints with every area of the business and managing projects across such a broad stakeholder group has taught me a lot.

What makes Liberis different from anywhere else you’ve worked?

Most of my previous experience was in consulting, which was great for my development as I learnt so much in different roles, but you can sometimes feel on the outside of teams on client side. At Liberis, I really feel part of a team, and this is a better fit for my personality as I get my energy from feeling responsible not just for myself but for others and for the success of the business. I am driven by expectations and trust, which I feel I have had in abundance at Liberis. The culture is also something I have found quite special, Liberis isn’t an “easy” place to work as there are an immeasurable amount of things we want to achieve. Hence, it isn’t somewhere you can coast, and often this can translate into a toxic workplace environment but couldn’t be further from the truth here. There is a huge focus on work/life balance and a lot of structures in place to maintain a healthy and happy working environment. I have recently joined the D&I council and it is great to see the power and freedom the team have and the work they have done in the business so far.

What makes you stay working here?

What makes me stay at Liberis is the people, the culture and the super exciting things we want to achieve in the future.

What do you look forward to most in Liberis’ future?

I look forward to the role everyone at Liberis truly believes we can have in closing the global funding gap for our merchants, diversifying the merchants we work with and offering support in what looks like a challenging economic environment to come!

Life at Liberis

A day in the life of a Marketing Lead

What’s your name and what do you do at Liberis and where in the world do you work?

My name is Jess Middleton and I work in the Marketing team with a focus on customer acquisition – which essentially means helping Liberis grow our SME customer base by marketing our product through our roster of partners. I work in London – splitting my time between home and the office.

From the moment you wake up in the morning, what do you look forward to for the day ahead?

No day is the same workwise, but the people are consistently full of energy and are what makes Liberis special. Friendly faces around the office and dynamic, creative meetings are always something I look forward to (and I’m a big fan of the office café and their rotating menu…😊).

Describe a typical day for you in your role.

Every day is different, I’ll either be working with partners (like Worldpay, Klarna, Barclaycard or Clover) to deliver regular marketing campaigns, or strategising how we can optimise them. Or I’ll be working with the rest of the marketing team on a range of projects, e.g. enhancing the Liberis brand or creating new exciting content for partners. So, lots of diversity!!

What advice would you give a colleague whose just joined your team?

Ask all the questions you possibly can early on, there’s no such thing as a stupid question – this is the time you can get away with it. 😉

Are you office based, remote or hybrid? What are the pros and cons, if any?

I’ve just returned from a month working fully remotely in Barcelona! But now that I’m back I spend about 2-3 days in the office and the rest at home. Home is great if I need to get my head down on a piece of work without distraction (or if I have packages arriving..) but being at work is the best for collaborating and feeding off everyone’s energy – which in turn gives me lots of momentum to get stuff done.


Impact of Inflation and Recession on Small Businesses in the UK and US

Guess the year: E.T. was released in cinemas, Prince William was born, and the Mary Rose was raised from the Solent. These notable events occurred in 1982 – the year another headline was made amid economic turmoil: UK inflation reached a whopping 10.4%. The magnitude of this reading is underscored by the time it took to register another double-digit annual increase: 40 years and five months to be precise.

In July 2022, inflation jumped above 10% for the first time in more than four decades. According to the Bank of England’s governor Andrew Bailey “the Russia shock is now the largest contributor to UK inflation”. It’s a similar story in the US where price pressures remain elevated amid these conditions. In June, inflation in the world’s largest economy also hit its highest level in four decades, at 9.1%.

Inflation is intrinsically linked with another economic phenomena: recession. As prices heat up, central banks typically hike interest rates to cool them – a move that can contribute to the economy sliding into recession. The Bank of England (BoE) and the US Federal Reserve have embarked on policy tightening cycles this year, both hiking interest rates to their highest levels since 2008.

For small and medium-sized enterprises (SMEs) price pressures and a looming recession pose an existential threat at a time when many are still recovering from the pandemic. Let’s explore the associated factors that are impacting SMEs in the current economic climate.

Energy crisis

The energy crisis has largely been triggered by a combination of last year’s long cold winter and Russia’s invasion of Ukraine.

Higher demand means higher prices. In 2021, European and Asian countries – notably China – burned through a significant amount of their gas reserves during a relentless winter. Around the same time, the reopening of economies following successive lockdowns also led to higher energy usage as businesses tried to make up for lost time.

Since Russia – one of the world’s largest producers of gas – invaded Ukraine in February 2022 the cost of its gas has soared, causing energy bills to spiral. Sanctions imposed on Russia have forced European nations – which purchase around 40% of natural gas from Russia – to look elsewhere for their supply, pushing up the price from other sources. While the UK does not import as much Russian gas as its neighbours, the interconnected nature of the European market exposes it to price pressures across the continent.

According to the Federation of Small Businesses, UK firms have experienced a 424% rise in gas costs and a 349% rise in electricity costs since February 2021, causing rising energy bills for the average small business to reach over £28,000 – quadruple their level early last year. This forced the UK government to step in with an emergency support package for businesses, including a six-month cap on the price paid for energy from 1 October 2022.

SMEs in the US aren’t immune from this crisis. Despite the nation’s vast domestic resources, a rise in heating bills is expected this winter in the face of tight natural gas markets. According to the National Energy Assistance Directors Association, the average US household bill is expected to increase by 17.2% this winter compared to last year – a trend that could play out in the commercial market as well.

Fuel prices

Fuel is a major expense for many SMEs, which typically lack the finances to absorb a sudden surge in prices. So, as the cost soars against a backdrop of war in Ukraine, the brakes are being applied to SMEs’ spending power at the petrol pump.

Soaring crude oil prices – which is used in manufacturing petrol and diesel – are the root of the problem. Geopolitical forces – notably sanctions against Russia, which is the second-largest exporter of crude oil worldwide – have pushed the price of a barrel higher this year, dragging the price of fuel up with it in the UK and the US:

  • UK: By July 2022, pump prices had set records of £1.91 a litre for petrol and £1.99 for diesel. Just two years ago petrol was at a low of around £1 a litre.
  • US: In February 2021, the national average petrol price was $2.65 a gallon. Fast-forward to October 2022 and it had jumped to $3.89, with experts predicting it could exceed $4.

SMEs across industries are being forced to grapple with several challenges that stem from rising fuel prices: supply and overhead expenses, service territories, staffing, and the pricing of products and services. Those that operate internationally, relying on the global supply chain to import and export goods, will be hit hardest, with haulage firms passing on increased operational costs.

Cost of living crisis

SMEs are the backbone of the UK and US economies, but a rise in costs is threatening their future. The full extent of the cost-of-living crisis became apparent in early 2022 when COVID-19 restrictions were lifted, compounding the blow dealt to SMEs by the pandemic.

As decades-high inflation continues to push the cost of living higher, consumers are feeling the pinch. The subsequent fall in demand for goods and services is hitting SMEs where it hurts the most: their bottom line. And with wages failing to keep pace with rising costs, they’re also finding it harder to attract and retain staff.

Unable to compete with economies of scale, many SMEs are struggling to survive. PayPal’s Business of Change: Wellness & Empowerment Report 2022 found that more than three-quarters (78%) of SMEs in the UK cite the rising cost of living as the biggest threat to their operations. In the US, inflation has forced over 80% of SMEs to hike their prices, increasing the strain on consumer spending.

Higher interest rates

SMEs in the UK and the US have sounded the alarm over surging interest rates – the BoE and Fed’s main weapon in the fight against inflation. September was the tipping point as borrowing costs were lifted to multi-year highs on both sides of the Atlantic: The BoE’s seventh consecutive hike took UK rates to a level not seen since 2008; and the Fed’s fifth consecutive hike lifted its rate to 3% for the first time since early 2008 – from near zero at the start of the year.

The knock-on effect is potentially crippling for SMEs: the cost of repaying loans taken out to weather the pandemic has spiralled; their ability to secure affordable funding has been stymied; and the cost of mortgage repayments has risen, potentially resulting in defaulted payments and even eviction.

Risk of recession

With a recession – usually defined by two consecutive quarters of negative economic growth – looming, swathes of British SMEs are in the process of battening down the hatches. According to iwoca’s quarterly SME Expert Index, over three-quarters of brokers surveyed (77%) say SMEs are worried about the possibility of a recession – and they have good reason to be. An economic downturn can impact them in several ways, including:

  • Reduced profits as consumers tighten their belts.
  • Less likely to invest in new products.
  • Employees made redundant.
  • Lenders are spooked by higher rates, strangling lines of credit.
  • Vendors and customers find it difficult to make timely payments, reducing cash flow.

The UK economy unexpectedly shrank in August, strengthening forecasts that it will slide into a recession before the end of the year. Consequently, SMEs are scrambling to swell their cash reserves to insulate themselves from inflation and an economic downturn. Nearly half of business loan brokers have filed more applications for credit for their SME clients, the research found.

A survey by Goldman Sachs this summer showed 93% of small business owners are worried about the US economy experiencing a recession in the next 12 months. Like their British counterparts, they are taking steps to protect themselves from a severe economic downturn. But there is a steely confidence that they can see it out, with the pandemic cited as the main reason for this sanguine mindset. In the latest Small Business Recovery Report by Kabbage from American Express, over 31% of respondents said the pandemic has helped them find a greater sense of resilience and preparedness to be successful during future economic turbulence.

What next for SMEs?

SMEs have two choices in the face of red-hot inflation and recession risks: stay small or grow. Staying small by regulating cash flow requires them to cut back on nonessentials and acquire a basic form of financing to maintain inventory and operational costs. Whereas capacity building with sizable financing can help them generate enough revenue to weather inflation and stay ahead of the competition.

However, access to financing is difficult enough at the best of times for SMEs – especially innovative ones. This challenge has been exacerbated by inflation and high interest rates, which are severely impacting their cash flows. This brings the need to secure the right type of financing into sharp focus for SMEs as they fight to survive. For example, revenue-based financing allows SMEs to access funds based on their overall business revenue. This alternative funding option does away with set monthly repayment dates and personal guarantees for a more SME-friendly experience.

Life at Liberis

A day in the life of a Strategic Partner Manager

What’s your name and what do you do at Liberis and where in the world do you work?

My name is Finlay Craig, and I work in the Partnerships team at Liberis. Our team focus on driving growth through our partners by finding new opportunities, implementing new features, and trying to service as many businesses as possible. I am based in London and enjoy spending around 80% of my time in the office.

From the moment you wake up in the morning, what do you look forward to for the day ahead?

The great thing about my job is being able to work with myriad teams and people. It keeps the days fresh and exciting, whilst allowing me to learn from a plethora of diverse and talented people. Having said that, coffee comes first 🤣.

Describe a typical day for you in your role.

Working for a scale-up like Liberis means that typical days are few and far between. Objectives can vary from launching in a new country, refining processes, or pushing marketing campaigns out. The only real constant is the need to interact with various teams to achieve the objective of the day.

What advice would you give a colleague whose just joined your team?

Get stuck in. There is lots to learn at Liberis and that can’t be done if you are not willing to get involved. From my experience, everyone is willing to help, and everyone could always do with some help!

Are you office based, remote or hybrid? What are the pros and cons, if any?

I spend 3-4 of my days a week in the office with the other 1-2 at home. This really works for me as I love being in an office environment where I can pester people 😜 without having to put in a meeting. Another huge benefit is being able to (over) hear conversations about what is going on in other parts of the business, which in turn often benefits my work. Having said that, having a couple of days at home in a week never goes a miss; flexibility is key!

Life at Liberis

Brian Beacham: A day in the life of a Sales Executive

What’s your name and what do you do at Liberis and where in the world do you work?

My name is Brian Beacham and I work in Initial Sales in the UK. I work mostly from home and my home is Glasgow, Scotland.

From the moment you wake up in the morning, what do you look forward to for the day ahead?

I look forward to hitting my targets and helping as many businesses as possible.

Describe a typical day for you in your role.

A typical day involves going through fresh applications for funding and contacting the customers to facilitate an application being submitted or to schedule a call back at a more convenient time. I also inform the previous day’s applicants of the outcome of their applications.

I don’t really think of myself as a salesperson that just makes outbound calls. I am someone who responds to businesses that need funding to grow and thrive. I get to know them and their needs, and then I work with them to help get the funds in the easiest way possible to meet those needs and help fulfil their dreams.

What do you love most about your job?

Helping businesses achieve their ambitions and getting them back on their feet after a very challenging 2+ years. Like all salespeople, I also like hitting targets and making commission 😉.

What advice would you give a colleague whose just joined your team?

Work hard, take plenty of notes as things change a lot and welcome aboard. We are a very welcoming bunch.

Are you office based, remote or hybrid? What are the pros and cons, if any?

Predominantly home-based with a monthly visit to London HQ. Pros are not commuting, and I am my own boss as I have the autonomy to achieve whatever I want to achieve. The cons are that I miss the office banter.


Investing in Fintech: Why it’s Crucial for Growth!

If the fintech sector had a mission, it would read something like this: fundamentally improve the antiquated financial services available to small and medium-sized enterprises (SMEs), by using technology that supplants the old-fashioned methods used by brick-and-mortar banks.

This ambitious goal was a response to the shortcomings of the traditional financial services industry that were laid bare during the 2008 global financial crisis. Fintech’s power to disrupt financial services suddenly changed how they are structured, delivered and consumed. This paradigm shift relied on significant investment from banks, insurance and wealth management firms, and non-banking corporates. In 2019, global investment in fintech hit $156 billion – up from $67.1 billion in 2014.

This made it one of the fastest-growing sectors in the global economy – and the future looked bright: In 2018, it was predicted that the sector’s compound annual growth rate (CAGR) would be 25%, meaning $310 billion was expected to be invested globally by 2022.

Why it’s good to invest in fintech

The exponential growth in investment in the fintech sector was driven by the compelling benefits on offer:

Investment for growth

This strategy focuses on increasing an investor’s capital, typically by investing in young or small companies whose earnings are expected to grow at an above-average rate compared to their sector or the overall market. Fintechs fall squarely in this category of investment opportunity, with global fintech revenues, which were about €92 billion in 2018, expected to grow to more than €188 billion by 2024 (a pre-pandemic forecast).

Helping businesses provide customers with enhanced products

Investment in fintech helps drive the democratisation of innovative financial services that streamline previously clunky processes in an industry that has traditionally lacked agility. The resulting financial inclusion – such as digital lending platforms that allow SMEs to apply for finance in a few minutes – closes the lending gap that traditional financial institutions don’t have the appetite for.

Market conditions

The cyclical nature of the credit cycle means there are recurring phases of expansion and contraction in access to credit. It’s been shown that banks are typically slower to respond to a loosening of credit in the market. Fintechs offer investors the chance to gain access to an agile participant in the market, with the potential to pick up the slack where banks are failing to deliver the financial services needed by SMEs.

Innovative tech

The reason that fintechs can offer a superior customer experience compared to traditional finance institutions is their streamlined operations and smart use of technology. It’s for this reason the fintech industry sees a lot of strategic investment from legacy institutions. Investing in fintech gives strategic investors access to potentially significant value-added operational and technical insight, which they can apply to their own organisations. It’s this area of strategic investment that has the potential to be resilient through all market conditions.

The current fintech investment landscape

The fintech investment landscape – both debt and equity – has become littered with roadblocks since the COVID-19 pandemic blindsided the business world in March 2020, obstructing its steep growth trajectory. The pandemic – which triggered another recession – prompted the sector’s largest market capitalisation loss, with global fintech investment dropping to $105 billion in 2020. While this represented the third highest annual total in the sector ever, it marked a significant decline from the previous year.

The pandemic has also moved fintech up the regulatory agenda, with financial regulators implementing sector-wide and fintech-specific measures to mitigate pandemic-fuelled risks – particularly concerning cybersecurity and operational risks. While these regulations also aim to harness opportunities, their power to mitigate risk has prompted concern among investors that they could stifle innovation. Added regulatory scrutiny is being driven by the importance that fintechs now hold within national economies – UK fintechs were amongst the largest distributors of CBILS / BBLS loans throughout the pandemic.

Another global seismic event has reset investors’ mindsets when deciding which organisations to back: Russia’s invasion of Ukraine. According to a poll of over 2,000 visitors to investment platform interactive investor, more than half of investors are conscious of how their money is invested in the wake of the invasion in February 2022. This determination to prevent themselves from unwittingly helping to fund the Russian regime also led almost half of respondents to say they were considering investments that align with their moral values amid the conflict.

The conflict and other forces, such as the pandemic, changing market conditions and soaring interest rates, are causing investors to tweak their risk profile. According to the poll, 55% of respondents said they are making changes to their profile:

  • 25% are upping their stock market exposure.
  • 13% are reducing their stock market exposure.
  • 17% are reallocating money to more defensive sectors.

Reallocations of assets through investor nervousness very rarely benefit growth industries such as fintech.

Meanwhile, fintechs in the lending space are feeling the heat of soaring interest rates as central banks attempt to cool red-hot inflation. The ripple effect of rising borrowing costs is forcing lenders to increase their rates to counter them. Arguably fintechs are more sensitive to rises in borrowing costs than their traditional peers, so there remains questions about their ability to continue to serve the ‘underbanked’ with the financial services they need in an inflationary environment.

A combination of runaway inflation, rising interest rates, and slowing economies in the UK and the US have also stoked worries that both nations could slip into recession this year. This would pressure fintechs to fill the lending gap as this vital service continues to shift away from traditional banks.

These challenging conditions have dealt a chastening blow to the lending industry. Compared to other fintechs – particularly the payments industry, which continues to receive significant levels of investment – lending has suffered from declining valuation multiples. Consequently, as the playing field becomes increasingly uneven, venture capitalists lack enthusiasm for an industry they once valued, causing investment levels to drop.

Embedded Finance

Embedded finance: Don’t build it! Partner with an expert

Is it easier for acquirers, platforms, or banks to create brand-new embedded finance products rather than partner with established providers? Well, it depends on costs, available resources, and the relevant expertise required to take on such a project.

Embedded finance is much harder to build from scratch than if you were to partner with an existing, well-established third party. It can be daunting for acquirers, eCommerce companies and SaaS providers to rely on a third-party provider to co-exist within their ecosystem. That said, it does bring lots of great benefits once correctly implemented.

Firstly, using a third-party provider is often faster, more efficient, and more cost-effective than trying to build a solution from scratch. This leads to a quicker, more streamlined launch to market and increased customer satisfaction and retention. This is especially true for transactional products like business finance or insurance. Another great benefit is that trust between the customer and the partner has already been established through existing relationships, so adding new products to your portfolio through partnerships with companies like Liberis means that extra revenue can be generated quickly without the additional costs that would be inflicted on the acquirer, bank or eCommerce platform building the platform from the ground up.

Secondly, providing third-party access to customer data helps the business finance provider tailor the products they can offer to a business, making it relevant to its needs at the right time. With a rich amount of data available, it allows them to target much better and pre-approve businesses for finance, meaning instant decisions, ‘few click’ applications and certainty of funding for the end customer.

Risk and reward: Making the partnership work for each partner

Liberis was one of the first major players in the embedded business finance market, at the forefront of innovation. We’ve learned a lot since our first partnership launch in 2016. While tiny gremlins can always emerge, just like with any other integrated tech platform, swift identification and resolution is essential for the embedded finance provider and their partner.

The bigger risk is a lack of alignment and long-term goals, as well as incorporating a clunky customer journey that can lead to a negative customer experience. Through our dozens of partnerships, best-in-class tech, and ability to work with regulated banks and digital leaders like Klarna, we have built up an enormous amount of experience to ensure minimal issues.

In relation to responsibility for errors, a good services contract with industry-standard SLAs will cover most scenarios, just like all other partnerships. With the right tech platform, best-in-class team, and excellent communication with your partner, risks can be significantly reduced if not eliminated entirely.

Now for the marketing! If you were to try and build a product in-house, you would miss out on the benefits of partnering with an all-inclusive proposition that companies like Liberis can provide. We work with you to create the marketing campaigns, taking on all the necessary legwork giving your teams more time to look after other marketing initiatives. If a platform or acquirer were to build a solution from scratch, they would also need to take on the responsibility of generating the revenue themselves.

What to look for in an embedded finance partner

When entering any new partnership, each company should be aligned in their business, financial, and customer goals. Strong partnerships also need to align on how to treat their end customers, so partnerships tend to be stronger where internal company cultures and processes are similar.

The partner you choose to work with should complement the skills that the other would find difficult to source or embed into their own business. Working with a leading embedded finance provider allows the partner to offer an extra service to their customers along with outsourced expertise they may not necessarily have in-house. This can lead to increased customer acquisition and lifetime value without the need for increased costs associated with building a solution from scratch.

Lastly, another key attribute when choosing the right partner is ensuring that both businesses are transparent in their business dealings.

To sum it up, the chart below says it all…

Graphical user interface, application, Teams Description automatically generated

Interested in partnering?

If you are interested in helping your customers access the finance they need to grow, get in touch with the team to discuss our partnership opportunities. 

Get in Touch

Embedded Finance

Embedded finance as a way to increase customer loyalty

Many companies are looking for ways to increase revenue and customer loyalty simultaneously by dipping into embedded finance options. And while most companies recognize the need, selecting the right products to offer is the tricky part.

Bridging the gap between brands & finance

Retail embedded finance includes lending, insurance, digital wallets, integrated payments, and debit cards. Many companies have already integrated embedded finance, such as Walmart, Klarna and Costco with their closed-loop credit cards that function like bank-issued cards; but this is just the tip of the iceberg, as they are still using physical cards.

With embedded financial services, companies can offer financial services throughout the digital customer experience and prevent customers from navigating away from their website to complete a transaction.

Various embedded finance products 

Examples of embedded finance products that companies can launch include the following:

With more customer data and better financial relationships with your customers, companies can use embedded finance to acquire, retain, and increase customer lifetime value while generating revenue in new ways.

Embedded finance and customer loyalty

Embedded finance is also ideal for loyalty programs and increasing customer loyalty. Plastic loyalty cards are too easily lost or forgotten; digital loyalty programs embedded directly allows customers to make use of rewards instantly. Push notifications can be used to engage customers with further offers, rewards, and new products.

Loyalty programs also incentive further purchases and help generate additional revenue streams via the interchange fee earned with every card tap.

Finally, embedded finance helps a company improve overall customer stickiness; once they find a seamless, user-friendly experience, customers are more likely to be loyal to that brand.