Posted: August 24, 2022 By Kieran Darmody

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

In our latest blog, we discuss the pros and cons of partnering with an embedded finance platform provider rather than building an entire solution from scratch.

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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…

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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. 

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