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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.

Read more January 27th, 2023

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.

Read more January 27th, 2023

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.

Read more January 27th, 2023

Embedded Deposits

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

Read more January 27th, 2023

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.

Read more January 27th, 2023

Lemon Tree Deli Owner, Trish, Shares her Experiences as a Female Founder

We spoke to Trish, owner of Lemon Tree Deli, about her journey starting her own business and the importance of listening to your gut, being persistent, and believing in your business. She also talks about alternative funding options for entrepreneurs who face challenges with traditional banks.

Read more January 27th, 2023

A Day in the Life of a Customer Operations Executive with Dillon Green

Dillon Green, Customer Operations Executive at Liberis shares what a 'day in the life' looks like.

Read more January 27th, 2023

The Role of AI in Detecting and Preventing Financial Fraud in Embedded Finance

This blog dives into how AI is used in real-world cases to detect and prevent fraudulent activities in real time. It also sheds light on the challenges of using AI for fraud detection and prevention and provides best practices for implementing AI systems in embedded finance.

Read more January 27th, 2023

Smart Cellular Owner, Yasmin Shares her Experiences as a Female Founder

Yasmin founded Smart Cellular, an online refurbished mobile company that started in 2014. She spoke to Liberis about her experience as a female business owner working in a typically male-dominated industry and her funding journey.

Read more January 27th, 2023

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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.

Posted January 27th, 2023
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

Check out our 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.

Get in Touch

If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
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

Check out our blog on 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.

Get in Touch

If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
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

Check out our blog on embedded lending (our speciality) and how it has changed how businesses and consumers can obtain more flexible finance options that traditional banks and lenders have been unable to provide.

Get in Touch

If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
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

Take a look at our blog on embedded deposits, where we discuss how they have become a central offering of non-bank financial services companies to meet the demands of their customers.

Get in Touch

If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
Embedded Finance

Understanding the Role of Explainable AI in Embedded Finance Compliance 

What do you get when you integrate third-party banking-like services into a non-financial customer journey at the point of need? This might sound like the opening line to a corny joke but the answer is no laughing matter: embedded finance. By removing friction from the consumer experience, and creating growth opportunities, competitive advantage, and operational efficiencies, it presents a significant opportunity to fintech providers and non-financial companies – but a challenge inherent to financial services remains: regulatory compliance. 

Businesses that embrace embedded finance must be empowered to strike a balance between delivering a seamless customer journey and achieving regulatory compliance – fail and they will be exposed to financial penalties and reputational damage.  

Rather than allowing regulatory compliance to slip through the cracks during integrations, embedded finance providers are leveraging explainable artificial intelligence (XAI) to manage this vital requirement – innovation that enhances the delivery of frictionless financial services. 

What is XAI?

AI empowers financial service providers to harness the large volumes of data generated in financial transactions – and the benefits are compelling: identify patterns, make predictions, create rules, automate processes, communicate more efficiently, obtain a holistic view of the customer, and provide timely support. But there’s an inherent problem that presents ethical and regulatory challenges: the developers who build AI decisioning models can’t always explain how it arrives at the outcomes or which factors had the biggest influence.  

The emerging field of XAI is providing embedded finance providers with a platform to overcome issues of transparency and trust by lifting the veil on opaque AI models. This set of processes and methods makes AI models more explainable, intuitive, and understandable to human users without sacrificing performance or prediction accuracy. 

XAI in the context of embedded finance compliance

XAI augments AI’s innate ability to process large volumes of data expeditiously with transparency. This allows it to cut through the regulatory noise and provide information that can be trusted to maintain compliance. 

A single embedded finance regulatory framework does not currently exist, amplifying the need for clarity from a compliance perspective. While the regulatory policymaking process is moving at a glacial pace compared to the exponential growth of embedded finance technology, specific rules and regulations are emerging and more will follow. For example, the recent updates to Buy-Now-Pay-Later (BNPL) regulations in the UK now require providers to perform credit checks. 

XAI automatically horizon scans the regulatory landscape for new rules and regulations – or tweaks to existing ones – updates stakeholders and produces performance data that underpins preventive action if processes shift towards non-compliance. Crucially, there is no ambiguity around the steps taken to reach its conclusions. 

For example, businesses that embed responsible lending services into digital journeys can leverage XAI to reassure customers that they are acting in their best interests – from ensuring affordability and providing transparency of terms and conditions to supporting them if they experience repayment difficulties. 

Challenges of implementing XAI in embedded finance

Yes, XAI is a robust, descriptive tool that offers in-depth insights in comparison to opaque AI models – but it has its own sets of challenges: 

  • Bias: AI systems are only as good as the data they are trained on. Biased data typically leads to prejudice in automated outcomes that can lead to discrimination and unfair treatment. 
  • Fairness: Its perception of fairness in terms of the decisions it takes is contextual and depends on the information fed to the machine learning algorithms. 
  • Cost: Implementing XAI-based systems can be expensive, particularly for small and medium-sized businesses that may not have the resources to invest in such technology. 
  • Data privacy and security: Its ability to collect and process large amounts of data exposes it to privacy concerns. The data may contain personal information which, if not handled properly, can lead to breaches, identity theft, or fraud. 

Use cases of XAI in embedded finance compliance

XAI is helping to power the exponential growth of embedded finance: valued at $54.3 billion in 2022, it is forecast to reach $248.4 billion by 2032. A determination among embedded finance providers to take responsibility for the management of regulatory compliance using XAI – notably fraud, money laundering, and risk – is adding a layer of transparency and trust that’s enhancing its appeal: 

  • Fraud: Explanations of how or why the AI algorithm arrived at a particular conclusion in the fraud detection process can help investigators pinpoint the source and type of fraud. 
  • Money laundering: XAI is being used to replace legacy rule-based anti-money laundering models with intelligent algorithms and self-learning solutions that uncover suspicious transactions and patterns. 
  • Risk: Explainability scores provide clarity during the risk assessment process based on characteristics like the complexity of the dataset on which the model was trained. 

Best practices for XAI in embedded finance

The process of implementing XAI functionality into an embedded finance solution in an integrated and synchronised manner is sometimes mismanaged, leading to crippling pain points – from misaligned objectives and requirements to a lack of scalability. 

Embedded finance providers that adopt a logical step-by-step approach to the implementation process harness the power of XAI to streamline the management of regulatory obligations: 

  • Business and data understanding: Define the business objectives and translate them to XAI-related goals, collect and verify the data quality, and assess the project feasibility. 
  • Data preparation: Produce a dataset for the subsequent modelling phase. 
  • Modelling: Craft one or multiple models that satisfy the constraints and requirements. 
  • Model evaluation: The performance of the trained model should be validated against a test set. 
  • Model deployment: This phase is characterised by its practical use in the designated field of application. 
  • Model monitoring and maintenance: XAI models are typically used over a long period and their lifecycle must be managed. Failure to maintain the model can cause the degradation of performance over time, leading to false outcomes. 

The future of XAI in embedded finance

Predicated on the need to build trust in AI models, the global XAI market size is estimated to grow from $3.5 billion in 2020 to $21 billion by 2030 – acting as a strategic differentiator for those that embrace it.  

According to the 2022 IBM Institute for Business Value study on AI Ethics in Action, 79% of CEOs are prepared to embed AI ethics into their AI practices, up from 20% in 2018. More than 67% of respondents who value AI ethics indicated that their organisations outperform competitors in sustainability, social responsibility, and diversity and inclusion. 

Viewed through the lens of embedded finance compliance, XAI will not only continue to build trust in AI-based solutions; its ability to flag errors will drive improvements in compliance processes.  

Against a backdrop of regulatory development in the embedded finance space, there is also scope for fintech providers to establish industry best practices – with XAI at their core – that can help define future data and privacy policies – levelling the playing field for nonbank companies to provide financial services.  

XAI: building trust in embedded finance compliance

There’s no questioning the benefits of AI when it comes to conducting real-time analysis of vast datasets – but there’s a stigma attached that it’s found hard to shake: its proliferation as a tool to increase efficiency, save money, and inform decision-making has raised questions about the trustworthiness of the outcomes it produces.  

While XAI is not a silver bullet, it is ensuring AI can be better understood by making algorithms and their application less enigmatic. Consequently, humans are inclined to trust the AI model because the characteristics and rationale of the AI output have been explained. 

Forward-thinking businesses that embrace embedded finance are benefitting from XAI functionality that’s building trust in compliance management – elevating the integrity of these organisations. 

Get in Touch

If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
Embedded Finance

The Future of AI-Powered Personalisation in Embedded Finance

Embedded finance – the seamless integration of banking-like services into non-financial ecosystems and environments – is empowering businesses to take ownership of their access to financial services. No longer fettered by the monopoly banks once held, they are demanding bespoke experiences beyond physical branches and points of sale – a trend that has been stoked by the emergence of FinTechs.  

These subversive providers are disrupting the way businesses view financial services: they don’t want to be treated like a commodity by legacy providers that offer generic products and services; they want their interactions with loans, accounts, and payments to mirror the highly personal and frictionless experiences they enjoy elsewhere online. 

This need to develop a deep understanding of each customer’s requirements and orchestrate a set of tailored digital experiences is being powered by AI. 

The role of AI in delivering personalised experiences in embedded finance

Businesses are more likely to buy from a brand when they are acknowledged, remembered, or get relevant recommendations – which requires data to be successful. The more information that can be aggregated and analysed about a business, the easier it is to deliver personalised services that are relevant to their specific needs and preferences.  

Embedded finance looks beyond conventional data sources based on demographics and age by leveraging AI-powered personalisation. This is changing the ways brands interact with customers by conducting real-time analysis of vast datasets – such as transaction history, page clicks, social interactions, past purchases, and location – and recommending products and services based on their browsing/buying preferences.  

This insight allows brands that embrace embedded finance to enhance the customer journey by anticipating their expectations and giving them what they want at the right time, through the right channels – from tailored financial advice to contextualised loans. 

Impact of AI-powered personalisation on embedded finance

AI is a driving force behind the exponential growth of embedded finance: valued at $54.3 billion in 2022, it is forecast to reach $248.4 billion by 2032. This growth is being fuelled by an expectation among businesses for embedded finance to enhance customer engagement, satisfaction, and loyalty through AI-powered personalisation. 

By augmenting embedded finance with AI, this conduit for frictionless financial services becomes a truly customer-centric offering. Its ability to segment product offerings by market audience and distribute them as part of an integrated, personalised omnichannel experience taps into the modern consumer’s requirements: 81% of consumers want brands to get to know them and understand when to approach them and when not to.  

Challenges of implementing AI-driven personalisation

Embedded finance providers know a thing or two about integrating technology – which is handy because the process of implementing AI-powered personalisation into their systems presents challenges: 

  • Data privacy and security: The need to create a more personalised experience for customers requires access to large amounts of personal data – exposing businesses to increasingly stringent regulations. Failure to balance the need for customer data with the need to protect user privacy can lead to hefty fines and reputational damage. 
  • The Data Protection Act 2018: The UK’s implementation of the GDPR requires everyone responsible for using personal data to follow strict rules called ‘data protection principles’. They must ensure the information is: used fairly, lawfully, and transparently.  
  • Ethics: Due to the opaque nature of the algorithms that power AI, it can unintentionally operate in unethical ways to meet its targets – potentially damaging brand reputation and leading to legal issues. 

Best practices for implementing AI-driven personalisation into embedded finance

Before AI can do the heavy lifting on the data and personalise the customer journey, it needs to be seamlessly integrated into the embedded finance experience.  

Every AI implementation is unique: diverse data sets with different variables, challenges with existing software or hardware and unique expectations and goals. To get this right, several key factors should be considered, including: 

  • Realistic goals: Stakeholders should outline the basic steps required to create a viable personalisation offering, rather than redesigning the entire workflow. This incremental approach allows teams to start small and build, and for early successes to fuel future projects. 
  • Secure: AI-powered personalisation is underpinned by data, so it must comply with relevant security and privacy regulations.  
  • Scalable: Data models, infrastructures, and algorithms must be agile enough to increase or decrease their complexity, speed, or size at scale depending on the business’s dynamic requirements. 
  • Automated updates: The built models and applications must be kept up to date – which can be time-consuming and expensive if conducted manually. Automated updates ensure high performance is maintained automatically. 

The need for automated updates underscores the importance of continuous improvement and innovation in AI-powered personalisation. AI is inherently adaptable, allowing it to create user experiences that are increasingly natural and engaging by constantly learning and adjusting. 

The future of AI-powered personalisation in embedded finance

A current AI trend that will enhance the personalisation process is the development of ethical and explainable models. AI requires data to learn – and often this means sensitive personal data. If businesses don’t trust AI or understand how it makes decisions, they won’t feel safe handing over their personal information – making it rudderless.  

Transparent AI systems are being developed that can explain how decisions are made and what information was used to arrive at them. Advancements in AI ethics are allowing organisations to eliminate bias from their automated decision-making processes. Biased data typically leads to prejudice in automated outcomes that can lead to discrimination and unfair treatment – which is unacceptable in a world where AI is ubiquitous in digital decision-making processes. 

Amid this appetite for innovation, the global personalisation software market is expected to grow from $620 million in 2020 to $2.2 billion by the end of 2026. 

Embedded finance and AI: a perfect marriage

Once a binary process that was limited to product quality and price, competitive differentiation has evolved into a customer-centric pursuit thanks to the augmentation of embedded finance with AI.  

AI-powered personalisation compliments the core aim of embedded finance – to enhance the customer journey by providing instant experiences at the right time and place – by adding a vital layer to this modus operandi through the expedition of data aggregation and analysis: it provides the insight needed to ensure these experiences align with the businesses needs and preferences. 

By enhancing embedded finance’s ability to attract, convert, and retain digital consumers, AI-powered personalisation has reinforced the sustainability of this forward-thinking approach to accessing financial services.  

Get in Touch

If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
Embedded Finance

The 4-click Journey: Streamlining Embedded Finance with AI

Small businesses have every right to expect lending to be instant and transparent – just like every other service that has been disrupted by the digitalisation. Unfortunately, traditional lending products are failing to meet their expectations – and legacy providers only have themselves to blame. Their reluctance to respond to the demand for frictionless lending is no longer acceptable in today’s internet-enabled world.  

Traditional lending: embedded finance to the rescue

According to our 2022 survey commissioned with YouGov, 59% of SMEs would consider using their main bank when seeking funding. What they don’t realise is these legacy lenders provide clunky services that rely on outdated infrastructure and laborious manual processes. Amid a blizzard of paperwork, disjointed systems and frustrating phone calls, the lending application and assessment processes remain infuriatingly ponderous. Even if a loan is eventually authorised, it might be too late for an SME that has a time-critical need for finance. 

The tide isn’t just turning in the lending space; it’s being flooded by a new breed of alternative lending platforms that are riding the embedded finance wave – and challenging traditional lending models in the process. There’s virtually no part of the modern finance ecosystem that hasn’t been enriched by this seamless integration of financial services into non-financial ecosystems and environments. 

Embedded finance

Embedded finance – a subset of this new distributed approach to delivering financial services – has gained traction amid an avalanche of demand for a frictionless, digital-first borrowing experience. What began as helpful assistance for partners when managing the technology element of the lending process has evolved into a lucrative market: revenue generated by the embedded lending market totalled $4.7 billion in 2021 and is expected to reach $32.5 billion by 2032.  

Its ability to add value to the customer journey by providing seamless access to finance isn’t a linear attribute. It possesses the agility to create bespoke lending experiences for different customer groups that match their unique requirements. Take companies like Sezzle and Klarna, for example, who have partnered with Liberis to embed our platform into their offering as a value-added service for their business customers – enhancing loyalty and increasing revenue.  

Augmenting embedded finance with AI

This ability to mould the lending experience around the merchant’s business model is being elevated by artificial intelligence (AI). Embedded lending providers are leveraging AI to conduct real-time analysis of broad and diverse customer data sets and present their findings transparently and expeditiously. Empowered by the results, they can personalise the lending journey by learning from previous experiences. 

AI’s innate ability to foster a detailed understanding of the customer’s needs and preferences has changed the way we think about user experiences. Algorithms process data rapidly before applying changes to optimise the findings. By continually learning and adjusting, they improve the user experience to offer a more engaging, customised experience that matches current trends and behaviours. 

AI also has the power to facilitate instant and transparent decision-making processes, enhancing the user experience by addressing the applicant’s fear of rejection early in the process or right at the start in the case of pre-approval – according to our survey, 15% of SMEs say rejection is one of their biggest funding concerns. This peace of mind allows SMEs – for which restricted cash flow can be an existential threat – to start planning immediately. 

The 4-click journey

Embedded lending – augmented by AI – creates a symbiotic relationship between the innovative lenders who deliver it and the brands that embrace it: innovative lenders are ‘inserted’ into the moment the customer identifies a funding requirement or even before they identify their requirement, and brands benefit from a competitive advantage by elevating their offering. 

For this to play out, SMEs must be provided with a seamless lending experience that unlocks access to funds quickly and cost-effectively. Aware of our impatience online, through its machine learning capabilities, AI can expedite the lending process by enabling a 4-click journey that has convenience, transparency, and personalisation at its core. 

This frictionless process stimulates the point of need access to capital that SMEs demand, improving their cashflow management; while the partners that embed lending into their ecosystem improve brand loyalty and increase revenue through an improved user experience. 

The future of AI in the user experience

No longer shrouded in mystery AI is now part of our everyday lives, even if we don’t realise it – but we’ve only scratched the surface of its potential to improve the lending journey by expediting decisions and addressing rejection anxiety. The dynamic nature of AI – which is constantly learning and adjusting – instils it with the adaptability needed to create user experiences that are increasingly intuitive, natural, and engaging.  

Posted January 27th, 2023
Life at Liberis

Life at Liberis with Vino Vamadevan

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

My name is Vino Vamadevan and I’m the Director of Compliance.

What makes you proud to work here?

I have always thought a great place to work centres around the people, and this comes in 3 key areas – my colleagues, our customers, and our partners! I have great interactions with my colleagues and we try and collaboratively fix common problems – from top to bottom, regardless of seniority, job titles etc. there are no egos! Our customers are another important aspect of this, having the ability to help through business finance to support their needs whether that that means resolving cashflow problems, recruiting staff, or expanding; from a compliance perspective, that means truly putting customers at the heart of everything we do. The final piece of the puzzle is our partners and working together to realise our common goal of providing businesses with access to finance.

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

I have several good memories from the last 2 years – It ranges from setting up the compliance team, looking at different ways we can support customers, making sure we are monitoring our key controls. However, for me a standout memory has been the awareness and educational pieces of work – whether it’s Treating Customer Fairly Week – which included quizzes, prizes, and cakes (cakes from our TCF themed Liberis Bake Off) or the FinCrime Week which included the infamous FinCrime Rap including members of legal and compliance team. This was a standout achievement because it’s crucial to make key regulatory matters engaging but also add a bit fun.  Compliance doesn’t have to be boring!

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

I love the fact we are operating across multiple jurisdictions – UK, EU and US. As someone working in compliance this helps me develop regulatory understanding and nuances across these regions. I have also developed how we respond to business stakeholders and holding the compliance team accountable to strict deadlines.

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

As a business, Liberis has a great opportunity to scale the business on a couple of fronts which is both interesting and different to the other financial services businesses that I have worked at. Firstly, we have great opportunity to work with great partners and support their merchants with access to business finance. Secondly, there’s a great opportunity to work in different markets and develop regional differences and approaches.

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

To continue enabling SMEs to access much needed finance to grow and make our embedded finance solution available to more SMEs both in existing regions and expanding into new geographies. Working in compliance, I look forward to making sure we have the right compliance strategy and framework to help achieve this to make sure our customers get good outcomes – that’s through onboarding and in life management.

Posted January 27th, 2023
Life at Liberis

A Day in the Life of a Senior Product Manager with James Huber

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

My name is James Huber and I’m a senior product manager for our Funding team. The Funding team makes sure Liberis can get the money to our customers so they can grow, then makes sure that our customers pay us back.

I moved to London recently from the San Francisco Bay Area and started at Liberis in November 2022, so I work from the London HQ.

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

A combination of the mission of helping small businesses and working with great people. It’s way easier for big companies or sexy startups to get funding, but it’s surprisingly hard for the mom-and-pop stores that are core to our communities, so I am motivated to help them out.

I’m also motivated by the people I work with. Being forcibly separated from my coworkers during COVID showed me that feeling connected to them is key to me feeling excited about work, so I’m grateful for the opportunity to get together in person again.

Describe a typical day for you in your role.

When I first get in, I’ll review key metrics for our business: how many merchants we’ve financed that day / week and our revenue from that. I’ll also do a little reading on the FinTech industry. Some Slack and email, then hop on a standup meeting with my Funding scrum team. There will usually be a meeting with the scrum team where we’ll be sharing out a Funding-related problem we want to solve for our merchants and digging into how we’ll tackle it.

I love catching up with people by the coffee machine and will grab a group to eat lunch together – we have an open plan kitchen area that’s great for bumping into people.

A big part of my role is understanding the biggest pain points for our team to focus on and the broader strategy, so I also work closely with our Customer Operations, Business Operations, and Partnership Manager team, as well as the other product managers.

A couple highlights recently were when our entire Partnership Manager team did a deep dive share-out on how their accounts were doing – it was a great learning opportunity to hear what’s working for our customers and not working. We also had the CEO for a new partner come in and talk with us about how excited he is to work with us and how it will benefit small businesses. We had drinks after both sessions, which was a fun way to casually debrief and chill afterward. 😊

Hiring and culture are important to me, so I also help with interviews. I also enjoy demoing the awesome work our team has been doing!

(Obviously, I’m not doing all those things daily, but just wanted to give a sense of what I’m up to)

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

It’s a small and friendly company, so meet as many people from as many departments as you can. Learn about the financing challenges that small business face and the FinTech industry. Get some small wins early on that matter to the business and make sure you share out those wins!

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

I’m in the London office Monday – Thursday and work from home on Fridays. A big selling point for me was that Liberis did my final round interview onsite instead of over Zoom / Teams. I thrive in an in-person culture and want to be around my coworkers in-person, so it made a good impression on me seeing such a lively office culture.

Obviously feeling more excited and connected by physically being around your coworkers is a pro, but I’ll also add that because most of the executive and senior leadership team are in-person in the London office, you’ll get lots of opportunities to chat with them and it’s easier for them to see your work. For example, I’ve grabbed lunch with our CEO, CPO, and COO a bunch just by virtue of being in the office.

The cons are that it can be a bit noisy in the office and challenging to make sure we’re providing just as good of an experience for remote contract workers.

Posted January 27th, 2023
Embedded Finance

Embedded Finance and XAI: Credit Decisioning with Clarity

Consumers are obsessed with their credit scores. Some who have achieved the holy grail of a score above 800 have even been known to boast about it on their dating profiles. For businesses, which are scored in a range from 0 to 100, anything above 80 indicates good financial health and creditworthiness. But should they obsess about them – and boast about them on their LinkedIn profile?

The ‘credit bureau blind spot’ suggests they’re not as reliable as everyone thinks. This phenomenon refers to the inability of loan providers to accurately assess creditworthiness using legacy credit decisioning models that underpin their lending processes. Encumbered by narrow credit reports that overlook the applicant’s future financial position, instead relying on payment history and outstanding debt, these providers are unable to gain a holistic view of their financial position.

A lack of competition among credit bureaus also means that lenders typically make decisions based on the same information, restricting differentiation. This can make it difficult for businesses with a poor credit score to receive funding approval or do anything to improve their score.

Against this opaque backdrop, businesses are demanding instant access to real-time data that facilitates informed decision-making. Advances in artificial intelligence (AI) are generating opportunities for lenders to develop transparent credit decisioning models that mitigate the risk of rejecting creditworthy applicants and approving those whose finances might deteriorate.

Explainable AI to the rescue

The use of AI in finance is growing rapidly, with applications in areas such as risk management, fraud detection, and algorithmic trading – prompting the adoption of explainable AI (XAI) tools: a set of processes and methods that make AI models more explainable, intuitive, and understandable to human users without sacrificing performance or prediction accuracy.

Credit decisioning is also being elevated by this advanced technology, which is having a proven impact on credit-approval times and percentages. XAI-driven decisioning streamlines lending journeys by conducting real-time analysis of customer data to expedite credit decisions for retailers, small and medium-sized enterprises (SMEs), and corporate clients. This is achieved by aggregating structured and unstructured data from traditional sources (such as bank transaction history, credit reports, and tax returns) and overlooked sources (such as location data, telecom usage data, and utility bills).

By leveraging XAI to analyse these broad and diverse data sets, businesses can qualify new customers for credit services and determine loan limits and pricing expeditiously – and the benefits are compelling:

  • Increase in revenue through higher acceptance rates, lower cost of acquisition, and better customer experience.
  • Reduction in credit-loss rates by more precisely determining customers’ likelihood to default.
  • Efficiency gains through highly automated data extraction and case prioritisation.
  • Enhanced fraud management by replacing manual processes with automated detection and prevention tools.
  • Improved customer experience by addressing applicants’ fear of rejection early in the funding journey and by providing instant and transparent decision-making processes.
  • Reduces compliance risk by powering faster and more secure transactions, expediting informed decisions, and automating regulatory change management.

XAI and embedded finance

XAI is underpinning one of the hottest trends in the world of finance today: embedded finance. This seamless integration of financial services into non-financial ecosystems and environments is expected to grow at breakneck speed over the next decade: valued at $54.3 billion in 2022, it is forecast to reach $248.4 billion by 2032. This growth is being driven by an expectation among businesses for embedded finance providers to leverage XAI risk models and continuously invest in new ways to learn from traditionally overlooked sources.

Credit decisioning is a fulcrum of embedded lending: a subset of this new distributed approach to providing financial services that eliminates the need to rely on high-cost third parties – typically a financial institution – within the lending process. By integrating XAI-driven decisioning tools into this digital-first lending experience, it becomes a truly frictionless value-added service.

This is empowering nonfinancial businesses that embed lending functionality into their customer journey to make informed financial decisions directly within the context of their core non-financial applications or products. 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 instantaneously – with 70% of businesses receiving their funding in less than 48 hours.

Credit bureaus typically focus almost exclusively on negatives – such as missed payments and prior defaults – meaning businesses don’t get rewarded for good financial behaviour. By leveraging XAI to factor in other data sources – such as revenues – and developing a more holistic view of a business, Liberis can apply a more positive mindset to our decisioning with a bias towards approving where possible.

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 to between $50 billion and $75 billion by 2026. XAI is fuelling this exponential growth by allowing lenders to augment historic credit data with forward-looking insights into an applicant’s suitability to repay a debt obligation in the future – and present their findings transparently and expeditiously.

The future of XAI in credit decisioning

XAI is playing a vital role in helping more SMEs gain access to the credit they deserve so they can live their best financial lives – and it’s only just getting started. By its very nature, XAI is constantly developing. This dynamism will continue to enrich credit decisioning processes through advancements in open bank connectivity for access to richer data, and by harnessing counterintuitive data that challenges the status quo.

Posted January 27th, 2023
Life at Liberis

A Day in the Life of a Business Development Manager with Chingy Yuen

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

Hi, I’m Chingy, and I work in the Global Business Development team and am based in London. My focus is global Partner acquisition – in a nutshell identifying and onboarding new Partners from acquirers to marketplaces and everything in between! 

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

Liberis serves to support small businesses, which holds a dear place in my heart. My late father had several small businesses, so I have first-hand experience. I take great pride in knowing my contribution works towards assisting small businesses to thrive.  

On a different note, I am very much a people person. I look forward to meeting new partners, building and deepening relationships, and adding value by tailoring solutions to their needs. I also enjoy catching up with colleagues – everyone at Liberis is super friendly, and we have a comprehensive snack table, where I often find myself! 😜

Live life! Love Liberis! 

Describe a typical day for you in your role.  

I love the variety and autonomy I have – no day is the same. External tasks vary from attending trade shows, presenting our embedded journey to completing RFIs. Internal activities include collaborating with cross-functional departments within Liberis, such as Legal, Partnerships and Compliance, to ensure a smooth handover once Partners are onboarded.  

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

  1. Be curious – there is so much to learn, and everyone is always willing to share. No question is a silly question!  
  2. Be strategic – Understand your deliverables, key stakeholders, opportunities and challenges. I find it helpful to be clear about my goals and plan backwards. 
  3. Be proactive – Prioritise, take action/ ownership and share ideas. 

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

Hybrid- I work three days from the office and two remotely. Apart from the great fun, being in the office helps to drive results through collaboration. Nothing beats getting around a whiteboard to brainstorm ideas or being able to walk up to colleagues for a quick catch-up. On the other hand, working from home allows me to have flexibility and enjoy simple pleasures such as the school run with my niece and nephew! 

Posted January 27th, 2023
Life at Liberis

Life at Liberis with Ollie Bambrick

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

My name is Ollie Bambrick, and I’m a Senior Business Strategy Manager.

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

I’ve been at Liberis since June 2022 and initially joined the Global Operations team. My first impressions were that Liberis was a dynamic, fast-moving, and exciting company that had weathered the COVID-era and had come out with a hunger to fulfil big plans. On a social level – it was full of driven and talented people who liked to solve complex tasks with a smile.

What makes you proud to work here?

Lots of reasons – the people, the culture, and the desire to do good on a global scale. I’m proud that I work in a company that enables Small-Medium Enterprises to get quick access to capital that they require to expand or excel. I’m also proud of the transparency and integrity of the product that we offer our customers – I love explaining it to anyone who will listen.

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

I have a few stand-out memories, both professionally and personally:

  1. Managing an extremely talented group of Liberites in a Data-Migration across Salesforce platforms. This was an enormous piece of work that everyone in the company had a part to play in. It truly showed that teamwork and commitment, coupled with extremely capable employees, would succeed in the end.
  2. I have since moved from Global Operations and have been empowered to develop functional strategies to achieve our deliberately ambitious 2023 goal! It’s great to be in a position to have an impact on the success of Liberis.
  3. Socially 😉 – the Summer and Winter parties have been great – the whole of Liberis gets together at great venues where it’s good to meet people face-to-face and have a laugh in an informal setting.

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

Personally, I am not technical – but I have learnt a lot about leading teams who are. These are the people who can achieve things that I didn’t know existed before this role. I’ve thoroughly enjoyed learning from them by osmosis and can now (at least think I can) contribute to problem-solving and workshops. Through listening and working with these extremely clever Liberites, this has enabled me to develop my working knowledge of Technology, Data, Partnerships and Payments.

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

My previous role was as a Consultant within Big Banks – Liberis is completely different. I am valued for my inputs and ideas which have tangible impacts on Company direction. I am well and truly part of the team. Our brand-new office space is exceptional too and brings out the best in collaborative working. I was also in the Army in a previous life, so there is definitely less camouflage and no shouting.

What makes you stay working here?

My role is fulfilling, and I genuinely enjoy the work I get to do. To me, it’s deeply important to enjoy what I do and feel valued for doing it. The people I get to work with are all invested in the continued success which breeds a culture of improvement – something that is highly desired. It is heartening to see how much we can deliver when everyone gets stuck in and it has to work!

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

We have an ambitious but achievable plan for success on a Global scale. I am exceptionally excited to be part of accomplishing this and am looking forward to how we get there.

Posted January 27th, 2023
Life at Liberis

A Day in the Life of a Financial Planning & Analysis Associate

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

My name is Will Henshaw, and I work in the Finance team as our Financial Planning & Analysis Associate. I work in the London office, based in White City. The FP&A team play a significant role in Liberis’ financial planning and decision-making processes. The main area of responsibility includes financial planning and budgeting, regular financial reporting and guiding financial decisions such as investment opportunities.

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

FP&A has excellent insights into the strategic direction of the business due to its focus on financial planning and budgeting. Day-to-day I look forward to measuring the business against all the strategic goals set and how we have overcome any challenges that may have arisen.

The social and cultural aspect of Liberis is a major standout. Everyone really cares about one another, which makes each day so much easier to learn, deliver and enjoy 😊

Describe a typical day for you in your role

FP&A varies daily and depends on the specific needs and priorities of the business. This variation requires and allows me to enjoy collaborating with cross-functional teams to develop and implement financial plans and strategies. Working with really talented colleagues every day is really exciting.

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

Building great relationships internally with other departments plays a significant role in supporting the overall business. Top tip, just be yourself!

It’s essential to understand the company you work for as much as possible, such as the business model, financial performance and goals. This will help you understand the context when making financial projections and recommendations.

Finally, be proactive and curious in your approach to FP&A; Get stuck in and identify areas where you can add value and develop ideas for improving the company.

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

Office-based 3-4 days a week. We have a brilliant new office where you can soak up the fast-paced and exciting atmosphere.

Posted January 27th, 2023
Revenue Finance

8 Ways to take control of business Cash flow

We know running a business can be challenging; balancing day-to-day operations with growth-driving initiatives can put massive pressure on small business owners. And behind the scenes, but at the heart of all this, is cash flow. 

Ensuring cash flow stays positive is key to the success of your business, and our Business Finance team recommend you have enough funds to cover up to six months of your average cash outflow. 

Easier said than done, right? Here are some best practice tips to help create a steady cash flow to keep your business moving and growing. 

  1. Don’t wait to send invoices. Send an invoice with an automated system such as every time you complete work or sell a product. 
  2. Adjust your inventory as needed. Identify items that aren’t selling well and sell them at a discount. Be sure to keep your best-selling items in stock. Not sure which products are going to become your best seller? Explore what you can learn from your consumers – create a ‘coming soon’ product post on your business’s social media accounts and see which one drives the most engagement.
  3. Lease your equipment instead of buying it. You won’t have to upgrade or try to sell outdated equipment. Equipment leases often qualify for tax credits, which lessen your tax burden. 
  4. Borrow money before you need it. The best time to solve a cash flow problem is before it happens. If your business is running smoothly or is in the beginning stages of production, now is the time to borrow money.
  5. Re-evaluate your business operations to improve efficiency. Monitor, evaluate, and improve your business operations, such as shipping costs, wholesalers, extra employees, allotted overtime, marketing returns, overdue invoices, and rented equipment payments. As the economy changes, so should your business strategy. For example, meet with new vendors to see if they can provide your inventory and supplies at a better price. Even if you don’t change vendors, you can use the information to ask for better pricing with current vendors.
  6. Restructure your payments and collections. If all your bills are due the same week, look to change the date some of your bills are due, so you stagger when you pay your bills. 
  7. Monitor where your money is going. Taking on debt isn’t always a bad thing. If you calculate how much debt you can manage so you’re not overleveraged, borrowing money strategically can be a viable option if you have a repayment plan in place. 
  8. Take advantage of technology. Use apps and software to streamline your business processes and increase efficiency. Although technology can help with any sector of your business, at the very least, use it to create budgets and project cash flow.

Need some extra funds to help balance out your cash flow? Whether you need to pay bills, make payroll, or purchase new equipment, our partners, such as WorldPay, Barclaycard and Tide, in partnership with funding experts Liberis, offer a fast, flexible funding solution for small business owners.

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If you want to learn more about partnering with Liberis, feel free to get in touch.

Posted January 27th, 2023
Financial Inclusion

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

You’d be forgiven for assuming basic human rights have nothing to do with financial services – but you’d be wrong. Article 3 of the United Nations Universal Declaration of Human Rights states that “everyone has the right to life, liberty and the security of person.” Without access to basic financial services, liberty and security are likely to remain perilously out of reach. This ability to access affordable financial products and services that meet individuals’ and businesses needs is known as ‘financial inclusion’. 

Unfortunately, micro-entrepreneurs and small businesses across the world face an all-too-common existential threat: limited access to responsible and sustainable finance. This financial exclusion is caused by several crippling factors – from being underserved by legacy providers to low levels of financial literacy.  

According to the World Trade Organisation, small and medium enterprises (SMEs) make up over 90% of businesses and 60-70% of employment worldwide. Despite the vital role they play in economies globally, many struggle to access the funding they need to first survive and then grow. For example, the annual growth rate of borrowing by UK-based SMEs fell to -5.1% in 2022, a new low. 

This common scenario is symptomatic of traditional banks’ rigid lending frameworks, which reinforce erroneous assumptions that SMEs are too risky to engage with – depriving them of the capital they need to thrive. Conversely, larger businesses are generally seen as less of a risk because they typically have more assets to underwrite loans.  

The banks’ myopic view of SMEs is formulated using antiquated criteria and assumptions that fail to consider the current and – crucially – the future business situation: 

  • 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 funding barriers are exacerbated by the banks’ cumbersome client support infrastructure and convoluted application and assessment processes. Even if a loan is eventually authorised amid these time constraints, it might be too late for an SME that has a time-critical capital requirement.  

Financial literacy – the knowledge and skills needed to make important financial decisions – is typically viewed through the lens of the individual. But small business owners must also sharpen their financial skillset to survive and thrive. As businesses attempt to scale, their financing needs alter. Understanding and navigating the funding options available can be challenging for SMEs who are entering uncharted territory. A lack of knowledge or availability of the most suitable funding options deters them from applying or can be costly if the incorrect product is selected. For example, whether to use loans or equity and whether to borrow for the short or long term. 

The funding mountain is even higher for female entrepreneurs. For example, women in the UK launch businesses with 53% less capital on average than men. Why? According to Credit Suisse, they are less aware of different funding options and less willing to take on debt throughout the business life cycle. Faced with these hurdles, female-led businesses may lack the impetus needed to grow and may be more vulnerable to an economic downturn.  

Why inclusive finance matters for small businesses

It doesn’t matter what stage of their lifecycle they’re at – from starting up to embarking on growth – the lifeblood of any SME is the same: capital. Unlike large businesses, their pockets aren’t deep. This lack of financial reserves brings financial inclusion into sharp focus for SME owners.  

Capital requirements represent a significant barrier to entry for many people planning to start a new business. Obtaining a business loan or other form of start-up funding is often easier said than done. Many businesses ideas fail to get off the ground because it appears too risky for lenders, or the loan applicant has poor credit. Without funding, people who don’t have personal savings to dip into or a ‘Bank of Family’ to assist can’t fulfil their ambitions. 

Once established, SMEs typically require additional funding to achieve financial security and scale the business. This injection of capital can help them manage several vital requirements: short-term cash flow, re-balancing the mix of short-term and long-term debt, replacing expiring finance facilities, or funding the growth of the business. 

Financial access helps SMEs plan for everything from long-term goals to unexpected emergencies and an economic downturn. Take the current UK economic landscape, for example, which is littered with significant challenges for SMEs – from decades-high inflation to a recession. Access to additional funding provides a financial safety net for SMEs during this turbulent period, helping them to pay bills, avoid redundancies, and cover debt.   

Financial inclusion in 2023

SMEs must contend with many variables that are beyond their control – not least the health of the domestic economy. If we were to take the UK economy’s current temperature it would be worryingly hot. Not only did UK inflation hit a 41-year high in October, accelerating to 11.1%, the economy has recently entered a recession that’s expected to last until summer 2023 – testing conditions that are likely to squeeze businesses finances. This is being compounded by Bank of England interest rate hikes in a bid to cool red-hot inflation, making it more difficult for SMEs to repay existing loans.  

SMEs that experience barriers to financial inclusion over the coming months might lack the finances needed to weather the economic storm.  

How embedded finance is improving financial inclusion

SMEs have been thrown a financial lifeline by the emergence of embedded finance: the seamless integration of financial services by non-banks into their infrastructure. By partnering with embedded finance providers like Liberis, platforms, ISO/PSP providers, SaaS providers, and acquirers can offer their business customers access to vital finance that helps to address the financial inclusion challenges they face. Known as embedded lending, this subset of the wider distributed approach to providing financial services eliminates the need to rely on high-cost third parties – typically a bank – in the lending process. 

Within this lending revolution, an alternative funding option has become available to SMEs that can unlock capital quickly and cost-effectively: revenue-based financing. This allows SMEs to access funding based solely on their overall business revenue, using transaction data, not historic credit scores as is the case with traditional forms of finance like loans – and the benefits are compelling: 

  • The application process is primarily conducted online with a few clicks, and a decision is made within minutes. 
  • In most cases businesses don’t need to provide personal guarantees or assets to access funds.  
  • Don’t need to meet set repayment dates each month. 
  • Funding is authorised based on the overall financial performance of the business. 
  • Repayments are made with confidence, with the business generating the revenue needed from each customer transaction. 

A quick look at the World Bank’s definition of financial inclusion underscores how embedded finance epitomises everything it aims to achieve: “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.” As the number of useful and affordable products launched by non-financial services companies continues to grow, SMEs are turning their backs on traditional providers and embracing the modern inclusive model.  

Help close the funding gap by partnering with Liberis

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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Posted January 27th, 2023