Beyond CLTVs – Why is Embedded Finance not just about improving margins?

Beyond CLTVs, embedded finance is like a Pandora box of opportunities. Here’s how.

Embedded Finance has provided FinTech with a telescopic lens to view many possibilities that previously went unnoticed. The Financial Technology sector is discovering a new galaxy with this promising new trend that makes any sizable business a lender, and therefore a better profiter.

Also called ‘embedded banking,’ this system facilitates new channels of sale of products or services within the interface where it is embedded. 

It provides a smooth and effective financial service to its customers at the precise moment they require it. 

The goal of embedded finance is to allow any company to manage and sell innovative financial services. 

Uber, for example, has integrated payments into the consumer experience, while Paypal Credit, Klarna, and others have thrived by experimenting with and increasing embedded loans at checkout. 

But, beyond CLTV (s) or Combined-Loan-to-Value and improving margins, there is a lot to explore from Embedded Finance. Read to know more. 

Embedded Finance and CLTVs

Retailers use embedded finance to add significant value to their customers. In the process, they buy more inventory, expand their product assortment, add high-margin SKUs, and expand their store’s space and assets. 

With this system, non-financial businesses can leverage the power of FinTech and tackle the need for financial assistance in different stages. 

Thus, all these aids in the expansion of their business and the expansion of their consumer base. Consequently, AOV (Average Order Value) and CLTV (Customer Lifetime Value) will increase, and delivery efficiency will improve. So, you may be wondering, how can embedded finance improve this? Have a look:

Spurt in Average Order Value

Access to financing has a significant impact on how businesses operate. For example, merchants focus on cash flow when they don’t have formal loans to meet their working capital requirements. As a result, they buy fast-moving products with informal loans to move money faster and take fewer risks (i.e., they do not purchase high-margin products).

But with fast, legit credit available at their disposal, merchants will focus on business goals and grow. 

A Share of the wallet

A store frequently optimises for both pricing and terms of financing. As a result, they can stock expensive SKUs with better financing conditions. In addition, merchants have some informal funding possibilities. But providing credit in a frictionless and better-than-local manner motivates retailers to buy more from the platform and increases their share of wallet.

Increased retention

Offering credit increases the platform’s engagement with its merchants.

Platforms may now provide a wide range of products based on a better understanding of their customers. Additional creditworthiness, financial status, and other criteria can help in many ways, including delivering flexible financial services.

Increased Activation to Acquisition ratio

Acquisition expenses are relatively high for merchant-oriented enterprises. Adding credit is known to improve merchant engagement on a platform in a variety of ways, including:

  • Differentiate from businesses that do not provide credit. 
  • Allowing for alternative payment choices and reducing the hurdles of  trying out a new vendor (platform)

But, why embedded finance? How can it improve this CLTV?

What Are the Benefits of Embedded Finance to improve CLTVs?

Within a B2B e-Commerce platform, Embedded Finance Infrastructure naturally offers credit for all businesses. 

It manages the entire lending process from start to finish, from developing loans to connecting with lenders, integrating third parties, and collecting repayments.

Here’s a quick glimpse into pain-points that embedded finance caters to:

  • Embedded Finance firms provide user interfaces for each step of the loan lifecycle, application, post-approval, and post-disbursal – within the platform. 
  • The loan application process is digital and is accessible through the platform’s app seamlessly.
  • The platform combines lending expertise with alternative data underwriting, allowing higher credit scores and customer approvals.
  • Connecting your digital platform to a comprehensive and diverse lender network guarantees your merchants receive the most competitive loan offers.
  • Credit products that meet consumer needs at the time of requirement are more effective than one-size-fits-all products.

The technology stack provided by embedded finance is more advanced than what is provided by traditional digital lending partnerships. 

Learn how embedded finance is an evolution in digital lending and works beyond improving margins.

The possibilities of embedded finance

This system eliminates the need for a third-party bank or lender. 

Businesses in the MSME, B2C and B2B categories can use embedded finance to boost client lifetime value, monetise their customer base, and vertically scale their product offering.

After all, Bain capital does not call embedded banking the fourth platform without any reason. You’re talking about a potentially $7 trillion market

Examine the following embedded financial use cases to see if you can find a niche for your organisation in this industry:

1.Embedded Payments

Paying in cash might be painful at times. However, availability of cash in hand can determine a customer’s purchase intent. Customers can buy almost effortlessly thanks to embedded payments. 

A user utilising an app with an inbuilt payment programme doesn’t have to go through their wallets for cash or find their credit card; instead, they hit a few buttons, to make payments. 

Take for instance, the ride-sharing apps Uber and Lyft are examples of successful programs with embedded payments. 

A ride with one of these companies doesn’t require you to pay with cash or a debit or credit card at the end if you want. Instead, after the ride ends, you can complete the transaction in the app.

2.Embedded card payments

Debit cards make it easier for businesses to pay contractors and staff. Companies can send payments to credit cards issued by the company rather than writing checks or making direct deposits. 

The corporation can agree to pay the card issuer all or part of the interchange charges in exchange for a white label debit card. PayPal is one such company that processes payments using cards. 

PayPal users can link their bank accounts to their PayPal accounts. Also, the company offers a cash card that helps users access their PayPal balance directly. 

Having a cash card allows a user to play with it or withdraw cash from an ATM immediately. So, no more waiting for the funds to hit their checking accounts.

3.Embedded Lending

When someone needed money in the past, they either applied for a bank loan or obtained a credit card. Embedded lending now allows customers to get a loan at the time of purchase also called ‘just in time financing.’ 

It also allows customers to break a large loan into smaller instalments. Klarna and AfterPay are two examples of embedded lending use cases. Both services allow customers to break down a large online purchase into smaller monthly instalments

For example, you can repay a $100 payment into four $25 instalments. There is also the Buy Now Pay Later (BNPL) system disrupting Fintech. 

4.Embedded Investments

Most people find investing challenging and out of their reach. A new class of programs designed to simplify the investing process aims to address this problem. 

The investment of spare change through Acorns, which rounds up purchases, is one example. 

With Acorns, investing becomes seamless and easy. This app handles all the money transfers to your account, so you don’t even have to remember. In addition, an Acorns user doesn’t need to keep track of the share or mutual fund values since their portfolio is adjusted based on market activity.   

5.Embedded Insurance

Embedded insurance programs eliminate the need for an insurance agent or broker during the purchase of a policy. For example, purchasing a car or home used to necessitate buying insurance. 

It was also a completely independent step in the procedure. But, some businesses have developed ways to include insurance policies that save time and money. 

Tesla, for example, is one such company. It has an insurance programme that allows consumers to buy the required quantity of coverage almost immediately. 

It is less expensive than insurance purchased from a third-party supplier.

6.Embedded Banking

This is where embedding finance differs from embedded banking. Some companies are also providing banking services, replacing traditional accounts offered by financial institutions. 

Examples of embedded banking include the Lyft debit card, which allows drivers to be paid instantly by the ride-sharing service. The program also helps drivers to create a separate savings account.

So How is Embedded Finances the Future?

The beauty of embedded finance is that it streamlines financial processes. It provides a solution that could assist companies in exploring ways to expand their customer base and loyalty. Embedded finance solutions will gain more visibility and diversity in the coming years and help businesses of all sizes meet their financial needs. Beyond CLTVs, embedded finance improves many spectrums than improving margins alone. 

One such firm that identified the broader scope of Embedded Finance is GLAAS (Gromor Lending As A Service), Gromor Finance’s new offering. Every company is transforming into a fintech company. GLaaS is an integral component/player of embedded finance

In a nutshell, anyone who already has a sizable number of customers can get into lending.


  • By providing loans, these companies help their customers sustain/grow their businesses.
  • Financing is more profitable (higher margins) if done well. A bank is an example of this.

GLaaS’ product/API now acts like a plug-n-play service where businesses can embed it into their products, and GLAAS will take care of all the nuances around lenders, including compliance. 

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