Trust and Security vital for scaling Embedded Finance in India

Aided by the rapid pace of evolution in the world of fintech, embedded finance has quickly become one of the most promising areas for innovation and growth in the financial services industry. COVID-19 has played a significant role in accelerating mass adoption of digitally refined systems and solutions. The post COVID world has only witnessed us venture further into the embedded finance experience. By eliminating the massive inefficiencies and lowering the cost for end-user of financial service, every stakeholder wants a seat at?the table of embedded finance. You can have your pick from the pool of embedded finance offerings, from embedded payments, embedded lending, embedded insurance to embedded banking and embedded investments.?

Embedded Finance the Game Changer for Businesses

Some businesses need an immediate credit line, others might not have the required financial documents, while others still may be lacking proper collateral, and so on. It is the need of the hour to have accommodative solutions that meet the different credit requirements of the heterogenous SME segments, and do away with a one-size-fits-all approach. It is also no longer enough to simply offer these financial solutions; they must be seamless and digitally convenient for the end users. Embedded finance streamlines financial procedures, minimises wait time and provides contactless services, all wrapped up in convenience. Offering financial convenience can be achieved by partnering with digital platforms to obtain access to the varied pool of clients available to them. We have had some mutually beneficial collaborations at Rupifi;?Our teamwork with Flipkart Wholesale?enabled 1.5 lakh MSMEs and kirana stores to get instant and digital credit, with flexible repayment timespans and transparent pricing. Collaborating with companies with their pan-India presence and decades of experience is another viable option. For instance, our?partnership with Muthoot Finance?helped provide instant credit to SMEs.?Venturing further into the pharmaceutical industry, we have partnered with Retailio?to provide embedded BNPL solution to pharmaceutical SMEs.

Easy Credit the need of the hour for SMEs in India

Embedded finance can greatly enhance formal financial services in rural areas by lowering obstacles to access for credit novice consumers and enabling customisation of financial services. Increased financial inclusion is imperative for business growth in rural India, and addressing the challenges is the first step. Most rural loan applicants are not adequately exposed to the formal credit arena, with no traceable credit history data and, as a result, no credit score. Without a credit score, access to credit becomes cumbersome, making it nearly impossible for the rural population to obtain loans.?

Embedded finance also solves for the lack of past data and financial documents, providing an alternative data-based underwriting, enabling lenders to develop robust systems that serve as substitutes for determining creditworthiness in the absence of other datasets such as transactions and financial records, among other things. At Rupifi, we use cash flow-based underwriting instead of balance sheet-based underwriting, which nullifies the fundamental problem of the lack of financial history documents.

Factoring in trust and security

Whether one is investing, borrowing, or lending, security concerns constantly plague your decision-making process. Trust is a huge factor when handling finances, and embedded finance knocks it out of the park with various security measures. Be it integrating BNPL into the system, real-time monitoring platforms or seamlessly incorporating credit products into traditionally non-financial systems.?

If effectively implemented, embedded finance may create a better financial world in which everyone has applicable access to comprehensive economic goods and services that is more accessible and better fits their daily lives.