- Summary
- What is Embedded Finance?
- How Embedded Finance Supports MSME Growth
- GetVantage’s Role in Embedded Finance
- Embedded Finance vs. Traditional Banking for MSMEs
- Future of Embedded Finance in MSME Growth
- Conclusion
Embedded finance has gained traction as a tool to revolutionise the growth of Micro, Small, and Medium Enterprises (MSMEs). By seamlessly integrating financial services directly into existing platforms or products, embedded finance offers MSMEs a more convenient, accessible, and tailored approach to managing their finances.
Simon Torrance, the founder of Embedded Finance and & Super App Strategies, says, “If open banking is the ‘how,’ then embedded finance is the ‘why.'” For MSMEs, this suggestion can imply that open banking and embedded finance can simplify access to financial services, enabling seamless integration of banking functions into their operations and driving growth and innovation.
What is Embedded Finance?
Embedded Finance is the integration of financial services directly into existing platforms or products. This means that instead of seeking out separate financial institutions, businesses can access a range of financial services within the platforms they already use.
It provides financial services that meet businesses’ specific needs within their context and leverages financial technology for MSMEs to enable efficient and convenient access to financial products. Examples of embedded finance are the payment gateway companies receiving embedded finance solutions for services such as Buy Now and Pay Later options, financial management tools, and more.
How Embedded Finance Supports MSME Growth
Better Access to Finance
Embedded finance platforms can streamline the loan application process for MSMEs, reducing paperwork and administrative burdens. By leveraging technology, these platforms can expedite credit assessments and loan approvals, providing MSMEs with timely access to funds. These solutions also often offer flexible repayment terms and options tailored to MSMEs’ needs and cash flow.
Seamless Financial Management
Embedded finance platforms can integrate with accounting software, enabling MSMEs to track their finances, manage expenses, and monitor cash flow more effectively. These platforms provide real-time financial data and analytics, helping MSMEs make informed decisions and identify areas for improvement. The solutions also automate invoicing and payment processes, reducing errors and improving efficiency.
Increased Market Reach
Embedded finance platforms can provide MSMEs with secure and convenient payment gateways, allowing them to accept payments from a broader range of customers. These platforms can also integrate with online marketplaces, enabling MSMEs to reach a more extensive customer base and expand their sales channels. Embedded finance solutions may also offer digital MSME solutions and marketing tools to help MSMEs promote their products and services online.
Risk Mitigation
Insurance integration: Embedded finance platforms can integrate with insurance providers, offering MSMEs tailored insurance coverage to protect their businesses from credit and business continuity risks. These platforms can leverage advanced credit scoring and risk assessment models to evaluate MSMEs’ creditworthiness and provide appropriate financing options.
GetVantage’s Role in Embedded Finance
GetVantage is a leading embedded finance platform that provides fast, flexible growth funding for MSMEs to help them build. With our founder-friendly approach, we offer capital, insights, and support to entrepreneurs looking to expand their ventures. We have partnered with hundreds of founders, providing them with up to 20% higher funding, 10% lower flat fees, and 100% higher moratoriums.
Our platform has facilitated funding for over 1500 brands, with a total GMV funding of Rs. 7500 crore. Notably, 71% of our customers are repeat customers, indicating their satisfaction with the service.
We offer modern capital solutions tailored to the needs of digital-first businesses operating in various sectors such as eCommerce, D2C, B2B SaaS, Edtech, and Cloud-kitchens. The funding process at GetVantage is simple and efficient. Companies can sign up, connect their sales and marketing accounts, and receive a personalised funding offer within 72 hours. GetVantage’s pricing is transparent, with a flat fee on the total repayable amount.
Our founder-friendly model ensures that businesses only repay when they generate sales, making it a flexible and risk-free option. GetVantage’s focus on speed, unbiasedness, data-driven insights, transparency, and flexible terms sets us apart in the embedded finance market.
Embedded Finance vs. Traditional Banking for MSMEs
Model type
Embedded finance solutions are integrated into existing decentralised platforms or ecosystems, providing MSMEs access to financial services directly within their preferred tools or applications. On the other hand, traditional banks operate as centralised institutions, often requiring MSMEs to visit physical branches or interact through conventional banking channels.
Product Type
Embedded finance platforms offer customised financial products and services that cater to the unique requirements of MSMEs, such as sector-specific loans or flexible payment options. Banks offer a standardised range of financial products, such as loans, deposits, and credit cards, but these products may not always align perfectly with the specific needs of MSMEs.
Process type
Embedded finance leverages technology to provide a seamless and efficient digital experience with online applications, instant approvals, and real-time access to financial information. In contrast, traditional banks involve bureaucratic processes, with lengthy application forms, multiple approvals, and slower turnaround times.
Future of Embedded Finance in MSME Growth
As MSMEs become more digitally savvy, we can expect a significant increase in the adoption of embedded finance business solutions for MSMEs. The convenience and efficacy offered by these platforms will make them highly attractive to businesses of all sizes.
Embedded finance is also expected to foster deeper partnerships between fintech for digital businesses and traditional financial institutions. This collaboration will enable both parties to leverage their respective strengths.
As embedded finance gains prominence, regulatory frameworks must adapt to ensure consumer protection and fair competition. We can expect the development of clear guidelines and standards governing the finance industry.
Conclusion
Embedded finance revolutionises MSME growth by providing convenient, accessible, and tailored financial MSME growth solutions. As MSMEs become more digitally savvy, embedded finance will be increasingly important in supporting their growth and success.
