Jifiti Group‘s CEO Yaacov Martin recently highlighted the challenges small and medium businesses (SMBs) encounter accessing embedded lending products. His insights reveal the current state of embedded finance, particularly its limited reach to SMBs.
Embedded finance, the integration of financial services within non-financial platforms or products, has grown in popularity. It offers smooth financial solutions to consumers. However, SMBs are not reaping the same benefits.
Recent research shows that 83% of lenders offer embedded finance to consumers. Yet only 55% extend these services to SMBs. This gap underscores a significant disparity in embedded finance access between individual consumers and SMBs.
Exploring the Gap in Embedded Finance Access
Embedded finance offers potential benefits to businesses, such as streamlined operations and improved customer experiences. The observed gap in access, however, suggests challenges for SMBs in securing financing in the digital economy.
The reasons for this disparity are not clear-cut. One might guess that it relates to the higher perceived risk of lending to SMBs versus individual consumers. Additionally, the complexity of business operations might add hurdles in implementing embedded finance solutions for SMBs.
Despite these obstacles, it’s essential to acknowledge the role of embedded finance in SMBs’ growth and sustainability. Efficient access to financial services can dramatically enhance business operations, supplying the necessary funds for investment and expansion. Hence, making embedded lending products more available to SMBs could significantly support their growth.
In conclusion, lenders need to broaden their embedded finance offerings to SMBs. The potential benefits for both lenders and SMBs are substantial. However, to achieve this, lenders must understand and tackle the unique challenges SMBs face when accessing these financial services.
