European Fintech iwoca Says Embedded Finance Is Vital to SME Recovery Post COVID

New data from European Fintech iwoca, one of the largest small business lenders, reveals how embedded finance will play a key role for SMEs as they try to recover from the COVID-19 pandemic.

Timely insights “bring to life” the wide-ranging benefits of embedded finance, according to iwoca which notes that its small business clients are able to get faster lending decisions and are “more likely to be successful in getting the finance they need.”

During Q1 2021, iwoca data reveals that 50% of clients who had applied via an embedded finance partner “received a lending decision in less than two minutes, compared with 12% of direct applications.”

Additionally, small business applications made through embedded finance partnerships
“are 58% more likely to be approved than those that applied to iwoca directly.”

iwoca claims that it’s an “industry leader” in using embedded finance “to support small businesses, with nearly 30% of all loan applications to iwoca now coming through embedded finance partners.”

As mentioned in an update shared with CI:

“Businesses can access loans from iwoca through a range of platforms such as accounting software and digital neo-banks including Xero, Tide and Funding Options. This makes the process of applying for finance far simpler for SMEs as loan offers are readily available in the services they use day-to-day.”

The iwoca team also noted:

“In addition, these platforms hold much of a company’s financial information – such as cash flow and trading performance data- that a lender would need to review a loan application. This allows iwoca to make faster decisions and to tailor products to a customer’s individual needs, which translates to greater chances of getting approved for finance.”

Access to finance will be vital in assisting small businesses with getting back on track after the impact of the Coronavirus outbreak. But with the closure of the Bounce Back Loan Scheme many “high street” banks are “likely to reduce their lending to small and micro businesses as their risk appetite narrows.”

The iwoca team also mentioned that alternative lenders may fill this critical gap, with embedded finance integrations offering SMEs with “simple access to the finance they need.”

Colin Goldstein, Commercial Growth Director at iwoca stated:

“The technology behind embedded finance has huge potential for SMEs, and the possibilities to embed finance are vast. Small businesses are already benefiting from embedded finance through faster and more successful loan applications.”

Colin added:

“iwoca has led the way in developing embedded finance products, and well over a quarter of businesses we are now serving come through our embedded finance partners. Accelerating this should be a central pillar to rebuilding our economy, and we look forward to working with more partners to help their small business customers get the finance they need.”

iwoca further reveals it has been at the “forefront of innovation” in embedded finance in the United Kingdom, “becoming the first alternative lender to offer lending through an API.”

The Fintech firm introduced its own OpenLending platform “following the £10 million Capability and Innovation Fund award from the Banking Competition Remedies in 2019, which allows partners to integrate seamlessly with iwoca’s lending API.”

iwoca has reportedly created more than 20 embedded finance partnerships, “with more expected to be announced over the coming months.”

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