Embedded lending is on fire. I will touch on this next week as well, when I publish a new podcast episode (and I am looking for more guests for other aspects of embedded lending).
Specifically in the past few weeks, I have noticed an increase in European non-financial brands announcing lending products. Or rather announcements from their respective infrastructure providers to be precise. Most recently, the two Berlin-based embedded lending providers Banxware and Finmid have announce new partners. Firstly, vacation rental provider your.rentals has announced a partnership with Finmid which provides a lending and cash-advance solution for companies using the your.rentals portal to manage their rental units (Finmid). Secondly, Refurbed, a provider that buys and sells used gadgets, announced a partnership with Banxware which offers a financing solution for its business customers (LinkedIn). Both examples are “prime” embedded lending solutions as neither your.rentals nor Refurbed are fintech companies or financial institutions.
If you have read previous newsletters, you will also remember that eBay, Enpal, Urban Sports Club and many more launched financing products in the past weeks. Most of these companies tend to have a marketplace or digital platform model and I expect many more to follow. Hokodo, a UK based BNPL provider has published an European B2B marketplace map (Hokodo). Perhaps it would be a good exercise to mark all marketplaces that offer financing products today and compare it with in a year from now?
Nevertheless, we should remember that these are all only product launches. Similar to startups, not every product survives mid or long-term. It is great to see that many non-financial brands understand the embedded finance opportunity, but they will also make sure to address an actual pain point of their customers. Throwing lending products at customers won’t be successful, but if they can create the right financing products (i.e., amount, interest rates, duration and repayment terms) and place them at the point of need (!) then they might (!) succeed. While all financial products can add value, lending products are often the ones that create flywheels. But more on that at another time :)
