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Ed O’Donnell, CEO of Versatile Credit, said embedded finance could change the competitive dynamics for small businesses and was already doing so.
“Technology has become a huge leveler not only for small and medium-sized businesses (SMBs), but also for the large enterprise customers we work with,” he said.
Generally speaking, O’Donnell said, technology is enabling companies to do more with less, reduce operational costs, fine-tune efficiencies along the way, and be consistent across channels. He said that it is now possible to create a personalized consumer experience.
Technology has made it easier than ever to open an online storefront or create an online experience, making those businesses look more professional and perhaps bigger than they otherwise would be. he said. But once a customer reaches the company online, it’s incumbent on small businesses to offer payment options, or financing options, that turn the browser into a buyer.
He said technology should be incorporated into the process so that it resembles what O’Donnell calls a “self-guided tour for consumers,” and salespeople don’t need to know much about financing. said.
However, as he pointed out, there is a wide range of technology providers out there, and O’Donnell said small businesses need to work with partners who can expand their visibility and attractive opportunities, not just now, but in the future. warned. Many years from now. Providing built-in payment options before, during, and even at checkout has increased return on investment for forward-thinking businesses.
This platform model, through companies like Versatile Credit that matches lenders with businesses that provide offers to end users, connects businesses and even family members who traditionally thought they could do something like that. It has helped change the way companies think about management. We offer these products to our customers because we feel they are not big enough. ”
O’Donnell said the platform model allows lenders to offer small customers a proverbial turnkey solution that allows them to cover the entire credit FICO spectrum.
“For small purchases, you can use revolving credit products,” he says. “And if you have long-term, high-value needs, we can also offer an installment loan product. We know there are different business models out there.”
Transforming the home center sector
Versatile Credit has seen first-hand how embedded finance changes the dynamics of entire industries. The most prominent of these is the home improvement sector.
The steady rise in mortgage interest rates has kept prospective home buyers in their homes, choosing to stay in and spruce up their apartments or houses rather than sell their properties and pay double the mortgage on their old homes. There is.
Traditional methods of financing home improvement projects may have been through a home equity line of credit or using a credit card. However, individuals and households are wary of paying the high interest rates associated with these channels and are turning to installment financing, which can cost thousands of dollars for a project. It will be more delicious.
“A $50,000 home improvement project doesn’t have to feel like a huge car payment of $1,000 or $1,500 a month. You can spread it out over time,” O’Donnell said. .
In the meantime, consumers are likely to return to merchants that offer built-in financing, he said.
“Not only from a buying and selling perspective, but also because we have established trust relationships that we can take advantage of. [consumers] We need something else,” O’Donnell said.
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