Non-Bank Businesses Find The Value Prop In Financial Services

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It’s an increasingly popular concept: In order for businesses to offer the best customer experience, they should think like a FinTech.

The idea has ushered in a wave of non-bank businesses offering financial services to their own customers by integrating the technologies of FinTech partners within their own products and services. The key, said Barclay Keith, CEO and co-founder of Artis Technologies, is that the financial offering must integrate seamlessly within customer experience.

Speaking with PYMNTS, Keith explained the impact on the bottom line that expanding into the world of financial services can have on businesses, and how developing ecosystems of industry marketplaces will further fuel the evolution of non-bank players offering financial products and services.

A New Revenue Stream

It may not initially seem like the obvious choice for, say, a home improvement company to expand into the world of financial services. But for a business of any vertical to be able to offer lending services to their own customers through a partnership with companies like Artis Technologies, the impact on the bottom line can be profound, according to Keith.

Not only do loan products introduce a new revenue stream for businesses, he said, but they also enable customers to potentially spend more with a business.

He offered an example of a customer looking to purchase a widget at a lower price-point, versus purchasing a widget with all of the features a shopper wants, but at a higher cost. When a loan option is integrated into the customer experience at the point of need, presenting that more expensive product at a cost of $200 per month, as opposed to $15,000, can be much more appealing.

“You’re able to reframe that selling proposition in many ways,” Keith noted. “A lot of businesses are able to gain significant lift by leveraging these technologies and weaving them into their offering.”

Vital to a successful implementation is incorporating that financial product, like a loan, seamlessly within a business’s existing brand experience. It’s an attractive value proposition for customers to access financing within the same place they’re making a purchase, rather than having to toggle between platforms and web pages.

“Brands want to own the whole experience,” Keith added, adding that with many merchants already integrating payments functionality into their online portals and marketplaces, integrating loans is a next logical step to keep customers under the holistic umbrella of the brand experience.

Building An Ecosystem

Unifying the brand experience is one component of fostering the development of ecosystems of merchants, service providers and customers across industries, and it’s an ecosystem that Keith noted is particularly useful to businesses looking to integrate their own financial services and products into their offering.

That’s because the financial technology firms that enable those finserv offerings are able to make use of the data of those ecosystems.

“You have a lot of merchant networks and marketplaces that have developed in the last couple of decades,” said Keith. “You can look at that data to underwrite that merchant or consumer based on their activity on the platform, in a lot of cases … It’s monetizing an ecosystem.”

Building in financial products within a brand’s current offering further fosters the development of those ecosystems, he said, and can open up more opportunities for the FinTechs that enable non-bank players to offer these products.

For instance, said Keith, the door is opening up for companies like Artis to introduce small business loans to its own offering.

“Coming back to the data, we see that as a natural fit,” he said. “Once we’re able to leverage that transactional data, it gives us a lot of insight into the revenue cycle of a merchant and how cash flows through the business. We do see small business lending as a valid opportunity.”

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