The Banker’s and Lender’s Essential Guide to Embedded Lending

by Nici Pillemer


February 25, 2024

Banks & Lenders
What is embedded lending?

In the rapidly evolving digital landscape, innovative solutions are transforming the way customers access financial products and services. Among these groundbreaking innovations, embedded lending stands out as a pivotal development, reshaping the future of bank lending. This blog post delves into the essence of embedded lending, the opportunities it brings to banks and lenders, and its profound impact on businesses and consumers alike.

What is Embedded Lending?

Embedded lending is the seamless integration of loans and financing within the user flows of non-financial businesses. This revolutionary approach allows consumers to access credit at the point of need, directly within the purchasing process, without the hassle of paperwork, delays and third-party redirects. By embedding loan options into in-store channels, ecommerce user journeys and even business-to-business (B2B) ordering systems, embedded lending not only enhances the customer experience, thereby building customer loyalty, but also opens up new revenue streams for banks, lenders and merchants.

Embedded Lending vs BNPL

BNPL began as an easy way for customers to afford retail purchases, such as a pair of Air Jordans, by splitting their payment into 3 or 4 installments. But what about larger ticket items? Customer financing is not a one-size-fits-all so a split pay option that worked for smaller ticket purchases would not necessarily be relevant for larger ticket purchases, such as a home renovation or business expenses.

There was a big gap in the market.

Customers needed a way to access the right type of financing option to suit their needs, ticket sizes, products and credit profiles, specifically longer-term loans to fit larger purchases.

Enter embedded lending.

Here are the most notable differences between embedded lending and BNPL:

FactorEmbedded LendingBNPL (Buy Now, Pay Later)
Financing ProductsBlanket term including a wide variety of B2C and B2B financial products traditionally offered by banks, such as installment loans, lines of credit, working capital, deferred invoice, and split pay options. Caters to a broad range of customer risk profiles, financial needs, and use cases.Usually refers to split pay options, typically interest-free, like pay-in-3 or pay-in-4.

May also include short-term installment loans or lines of credit for specific use cases.
Customer RelationshipWith a white-labeled embedded lending solution, the lender enables the merchant to retain the customer relationship without third-party detours or distractions.The BNPL fintech company engages directly with consumers as a direct-to-consumer brand, potentially leading to a loss of current and future sales for the merchant due to exposure to competitors.
Data OwnershipThe lender and merchant gain control over and full insight into customer data through transparent data and reporting dashboards.The merchant ends up sharing customer data with the BNPL provider.
Use CasesFinancing for life-milestone and life-enhancing purchases for B2C and B2B use cases, such as kitchen remodeling, elective medical procedures, events, professional courses, and essential appliances.Usually for smaller, more immediate purchases, such as in retail.
User ExperienceWhite-labeled solutions add a technological layer to banks’ services, seamlessly embedding their loan programs with the merchant’s branded customer journey.Frictionless user experience that usually redirects the customer to the BNPL provider’s website or app.
Regulatory ChallengesBanks and traditional lenders operate within a regulatory and compliance framework.BNPL fintechs must independently meet all compliance and regulatory requirements, facing challenges on the regulatory front.
Underwriting ExperienceBanks have centuries of underwriting and decisioning experience.BNPL providers may lack the extensive underwriting experience of banks.
Implementation SpeedEmbedded lending technology enables quick implementation and scaling, allowing banks and lenders to surpass fintech competitors.Known for quick and easy implementation, appealing to merchants and customers.
Core Competency of the LenderBanks focus on money management, with powerful balance sheets and extensive lending experience.BNPL providers are primarily tech companies, focusing on user experience and technological implementation.
Merchant ChannelsOmnichannel, including online, in-store, via call center, in-office, or any assisted sales flow.Typically online, but can also be applied in-store.

The $230 Billion Loan Revenue Opportunity

By 2025, embedded finance is predicted to generate USD$230 billion in revenue.

Source: Lightyear Capital, 2022

The concept of embedded finance, within which embedded lending is a critical component, is not entirely new. However, its adoption has accelerated in recent years, driven by advancements in technology, changing consumer expectations, and the increasing digitization of payments and commerce. 

Did you know?

At least 30% of banking industry revenues for things like payments, personal loans and credit cards are sourced through non-banking third parties (Accenture Global Banking Consumer Study).

Core Benefits of Embedded Lending for Banks & Lenders

  • Easy access point to new-to-bank customers
  • Opportunity for cross-selling/upselling other banking or financial products
  • Scale B2C and B2B lending in any global market
  • Deepening existing customer relationships
  • Brand building at the place of need
  • Developing customer loyalty
  • Data insights enabling customer personalization
  • Relationship-building opportunities with merchants
  • New revenue streams
  • Ability to appeal to younger as well as older generations
  • Enhanced customer experience: By offering financing options at the point of sale, businesses can significantly improve the buying journey, leading to higher conversion rates and customer satisfaction.
  • Access to new customer segments: Businesses can tap into previously unreachable customer segments by providing flexible financing options to those who might be underserved by traditional banks.
  • Streamlined operations: Integrating lending services directly into platforms simplifies the financing process, reducing administrative burdens and improving operational efficiency.

The Role of Embedded Lending Technology

Banks are pros at lending. But they often lack the embedded lending technological capabilities needed to seamlessly connect their loan programs to the point of sale, digitize their lending process and provide real-time decisioning. Furthermore, integrating with the merchant’s point-of-sale is notoriously difficult, requiring time, technological expertise and resources. 

With a white-labeled embedded lending platform, banks and lenders can quickly bring their own embedded lending offering to market, onboard merchants easily, and scale their consumer and business lending. 

Want to know what tools you need to embed your loans at the point of sale?

Download our latest embedded lending whitepaper.

Everything You Need to Succeed at Embedded Lending

Real-Life Use Cases of Embedded Lending

Embedded lending is versatile and can be applied across various industries and sectors. Some examples are:

  • Retail and ecommerce: Offering instant financing options at checkout to help B2B and B2C customers pay for purchases over time through any customer channel.
  • Healthcare: Enabling patients to access affordable payment plans for medical treatments not covered by insurance.
  • Auto Services: Unexpected expenses for auto repairs, services and parts can be burdensome for the average consumer. With easily accessible financing from reputable lenders, consumers can spread their auto service costs. 
  • B2B Transactions: Offering businesses the ability to access business loans for inventory purchases or operational costs right at the point of sale or within the ordering system.

Challenges and Considerations

While embedded lending offers numerous benefits, businesses must navigate compliance, data privacy, and security challenges. Partnering with experienced technology providers who are well-versed in these areas can mitigate risks and ensure a smooth implementation process.


Embedded lending represents a significant shift in the financial landscape, offering a more accessible, convenient, and personalized way for consumers and businesses to access credit. For banks and lenders, it opens up new opportunities for loan volume growth and customer acquisition. 

Embedded lending not only democratizes access to credit but also redefines the relationship between banks and their customers, paving the way for hyper-personalized, customer-centric financial products and services. 

Disclaimer: The information in this article is for informational purposes only, and should not be construed or relied upon as legal advice on any subject matter. The author is not responsible for any consequences whatsoever arising from the use of such information.

Jifiti is transforming point-of-sale financing with cutting-edge technology, data and BNPL solutions.

Our white-labeled Buy Now Pay Later bridging the gap between retailers, lenders, and consumers.