DIGITAL PAYMENTS
Nonetheless , despite the abundant positives that embedded lending can bring , banking and finance expert Mike Smith says there are still things we need to be wary of : “ Embedding financial services in commonly used digital platforms can make it easier for consumers to access credit ,” he explains .
“ When financial offerings are integrated into apps and websites people use daily , lenders can use more data to understand a person ’ s creditworthiness , beyond just traditional credit scores .
“ This is great for those who might not have a strong conventional credit history but are responsible in other financial areas . The convenience of accessing credit within familiar platforms can make the process less intimidating and more user-friendly .
“ By reducing these barriers , many consumers , especially those often overlooked by traditional banks , can find it easier to secure the credit they need .”
Despite the positives , embedded lending still raises concerns “ To add a bit of nuance , embedded lending also raises concerns ,” Smith says . “ The use of alternative data to gauge creditworthiness might inadvertently penalise those unfamiliar with certain platforms or technologies .
“ There ’ s also an increased risk of consumers accessing credit impulsively due to the seamlessness of the process . Data privacy is a significant worry , as collecting more information can make users vulnerable if there ’ s a data breach or misuse .
“ Finally , a blurred line between financial services and non-financial platforms might make it harder for consumers to differentiate or choose between legitimate services and potentially predatory ones .”
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