Are you considering investing in an embedded finance solution?
The hotly anticipated technology is being hailed by many as the “next big thing” in finance, set to change the way businesses access and offer financial services for the better.
But how does it all work?
Well, under the surface, embedded finance technology is made possible through something called an API, which stands for “application programming interface”. Sounds confusing, doesn’t it?
Fear not—we’re here to demystify APIs, so that you can understand how they make embedded finance possible, as well as how they can help your business unlock new revenue streams.
What is an API in finance?
An API, or “application programming interface”, is a series of definitions and protocols that allow two systems or applications to talk to one another.
While that sounds very technical, the principle is fairly straightforward. It’s a series of commands that can be used to exchange information between two platforms.
Let’s look at an example to illustrate this.
An abstract example of APIs in practice
Let’s say you have an app, through which you sell cinema tickets for a leading cinema chain.
With an API, you’re able to request specific information from the cinema chain, like film times, seat availability, and prices, which you can then display in your app, as well as submitting order requests to the cinema whenever you make a sale.
The API is simply a manual describing the ways you can request information, along with a unique key that allows you to access the information held within.
How does an API work?
With any API, there are two main stakeholders or systems at play: the client and the server.
- Client – the system that is requesting the information.
- Server – the system that holds and provides the requested information in response.
The client will be provided with a unique key they need to include when making their request to the server. They will then pair this key with a request, written in a way that the server has been designed to understand.
Upon receiving the request with a valid key, the server will interact with its own data based on what has been requested. This could simply be a case of returning information from its database, for example, or involve making changes to the data within its system—such as making a booking or processing an order.
The server will then provide the client with a response, providing the information (or confirmation of an action) requested by the client.
What is a lending API?
A lending API enables businesses to interact with credit platforms.
This could mean processing loans, communicating directly with a panel of lenders, acquiring the latest interest rates being advertised, or countless other use cases.
What does a lending API enable you to do?
A lending API makes it possible for businesses without a credit facility to offer credit services, or enrich their offering with data from credit platforms.
Here are some of the ways this can be used in practice:
- Offer lending products – if you’re a non-financial business, you can use lending APIs to access credit technology and offer white label loans, credit cards, or car finance to your customers.
- Expand your credit coverage as a finance company – financial institutions can cater to new areas of the market, such as applicants with low credit. This allows them to turn applications that would have previously been rejected into a new revenue stream.
- Upsell finance products – a company that accepts a customer for product finance—an in-store furniture finance provider, for example—they could then offer the customer additional financial products that they didn’t previously offer, like loans or credit cards, alongside their own.
Of course, these are just examples and the unique use cases of lending technology can be shaped to fit almost any business model or vertical.
What are the benefits of using a lending API?
By using an embedded finance API to access lending technology, businesses can benefit from the following:
- Help more customers by providing a broader, more rounded service—leading to increased customer satisfaction
- Bring requested services to market faster, as API technology skips the need to set up new services from scratch
- Innovate without the risk of investing in developing new or proprietary tech
- Benefit from continuous improvement and investment in technology from technology partners
- Unlock new revenue streams by expanding your capabilities and reaching new areas of the market
- Gain access to richer customer data, allowing you to build out a more complete understanding of your audience
How Aro can support you
The technology at the heart of our offering: The Aro API
A lending API provides your business with the speed and scalability to bring new revenue streams to market, fast.
With our API, we can easily integrate our enhanced decisioning platform into your online journey, creating a seamless experience for your customers.
Here are just some of the ways our API can help:
- Pre-populate customer data into credit application forms, saving your customers time and providing a better overall experience
- Return a success message in your own environment before the customer is prompted to come to Aro
- Take a customer’s required details, captured in your platform, and drop them straight into a results environment
In other words, by embedding the services that customers can access by coming directly to Aro, you can offer a more rounded experience and range of products to your clients, all within your own ecosystem and customer journeys.
Access the UK’s largest digital borrowing marketplace
Our API provides businesses with access to the largest digital borrowing marketplace in the UK.
Why does this matter?
With such breadth and depth of panel, we can offer your customers a huge amount of choice, as well as tailored solutions for most credit profiles.
There’s also the ability to configure lending panels to cater for your customer and business needs, so you can be sure to only target the areas of the market you need to.
A proven record of experience in the market
Embedded finance might feel new, but it’s been around for longer than you may think—and so have we.
Here at Aro, we already have a number of longstanding, successful embedded finance partnerships with businesses from a whole range of industries, including banking, retail, and eCommerce. Our experience in partnering with businesses from both finance and non-finance industries makes us best placed to offer you guidance on what application of lending APIs makes sense for your business proposition.
Through our experience and expertise in the financial services industry, we are here to support your business. Whether it be help marketing financial products or support with risk and compliance, or providing additional insights into your customers that come through our platform.
Ready to get started? Explore your lending API opportunity today
With the largest digital borrowing marketplace in the UK, there’s no better partner to start benefiting from embedded finance than Aro.
Ready to get started? Reach out to our team and they’ll be happy to share more about our embedded finance solutions.