Consumers seen adopting embedded lending to ease transactions

Embedded finance has gained traction among all generations of consumers as they adopt lending embedded in non-financial platforms for daily transactions.

PYMNTS Intelligence, a global data platform has predicted that Generational Z and Millennial consumers will be major users of embedded lending by reshaping how smaller businesses access credit through convenience and flexibility.

In its report “The Embedded Lending — 10 Impact Statements eBook report” about 55.4 percent of millennials (born between 1980 -1990) and 55.8 percent of Gen Z (born between 1995 – 2010) consumers will switch providers for embedded lending, showing high interest in switching merchants or providers to access it.

However, consumers are turning to embedded lending for everyday essentials like groceries and bills, rather than splurging on discretionary items.

“This trend underscores embedded lending’s appeal as a convenient solution for bridging cash flow gaps to keep up with life’s necessities,” the report said.

Lenders are 50 percent less likely to offer embedded lending to small businesses than to consumers, presenting a significant opportunity to address an underserved market.

Many small businesses currently rely on consumer credit products due to the lack of suitable business-specific lending options; innovative lenders can fill this critical gap.

Stripe Capital, a US-based financial market company, explains embedded lending as the direct integration of lending services into non-financial platforms or applications. That is, instead of exiting the platform to access credit offerings, customers can use these services within the platform.