Embedded lending is growing in the heavy-equipment industry as technology allows OEMs to bring financing solutions directly to consumers.
OEMs are increasingly using embedded lending — the integration of financial services into non-financial platforms or applications — to make financing obtainable at the point of sale, Yaacov Martin, chief executive at Jifiti, a fintech that offers embedded lending solutions, told Equipment Finance News.
“We are definitely finding ourselves to be more and more active in this specific industry,” he said. “I think that many of the major [heavy-equipment] players are realizing that the embedded piece itself, meaning being able to apply the right type of technology in order to make financing accessible, is equally important as expertise in the retail and financial world.”
Embedded finance revenues in the U.S. are projected to grow 190.9% to $89.6 billion by 2029 from $30.8 billion in 2024, according to a Sept. 9 report by Research and Markets, a provider of market research.
Fueled by technology
Embedded lending has rapidly emerged in recent months due to increased adoption of evolving technology, according to the Research and Markets report. AI is poised to become a driving force behind embedded solutions, Bill Verhelle, chief executive at Fairport, N.Y.-based QuickFi, told EFN. QuickFi provides equipment finance service and embedded solutions.
“The benefits for manufacturers that sponsor embedded lending programs will likely create vast opportunities for AI-enhanced product marketing, AI-supported repeat sales capabilities and dramatic improvements in overall efficiency resulting from both automated digital processing and artificial intelligence,” he said.
For borrowers, AI has the capability to enhance the convenience gained from embedded lending, with financial decision-makers at qualified businesses able to offer loans at the point of sale through mobile technology, Verhelle said. Borrowers can access pre-approved financing without speaking with anyone at the lending institution, he added.
Jifiti’s Martin also is optimistic about the role of AI-driven finance solutions in the heavy-equipment space.
“If some of the larger players are set up properly to offer varied financial products that fit varied types of transactions we are able to utilize often, AI can take all of the data that is accessible, in terms of the person, the deal at hand, the history and really make sure that we’re serving up the most appropriate financial solution.”
Streamlining dealer operations
Embedded lending can optimize dealer operations by allowing customers to forgo the arduous loan approval process, thus expediting sales, QuickFi’s Verhelle said.
“Our digital platform is now putting in the pocket of the financial decision-maker at the small business a terminal that’s on the bank’s network,” he said. “So, now the banks can send offers, interacting directly, without a salesperson in between.”
QuickFi’s borrower self-service platform is trusted by equipment manufacturers such as Sany, XCMG and Atlas Copco, according to its website.
While many dealers are required to have some financing expertise, embedded lending may allow them to focus more on salesmanship by eliminating some of their duties as a middleman between the lender and customer, Martin said.
“The whole notion of embedded finance essentially means that we’re taking outside experts — lenders, banks or other types of financial institutions — who do this as their main focus, and we embed it within a foreign environment to the financial institution.”
