Embedded lending solutions are growing in popularity and set to become one of the next big disruptions in consumer lending. The pandemic has accelerated the pace of strategic partnerships in the financial services space. Today, Eko and TERA Finlabs joined hands to offer customized embedded credit solutions for Eko’s merchant network. By utilizing TERA’s lending platform and risk management capabilities, Eko will provide short term credit line solutions to help its merchant partners get access to affordable credit.
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| Pradeep Rathnam, CEO, TERA Finlabs |
Speaking to the journalists over a virtual press conference, Pradeep Rathnam, CEO TERA Finlabs, said, “Embedded lending solutions help consumer platforms offer tailor-made credit products to their customer and channel partner network, something that traditional financial institutions don’t offer. As a Risk Technology platform, we take a data-driven risk management approach to develop credit products that work for both our partners and their customers. We are excited to be partnering with Eko and helping them fulfill their vision of providing affordable and accessible financial services for the unbanked sectors in India.” TERA Finlabs is a Bengaluru based start-up that provides technology, risk, and capital solutions to enable innovative embedded financing solutions for businesses. An MIT Sloan alumnus, Rathnam is a financial services veteran who has worked with Citibank, Bajaj Finance, and AEGON Insurance.
Through this partnership, TERA will provide its entire technology stack, risk management capabilities, and capital solutions to create and enable a credit line for Eko’s merchant network. Merchants will now be able to use the credit line and offer a wide array of Eko’s digital services to end consumers. This will keep credit costs low for merchants who will have the option of drawing smaller amounts according to their requirement and settling it in daily.
“We are delighted to partner with TERA to enable us to offer customized credit solutions for our retail merchant base. This will go a long way in deepening our relationships with our partners and helping them increase their overall business. Having access to credit will now allow all Eko channel partners to efficiently serve the needs of millions of non-salaried gig entrepreneurs and workers who use our services to remit funds and perform other digital transactions,” said Abhinav Sinha, Co-founder, Eko.
Founded in 2007, Eko is a leading domestic player in providing accessible banking services to unbanked customers in India, especially the low to moderate income migrant workers. Eko enables over 10 million transactions a month and has served over 5 crore customers to date through its network of over 3,00,000 merchants.
“Today, our merchant’s business volume in our platform is an outcome of the liquidity he sets aside daily. However, considering the complexity of their core business, they are always exposed to some ad-hoc requirements. Our deep understanding of our merchants based on our relationship allows us to offer credit solutions and enables them to leverage the real business opportunity on the platform,” added Sinha.
With access to potential borrowers and their proprietary data, any business can now offer credit products by partnering with platforms like TERA. “Information asymmetry has been the biggest bottleneck in delivering consumer credit in India. Providing credit solutions at the point of sale or point of need makes credit delivery much more efficient. This makes embedded lending a very attractive proposition that can be a win-win for both businesses and their partners,” Rathnam added.
COVID-19 has severely stifled credit flow to consumers and small businesses. Uncertainties around business continuity and job security are further making borrower evaluation difficult for traditional lenders. The emergence of new captive consumer lending entities that are integrated with businesses that are close to their customers will only help channel more credit effectively and quickly. TERA is now enabling businesses that have large customer bases to become profitable lenders themselves. This will not only help businesses further monetize their customer relationship but also deliver personalized credit products to customers and channel partners, indirectly enabling higher revenues and margins from their core business.
