Study finds embedded finance is better for underserved communities
A new report by YouLend, a leading global embedded finance platform, conducted in partnership with Experian, the world’s leading global information services company, found that YouLend attracted 12% more applications from female-led businesses and was more than twice as likely to finance female-led businesses than the UK average.
The Widening Access to Capital Report indicates that embedded financing models are more effective than traditional banks in providing capital to female-led SMEs. Analysing over 100,000 cases of merchant financing from YouLend and comparing it to Experian’s data about the market, the study also uncovered that last year YouLend offered 90% approval rates for applicants, well above the 64% average in the UK.
Commenting on the findings, Mikkel Sølvsten Velin, YouLend Co-Founder and Co-CEO, said, “Our report confirmed that female-led businesses face more barriers when accessing much-needed finance than male-led businesses do. Positively, we also found that embedded finance can help break down those barriers through new distribution channels and potentially less biased underwriting models.”
He concludes: “Whilst we are proud of our social impact at YouLend, there is much more to be done to ensure equitable access to finance for businesses in our end markets in the UK, EU, and the US, particularly during the cost of living crisis.”
YouLend and Experian’s study reveals that embedded financing models are generally more effective in providing capital for underserved communities in the UK. Embedded finance models place financial products in a nonfinancial customer experience, journey, or platform without redirecting to traditional financial institutions. This allows excluded groups to apply for flexible, agnostic, and affordable financing.
For example:
- Over half (58%) of YouLend’s SME capital segment went toward the two most deprived regions in the UK
- 29% of all applications YouLend receives are from female-led businesses, outperforming the national average of 17% on application and approvals
Access to vital financial support for SMEs is essential to power growth on a local level. The data shows that by the end of H1 2023, SMEs contributed an additional £6.8 billion in revenue to the UK GDP and increased employee headcount by 14% by receiving financing from YouLend.
Read the full report here.
