Lecture series
Fintech business models in lending: embedded finance, BaaS and platforms
Who faces the customer, who holds the licence, who funds the loan and who bears the loss: how fintech lending models divide the work of lending, and what each arrangement means for risk, revenue and responsibility. Six lessons.
6 of 6 lessons published. Lesson 1 is free to read.
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- 01The lending value chain: who does what in a fintech loanA loan is several jobs: meeting the customer, running the process, providing the systems and holding the money at risk. Fintech business models differ mainly in who takes each job, and the first question about any model is who bears the loss when a borrower does not repay.
- 02Embedded finance: lending inside someone else's customer journeyEmbedded finance places a loan inside an activity the customer is already doing, such as buying from a platform, selling on it or being paid through it. The platform brings the customer and the data; a licensed lender brings the money and the credit decision. The questions are how the work, the revenue and the responsibility are divided.
- 03Banking-as-a-service: the licensed partner behind the brandIn banking-as-a-service, a non-bank brand offers the loan and a licensed bank or lender stands behind it with the licence and, often, the money. The work can be divided by contract; the responsibility to the borrower and the regulator stays with the licensed partner. The loss is divided too, and that division deserves the closest reading.
- 04Platform lending: marketplaces and balance-sheet lendersA lending platform either matches borrowers with investors and earns fees, or lends from its own balance sheet and earns a margin. The two look alike to the borrower but behave differently when losses rise, when investors leave and when the platform itself fails.
- 05Big tech and super apps in lending: data, distribution and concentrationLarge technology firms and super apps bring three things to lending that others lack: a very large customer base, a constant flow of data on how customers buy and sell, and the payment account through which their money passes. These can replace some of what collateral does for a bank. The same features raise questions of dependence, market power and how rules should apply.
- 06Choosing a model: risk, revenue, responsibility and the rulesEvery model in this course is a choice about which parts of lending a firm keeps and which it hands to others. The choice decides how the firm earns, how much of a bad year it feels, what it still answers for, and which licence it needs. Set side by side, the models differ most in who bears a rise in losses.
Quiz and certificate 9 questions; those on lesson 1 are free to try. Read every published lesson and score 80% or more for a certificate of completion.
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