Embedded Finance and B2B: how Fintech is changing the game

To meet an ever-increasing number of needs and provide innovative solutions for credit risk analysis and management to its users through the automation of analysis processes, in 2016 modefinance launched Tigran, a modular platform patented in 2021. This advanced architecture provides a wide range of customizable services to meet the needs of financial institutions and businesses in an ever-evolving world.

Starting with the fact that Tigran is a sophisticated solution that integrates the functionalities and services of a Fintech rating agency into a modular web platform for counterparty risk assessment and investment portfolio management, the platform is based on four distinctive features:

• Customizable decision engine: it is based on proprietary Big Data and Machine Learning algorithms. This powerful assessment engine enables accurate and timely credit analysis, adapting to specific risk sensitivities and financial areas such as factoring, lending, leasing, suppliers, and more. By implementing credit policies and proprietary models, Tigran offers a highly flexible solution that can adapt to the unique needs of each user.
• Data collector: it integrates and evaluates proprietary data from the rating agency and third-party sources in real-time. This approach creates a single information asset for the entire credit chain, optimizing efficiency and the timeliness of evaluations.
• Process automation: from pre-screening to decision-making, the platform digitizes the credit process, significantly reducing the time-to-yes (the time it takes for a bank to decide whether to open a credit line to a company). This allows analysts to focus only on more complex cases, optimizing operational efficiency and streamlining workflow across different business units.
• Real-time portfolio monitoring: this offers a competitive advantage, enabling first and second-level controls, automatic portfolio risk assessment, and the computation of expected losses (Loss Given Default and Value at Risk). This monitoring capability allows financial institutions to respond promptly to market dynamics and take preventive measures to manage risks effectively.

With the constant changes in the global financial environment, the needs of financial institutions also change, requiring solutions that are:

• Turnkey: to reduce time-to-market and respond promptly to customer needs
• Flexible: to easily integrate new solutions into existing infrastructure
• Specialized: to select technology partners that bring value with their expertise
• Discreet: to adopt technological solutions without major technical and infrastructure disruptions.

In order to meet the needs of the financial sector, modefinance offers its users the opportunity to access all models and services through both the Tigran platform and APIs, enabling their integration directly into the user’s management systems, thus ensuring a more intuitive, direct, and immediate process. This contributes to simplifying the interaction and access to financial solutions, improving the overall user experience.

The characteristics of our APIs stand out for their accessibility and flexibility. API resources are publicly accessible, allowing for easy integration. The REST API protocol is compatible with a wide range of programming languages, ensuring easy connectivity. All communications occur securely via the HTTPS protocol, and authentication is handled reliably through basic authentication or SSL certificates.

Furthermore, we provide a dedicated test environment for development needs, ensuring a smooth transition. Responses are provided in versatile formats such as JSON and ZIP, containing requested products in formats like PDF or XML. Calls can be synchronous for immediate responses or asynchronous for deferred processing, ensuring optimal usability of information.

The flexibility of solutions offered by modefinance through APIs opens the doors to a world of possibilities for financial institutions and businesses. These models and services, designed as building blocks on a standardized foundation, can be assembled in different ways to create highly customizable decision engines for various types of products and counterparts, a fundamental feature for addressing the specific challenges of the modern financial world.

The ability to build tailor-made risk assessment processes, from preliminary analysis to underwriting, without necessarily having to use the entire Tigran platform, allows financial institutions to quickly adapt to changing market conditions and customer needs. Such agility is crucial in the financial sector, where execution speed and the ability to respond promptly to user needs are critical factors.

Below, we provide a graphical representation of the various products made available by modefinance, the different assembly of which gives rise to countless tools capable of responding in a sophisticated and precise manner to a wide range of our users’ needs.

Below, we present a case study of a neo-bank that embarked on a digitalization journey to enhance the efficiency of its credit process.

The primary challenge was to reduce the "time-to-yes" for credit approval, enabling the bank to disburse loans more quickly. The solution was the implementation of a digitalization strategy for the entire process and the engineering of eligibility policies, starting from the pre-feasibility phase.

Thanks to this digital transformation, the neo-bank was able to automate a significant portion of the credit evaluation process, leading to a substantial reduction in approval times. This significantly improved the customer experience and allowed the bank to respond more swiftly to the financial needs of its users.

But let's take a step back. What are APIs? 

Application Programming Interfaces (APIs) are sets of definitions and protocols used to create and integrate software applications. APIs play a crucial role in the implementation of Embedded Finance, acting as a bridge between different platforms and enabling the seamless integration of financial services into third-party applications.

Therefore, these protocols allow systems to communicate with other products and services without the need for extensive implementation, simplifying both technology development and the possibility of significant ease of integration.

This Plug-N-Play approach enables various digital platforms to easily connect to financial services, allowing banks to offer integrated financial solutions directly within their platforms. It also simplifies the adoption, management, and use of innovative systems, ensuring high service standards for their users.

APIs, with their key role in Embedded Finance, offer numerous advantages that are revolutionizing the banking world, including:

• Integration time savings: thanks to the ease with which APIs facilitate communication between different systems, banks can integrate new financial services without the need for complex development operations, thereby reducing associated costs
• Learning time savings: access to integrated financial services occurs directly within the banks’ systems, allowing employees to use new features without having to interact with new platforms or processes
• High security standards: ensuring the protection of sensitive financial data and reducing the risks associated with potential privacy breaches
• Simplicity in interacting with proprietary systems and internal processes: APIs are compatible with any platform and process already in use, making interaction with proprietary systems and internal processes straightforward
• Improved operational agility: facilitating digital evolution and process automation
• Cost-effective service selection: the ability to request one or more services at a low cost. This economic flexibility allows financial institutions to select solutions that best suit their needs and implement them without significant investments in development and infrastructure.

The integration of financial services directly into digital platforms through APIs can be summarized by the term “Embedded Finance”, a relatively new concept in the fintech world that is rapidly gaining ground as one of the primary drivers of innovation in the financial sector. A natural evolution of open banking, Embedded Finance is fundamentally transforming how users interact with their financial resources and opening up new possibilities for businesses and banks.

The benefits of Embedded Finance are manifold. Firstly, it significantly enhances the user experience, making financial services more accessible and convenient. Moreover, this integration of financial services into digital platforms also enables greater customization of product and service offerings, as financial institutions can use collected data to understand their customers’ financial behaviors better, thus adapting more effectively to their needs. The ability to leverage collected data and thus build a more comprehensive overview of users’ financial habits also enables the creation of innovative financial products and services. Consequently, financial institutions can identify new market opportunities and develop cutting-edge solutions to meet previously unexplored needs.

Furthermore, Embedded Finance significantly enhances risk management. With a wealth of information about financial behavior, banks and other financial institutions can better assess the risk associated with each user, ensuring greater security and stability in financial operations.