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Luke Voiles

This article was originally published on 

It’s hard to overstate the importance of small businesses to our economy. They account for nearly half the private sector jobs and almost as much of GDP. Keeping small businesses healthy is in the best interest of all of us, and yet many have a very difficult time accessing the capital they need to operate and grow. 

For these small businesses–with anywhere from a few employees to a few hundred–

 isn’t just a challenge; it’s also a necessity. They’re often at the mercy of seasonality and typically don’t have the kind of cash cushion that larger companies do. 

For the smallest of these companies, a dip in cash flow or the loss of just one or two team members can endanger their ability to operate and keep the doors open. The need for access to working capital is very real, but so is the struggle to get it. The one source that has historically worked for small businesses is starting to disappear. 

Traditionally, these small enterprises relied heavily on their relationships with local banks, credit unions, or Community Development Financial Institutions (CDFIs). These institutions provided a lifeline, especially when the size, structure, or maturity of the business made it challenging to secure funding from larger lenders. Unfortunately, over the past decade and a half, these smaller community banks have experienced significant headwinds, leaving small businesses struggling to find the financial support they need.

In the aftermath of the 2008 financial crisis, small banks faced numerous challenges, while larger counterparts benefited from government interventions. The crisis had an especially big impact on small banks, while subsequent government interventions like TARP and the Dodd-Frank Act disproportionately benefited larger financial institutions. It’s an eerie parallel to the trouble smaller businesses have in dealing with some of the burdens bigger companies can more easily handle.

With decreased profit margins and increasing compliance costs, small banks have not been able to devote the same level of resources to crucial functions like lending to small businesses. This regulatory response left small businesses that once relied on local banks at the mercy of large conglomerates, which often implemented one-size-fits-all lending policies that didn't cater to the unique needs of small enterprises. 

With many smaller banks sticking with what they know and working with a decreased risk appetite, there are fewer options for many businesses in need of funds. Fortunately, there are financing platforms that still understand what it’s like to run a small business and are quickly increasing their offerings.   

Trips to the bank are becoming less and less frequent as businesses accept more card 

 and manage more of their business life online. In fact, software platforms are becoming the new “watering hole” driving capital into small businesses. It’s here that small business owners run their businesses from end to end and get the support they need. 

If we look back just a few years ago, most software was horizontal. Payment platforms were for payments, scheduling tools were for scheduling, and payroll software was only for running payroll. Today, software is verticalized, allowing business owners to do everything in one place. For example, restaurant owners can use Toast (or, even more specifically, pizzeria owners can use Slice) to accept orders, process payments, run marketing, and more.  

Until recently, the missing piece has been capital. But fintech is changing that. Vertical software platforms hold the deep industry knowledge and transaction data they need to become the new community banks on a much more niche level. Let’s talk about what that looks like.  

 falls short for small businesses when it’s designed to fit much larger ones. For example, many traditional bank loans are based on credit scores, two or more years of financial statements, and some type of collateral assets. Even SBA loans require a minimum of 3 years of business history. For younger and smaller businesses, any one of these elements can be a barrier to accessing financing, whether they deserve it or not. 

Modern fintech makes it possible for financing to be underwritten directly from transaction data, reflecting a small business’s true ability to pay back the funds. I’ve seen this work very well with as little as six months of data, making it a much better fit for young businesses. With live revenue data as the basis for the decision, collateral is no longer needed to reduce risk, which is also a welcome change for small business owners. 

This kind of transaction data is exactly what vertical software companies have in spades. As the operating platforms helping SMBs run every day, they have the first-party data needed to successfully underwrite small business loans with very reasonable risk levels. All they’re missing is the expertise in capital and the right models for 

. This is where a fintech partner comes in. 

 connects businesses or consumers to financial services through non-financial platforms. In this case, vertical software platforms are the perfect connection point, allowing business owners to 

 in the same place where they run their operations and accept payments every single day. 

,fintech lenders can ingest all the underwriting data they need, eliminating most of the cumbersome manual application steps and cutting out the middlemen from the customer's perspective. They can access the capital they need on the platforms they’re already using. Not only that, but capital also becomes seamlessly connected to the tasks that require it, like accessing capital for inventory inside of your inventory management system or the capital to cover payroll inside of your payroll software. 

This is what it looks like when niche software platforms increasingly serve the roles traditionally played by community banks for their unique industries. With the help of embedded financing, likely built by fintech partners, they can offer financing solutions that are tailored not only to small businesses, but even to the specific industries they serve. As more vertical software adopts embedded finance, the need for small businesses to go to traditional financial institutions decreases. And as these platforms expand to offer broader services within their industries, they gain additional data points, allowing for even more tailored and bespoke financial solutions, all accessible in one place. 

Discover how embedded finance can transform software companies into the new community banks.

Discover how embedded finance can transform software companies into the new community banks, providing small businesses with seamless access to capital.

Will Embedded Finance Make Software Companies the New Community Banks?

Connect with Manpreet on LinkedIn to keep the conversation going.

Manpreet Dhot

For the smallest of these companies, a dip in 

 or the loss of just one or two team members can endanger their ability to operate and keep the doors open. The need for access to working capital is very real, but so is the struggle to get it. The one source that has historically worked for small businesses is starting to disappear. 

Traditionally, these small enterprises relied heavily on their relationships with local banks, credit unions, or 

Community Development Financial Institutions

 (CDFIs). These institutions provided a lifeline, especially when the size, structure, or maturity of the business made it challenging to secure funding from larger lenders. Unfortunately, over the past decade and a half, these smaller community banks have experienced significant headwinds, leaving small businesses struggling to find the financial support they need.

In the aftermath of the 2008 financial crisis, small banks faced numerous challenges, while larger counterparts benefited from government interventions. The crisis had an especially big impact on small banks, while subsequent government interventions like TARP and the 

 disproportionately benefited larger financial institutions. It’s an eerie parallel to the trouble smaller businesses have in dealing with some of the burdens bigger companies can more easily handle.

 and increasing compliance costs, small banks have not been able to devote the same level of resources to crucial functions like lending to small businesses. This regulatory response left small businesses that once relied on local banks at the mercy of large conglomerates, which often implemented one-size-fits-all lending policies that didn't cater to the unique needs of small enterprises. 

Trips to the bank are becoming less and less frequent as businesses accept more card payments and manage more of their business life online. In fact, software platforms are becoming the new “watering hole” driving capital into small businesses. It’s here that small business owners run their businesses from end to end and get the support they need. 

Traditional lending falls short for small businesses when it’s designed to fit much larger ones. For example, many traditional bank loans are based on credit scores, two or more years of financial statements, and some type of collateral assets. Even SBA loans require a minimum of 3 years of business history. For younger and smaller businesses, any one of these elements can be a barrier to accessing financing, whether they deserve it or not. 

This kind of transaction data is exactly what vertical software companies have in spades. As the operating platforms helping SMBs run every day, they have the first-party data needed to successfully underwrite small business loans with very reasonable risk levels. All they’re missing is the expertise in capital and the right models for risk management. This is where a fintech partner comes in. 

, fintech lenders can ingest all the underwriting data they need, eliminating most of the cumbersome manual application steps and cutting out the middlemen from the customer's perspective. They can access the capital they need on the platforms they’re already using. Not only that, but capital also becomes seamlessly connected to the tasks that require it, like accessing capital for inventory inside of your inventory management system or the capital to cover payroll inside of your payroll software. 

See how risk teams leverage AI and machine learning to enhance product innovation and streamline underwriting.

See how risk teams leverage AI and machine learning to enhance product innovation, streamline underwriting, and provide tailored financial solutions for SMBs.

"

"How Risk Teams Drive Product Innovation in Fintech  "

How Risk Teams Can Help Drive Product Innovation

Small and mid-sized businesses (SMBs) play a pivotal role in driving innovation and economic growth. However, despite their significance, a staggering 53% of these businesses find themselves in a challenging predicament – they have "no current access to credit," according to a revealing statistic from 

. This glaring gap in credit access has broad implications, especially for businesses in the nascent stages of their lifecycle.

Traditionally, this lack of access to credit was directly linked to the nature of small business underwriting. Traditional business underwriting was heavily dependent on financial statements and bureau information that created a bias of more favorable outcomes for large & more established businesses. 

Young businesses often lack sophisticated accounting processes to create robust financial statements. Financial statements are a static information source that provides a point-of-time view of the business, which may not reflect the current financial situation. 

Early-tenure businesses tend to rely heavily on the owner's personal credit. The nature of small business credit needs drives higher & more volatile credit utilization leaving these small business owners with a knock on their personal credit as they build their business. This creates a deterrent in their access to credit and hence becomes a self-fulfilling prophecy.

Post 2008’s Great Recession, as banks pulled back from small business lending, a wave of fintechs tried to solve this problem with underwriting algorithms that combined these traditional sources of information with bank cash flow information that was now available via opt-in methods like Plaid/Yodlee. After some initial success, scaling this business model became an issue due to several limitations. 

These early fintech efforts used algorithms that still relied heavily on traditional bureau data and did not fully solve the access issue for businesses with a low traditional credit footprint. They were primarily reliant on direct channels for customer acquisition, which led to high cost of acquisition and high fraud losses due to an adversely selected pool of applicants. In direct channels, with most of the information required to underwrite being available only at the time of application, pre-approved offers could not be served, and the conversion of applicants to actual funded loans was quite low.

, where capital solutions are integrated within the digital ecosystem of the business, is proving to be a game changer. 

In this model, the card processor and vertical software provider become the channel partners for the 

 Technology integration with these partners means that capital solutions can be provided to borrowers within the ecosystem that they leverage on a day-to-day basis to run their business, thereby bringing capital to their digital doorstep. This also provides lenders continuous & real-time access to revenue data of the business enabling pre-approved loan & other credit offers based on this information. 

Revenue data tends to be much more portable across industries & geographies than bureau data. Even a short revenue history can enable offers of capital, whereas a bureau score takes years to gravitate to a prime score. By tapping into revenue data and being in the 

for collection, businesses, especially those deemed "too risky" by traditional models, can be given access to capital more fairly. This shift not only reduces risk but also democratizes access to credit, providing a lifeline to the small and mid-sized businesses that are often left out of the traditional lending equation. 

Embedded finance also solves the “conversion” and “cost of acquisition” issues with direct channels. Since the offers are pre-approved, most of the applicants can be approved, unlike the direct channels that have a much lower approval rate. Given the limited information required to be collected from applicants, the customer experience is much more frictionless, driving higher borrower adoption.     

Over the next few years, I believe we’ll see an explosion of 

 and embedded capital products, allowing a much broader range of companies to thrive and grow with access to credit. 

Explore how embedded capital leverages unbiased data to democratize credit access for small and mid-sized businesses

Explore how embedded capital leverages unbiased data to democratize credit access for small and mid-sized businesses, overcoming traditional barriers.

Can Embedded Capital Democratize Credit Access with Data?

Can Embedded Capital Democratize Credit Access with Unbiased Data?

Pipe

In the fast-paced fintech landscape, strategic partnerships are crucial for fostering innovation and accelerating growth. With a focus on 

, Pipe distinguishes itself by offering a spectrum of partnership models, each designed to cater to the varying needs of its partners and their end-users. These models range from referral partnerships to deep integrations, illustrating Pipe's commitment to flexibility and mutual growth.

At the foundation of Pipe's partnership strategy lies the referral model. This approach is built on simplicity and accessibility, allowing partners to refer their clients to Pipe's capital solutions. It's a mutually beneficial arrangement where partners can enhance their service offerings without the need for direct integration. For businesses looking for quick and straightforward ways to provide additional value to their customers, the referral model offers an entry point into the world of embedded finance.

Pipe Hosted Approach with One Data API Integration

Moving a step further, Pipe offers a hosted approach through a single data API integration. This model is designed for partners seeking a balance between 

 and a seamless user experience. By leveraging pre-approved offers based on the partner's merchants’ data, this approach allows for a more 

personalized and streamlined service directly within Pipe's platform

. It's an efficient way to offer embedded capital solutions without full integration.

 aiming for the pinnacle of seamless integration, Pipe offers a comprehensive solution through deeper integration via SDKs and APIs. This model is tailored for platforms that prioritize a native experience for their users, embedding Pipe's 

 directly into the partner's ecosystem. It transforms the way capital is accessed, making it an integral part of the partner platform's workflow. This deep integration ensures that the end-users benefit from a frictionless experience, accessing capital as if it were a native feature of the platform they’re already using. While the technical demands of a full integration are a bit higher, our expert Product and Engineering team offers support every step of the way.

Through these strategic collaborations, Pipe not only improves financial access for small businesses but also enriches the ecosystems of its partners. For instance, a software platform for SMBs can integrate Pipe's embedded capital solutions to offer their users instant access to 

 without leaving the platform. This not only enhances the platform's value proposition but also supports the growth and sustainability of the businesses it serves.

Building Success Together: Pipe's Partnership-First Approach

Implementing these partnership models requires aligning strategic goals and managing technical integrations. However, Pipe's commitment to flexibility, combined with our technical support, ensures that these challenges are navigated successfully.

Pipe distinguishes itself from traditional funding sources by prioritizing a partnership-first approach rather than merely facilitating transactions. Unlike conventional lenders that may impose rigid terms and focus solely on profitability, Pipe collaborates closely with businesses to understand their unique challenges and opportunities. This collaborative approach ensures the capital solutions provided aren’t just tools for immediate needs but are part of a strategic framework designed to support long-term growth and success.

Whether through simple referrals, hosted solutions, or deep integrations, Pipe offers a capital funding model that caters to the unique needs of our partners. This flexibility not only fosters growth and innovation but also ensures that end-users have seamless access to the financial services they need. As the fintech landscape continues to evolve, we hope our collaborative model serves as a blueprint for how strategic partnerships can unlock new possibilities and drive the industry forward.

Interested to learn more? Watch the full conversation between Luke Voiles (CEO of Pipe) and Tom Priore (CEO of Priority) 

Three ways Payfacs and ISVs can partner with Pipe to quickly launch an embedded capital offering.

Three ways Payfacs and ISVs can partner with Pipe to quickly launch an embedded capital offering to support their merchants, grow GPV, and drive new revenue

Discover Pipe's Partnership Ecosystem

As the small business economy evolves, Payment Facilitators (Payfacs) are a crucial partner enabling seamless transactions across platforms. However, in an increasingly competitive marketplace, Payfacs must continuously seek innovative ways to enhance their value proposition and strengthen merchant loyalty. One strategy that’s gaining traction is the integration of 

—a move that promises not only to transform the Payfac ecosystem but also to improve merchant satisfaction and drive growth significantly.

The Value of Embedded Capital for Payfacs

 seamless integration of working capital within non-financial platforms

, allowing merchants to access funding directly through their existing payment processing systems. This innovative approach addresses a critical need among merchants for timely access to working capital, enhancing the overall service offering of Payfacs. By embedding capital solutions into their platforms, Payfacs can provide more comprehensive financial support, making it easier for merchants to manage cash flow and fuel growth without having to look elsewhere.

Enhancing Merchant Satisfaction and Loyalty

Direct access to embedded capital addresses one of the most common financial pain points for merchants: the need for 

. Whether it's to stock up on inventory before a peak season or to bridge a cash flow gap, merchants often find themselves in need of short-term funding. Traditional lending channels can be slow, requiring extensive paperwork and long waiting periods. Embedded capital offers a swift, streamlined alternative, significantly enhancing merchant satisfaction.

Moreover, by providing these essential financial services, Payfacs can foster greater loyalty among their merchant base. Merchants are more likely to stick with a Payfac that not only processes their transactions but also supports their growth and financial health. 

Offering embedded capital can serve as a powerful differentiator for Payfacs in a crowded market. Not only does it add value for merchants, but it also opens new revenue streams for Payfacs themselves. As merchants leverage embedded capital to expand their operations, they're likely to process more transactions and generate higher volumes, in turn, increasing the processing revenues for Payfacs, along with a share of fees generated from the capital product.

Operational Efficiency and Risk Management

By leveraging the vast amounts of data that Payfacs already collect, implementing embedded capital can be streamlined and efficient. This data can be used to assess whether merchants are qualified for a working capital offer, and 

the offers are tailored to the merchant's financial health

. This process is dynamic, generating new working capital offers as merchants grow, all while minimizing the risk of defaults by aligning payments with the merchant's cash flow.

Navigating Challenges and Maximizing Opportunities

While integrating embedded capital presents numerous opportunities, it also comes with challenges, such as regulatory compliance and the complexities of financial product integration. However, these challenges can be navigated with careful planning, leveraging 

partnerships with fintech companies like Pipe

, and employing robust technology solutions.

Embedded capital is set to transform Payment Facilitators, offering a strategic tool to enhance merchant services, drive growth, and differentiate in the market. By embracing this innovative approach, Payfacs can not only improve their value proposition but also foster deeper, more loyal relationships with their merchants.

As the digital economy continues to evolve, Payfacs that are quick to integrate embedded capital into their platforms will be well-positioned to lead the way, offering a comprehensive, supportive financial ecosystem that empowers merchants to thrive.

Interested to learn more? Watch the full conversation between 

Find out how embedded capital can help payment facilitators build merchant loyalty, grow GPV, and drive revenue, while managing their risks.

Find out how embedded capital can help payment facilitators build merchant loyalty, grow GPV, and drive revenue, while managing their risks and resources

Transforming Payfac Ecosystems with Embedded Capital

 marks the evolution from traditional, standalone financial services to their integration within platforms and services that businesses and merchants use daily. Initially, financial solutions were broad, one-size-fits-all tools. However, as technology advanced, these solutions began to specialize, catering to the unique needs of specific industries or verticals. This transition from horizontal to vertical-specific tools has significantly enhanced the customer experience by providing more tailored, relevant, and efficient tools. It’s also made embedded financing much more powerful.

Embedded Finance and Its Impact on Small Businesses

For small businesses, embedded finance has been a game changer. By 

integrating embedded capital solutions directly into business platforms

, companies gain direct access to capital, without ever leaving their operational ecosystem. This 

 empowers businesses to focus more on growth and less on funding logistics.

For example, think about a coffee shop that, two decades ago, would manage transactions, payroll, and accounting through cumbersome, manual processes. Today, that same coffee shop can leverage specialized tools that handle all of this within a single platform. Now, with embedded finance, they can easily access working capital from within that same platform, with no need to compile financial statements and go to the bank.

The concept of unified commerce is emerging, where all facets of financial services—payments, banking, access to capital—are seamlessly integrated into a single platform. This unified approach makes financial management more intuitive and less time-consuming for business owners, who are often time-strapped and wearing multiple hats.

For small businesses, this could mean having a single dashboard that manages everything from inventory purchases to employee payroll, with embedded financial services like access to capital or payment processing. This level of integration not only streamlines operations but also provides businesses with a holistic view of their financial health, enabling better decision-making and fostering growth.

The evolution of embedded finance represents a significant leap forward in the way businesses interact with financial services. By breaking down the barriers between financial and operational platforms, embedded finance offers a more integrated, efficient, and accessible financial ecosystem for businesses of all sizes.

 continue to lead the way, driving innovations that promise to further transform the business landscape. In today’s market, staying ahead means embracing the integrated, seamless, and efficient solutions embedded capital provides.

This blog was inspired by the conversation between 

Payments, banking, and access to capital are coming together on unified platforms.

Payments, banking, and access to capital are coming together on unified platforms. See how embedded finance makes this possible in a whole new way. 

The Evolution of Embedded Finance Towards Unified Commerce

The Evolution of Embedded Finance: A Leap Towards Unified Commerce

Independent Software Vendors (ISVs) are at the forefront of technological innovation, crafting solutions that not only meet but anticipate the needs of businesses across industries. As these ISVs seek to provide more value and deepen user engagement, embedded finance emerges as a key area of opportunity. 

Integrating financial services—particularly access to working capital

—into software platforms can transform user experiences, open new revenue streams, and ensure platform stickiness.

 refers to integrating financial services within non-financial platforms. For ISVs, this means offering users access to financial products—such as capital, lending, payment processing, and insurance—directly within their software. This integration creates a seamless experience for users, who can access financial tools without leaving the platform, enhancing efficiency and user satisfaction.

Partnering with Embedded Capital Providers

For ISVs interested in integrating  a working capital model for embedded finance, various partnership models exist. These range from referral agreements with financial institutions to deeper tech-enabled collaborations involving API integrations. Pipe offers flexible e

 models that allow ISVs to choose the level of integration that best suits their platform and user needs. Through these partnerships, ISVs can provide embedded capital solutions that appear native to their platforms, enhancing the user experience without the need to develop complex financial services in-house.

Embedded finance within ISV platforms can be transformative. For example, business management software integrating embedded capital can enable its users to apply for and manage a loan or advance directly through the software, using data already within the system to streamline the application process. This not only simplifies access to capital for businesses but also strengthens the software's role as an indispensable tool for business operations.

Despite the clear benefits, ISVs may have concerns about implementing embedded finance, from technical integration challenges to maintaining user trust. Collaborating with established fintech partners like Pipe can alleviate these concerns. Pipe's experience and technology enable smooth integration of financial services, ensuring compliance, data security, and a seamless user experience.

For ISVs looking to future-proof their platforms and drive growth, embedding financial services offer a compelling opportunity. By integrating working capital and other financial solutions, ISVs can enhance their platform's value, foster deeper user engagement, and tap into new revenue streams. 

Pipe’s embedded capital offering isn’t a loan; it’s an advance based on a company’s revenue. This allows a wide range of businesses to access capital quickly, with an approval process that’s much faster than typical for lenders. By embedding Pipe Capital into your software platform, you give your merchants easy access to funding, including pre-qualified offers based on first-party transaction data.

Find out how ISVs can gain a strategic advantage by offering embedded financing and how simple it can be to implement

ISVs and the Future of Embedded Finance

Innovating at the Intersection: ISVs and the Future of Embedded Finance

Payment Facilitators (Payfacs) are constantly seeking innovative ways to enhance their offerings and add value for their merchants. Embedding financing options, like 

seamless integration of financial services

 that can increase merchant success and the growth of Payfacs themselves.

Embedded lending is the integration of lending services directly into the platforms that businesses already use for their daily operations. This approach eliminates the need for businesses to seek external financing solutions, providing them with fast, convenient access to capital. For Payfacs, embedded lending represents an opportunity to deepen relationships with merchants by addressing one of their most critical needs: access to funding.

Integrating an embedded capital product requires a strategic approach. Payfacs can look to 

, like those used by Pipe, which range from simple referrals to deep API integrations. These models provide flexibility in how Payfacs can offer services, allowing for a tailored approach that meets the needs of both them and their merchants.

While the benefits are clear, Payfacs still need to consider challenges such as regulatory compliance and integration complexities. Partnering with experienced fintech companies like Pipe can mitigate these challenges. Pipe's partnership-first approach ensures that Payfacs can implement embedded capital solutions that are not only compliant but also seamlessly integrated into their existing platforms.

Pipe’s embedded capital offering isn’t a loan, it’s an advance based on a company’s revenue. This allows a wide range of businesses to access capital quickly, with an approval process that’s much faster than typical for traditional lenders. By embedding Pipe Capital into your software platform, you give your merchants easy access to funding, including pre-qualified offers based on first-party transaction data.

 offers a pathway for Payfacs to significantly enhance their value proposition, deepen merchant relationships, and drive mutual growth. By addressing the critical need for access to capital, Payfacs can empower their merchants to achieve their growth objectives, resulting in increased processing volumes and revenue. As the digital payment landscape continues to evolve, embedded capital stands out as a strategic advantage for Payfacs willing to embrace innovation and partnership opportunities.

Here's how embedded lending and other embedded capital offerings can help Payfacs drive growth.

Here's how embedded lending and other embedded capital offerings can help Payfacs drive growth and become even more essential to the merchants they serve.

Empowering Growth: How Payfacs Can Leverage Embedded Lending

Connect with Ben on LinkedIn to keep the conversation going.

Ben Goodyear

For more than a decade, I’ve held key financial positions with Mailchimp, Visa, Intuit, and Pipe, with front-row seats to the inner workings of small and mid-sized businesses. During that time, not a day has gone by that I wasn’t immersed in data. But the way we leverage data is changing, and with it, hopefully, the way you look at your own business data. 

There’s a common misconception among companies of all sizes that CFOs are focused entirely on financial statements and 

be heads-down looking at that bottom line. But in today’s world, there’s more than one bottom line and more than one way to get there. We’re all looking for an edge—either a way to get ahead of the competition or a way to improve 

 performance—and I believe comprehensive performance data is the key to finding that edge.

We live in a complex world, and the complexity is only going to keep accelerating. Where CFOs once really 

limited to things like financial statements for insights, we’re now connected to more data and potential to measure performance than ever before. We have data measuring every part of the customer experience, from acquisition to engagement, performance, and attrition, all at our fingertips. Not only that, but we also have smarter tools to help us analyze that data with the help of AI and machine learning. 

All of this leads to two major shifts for the modern CFO. First, inputs from so many different places can revolutionize the way we make decisions. Instead of waiting for data that is backward-looking, we have the potential to invest in near real-time information. To make the most of all this data, we 

stay connected with the tools and know-how to analyze it. Anything else is just asking to be left behind by the competition. 

Secondly, CFOs must become experts in more than just the dollar signs and contribute to the company more broadly. In a complex market where small businesses and large corporations manage across multiple sales channels, compete for talent, and make financial decisions to grow their business, the world is more centered around data than ever. If you can help drive smarter decisions across functions, you’ll add value our finance forefathers and mothers only dreamed of.

Most companies I talk to ask about the tools and processes to make data-driven decisions. Here are five steps I suggest to them, and to you, to get a handle on your data and make the most of it for your company: 

Gone are the days of making financially or analytically inclined employees among your last hires. It bears repeating that companies that fail to prioritize data will be left behind. You need to reflect that value in your hiring decisions and the tools you invest in. 

Hire data-savvy people early on and equip them with the technology to capture, see, and analyze data in the best way. This will result in high-quality, usable data that will move your company forward and lead to much better decision-making.

 data out there, knowing where to focus is important. Make strategic choices about the metrics sacred to your sales and marketing funnel, customer satisfaction, and profitability. Once you know what to track, you can align your team around these numbers so everyone is on the same page. There’s nothing worse than monitoring metrics that don’t align with your goals or having your teams pour effort and time into work that moves the wrong needle.

We all know that setting goals only helps if you track your progress. In the same way, monitoring key metrics in your data is only useful if you review them regularly. Determine the best frequency for these reviews and who needs to be involved and stick to that schedule. Remember, just because you have data does not mean you have to review it with your team every day. Give your data some time to bake so that your reviews hold real meaning.

With the right people on your team using the right tools, you can be confident that your data is accurate. This sets you free from doubt and lets you foster healthy debate around what to do about the data, not the data itself. This is an easy point to gloss over, but it’s key to the power of good data. With a shared understanding of what the numbers really measure, you can focus your time and attention on building strategies and taking action.  

Commit to action and track the progress 

All of these things move us toward an ultimate goal: a culture that embraces the discussion and evolution of strategy. All this data makes it possible to see shifts beneath the surface and, in some cases, even predict them before they arrive. Meaningful progress in our companies comes from embracing those shifts and taking committed action as a result. That’s how the data-driven CFO becomes a driver of results.

As CFOs, we sit in the perfect position to harness the power of data. We’re well-equipped to make analytical decisions based on hard numbers. Now we need to direct that analytical thinking to more than just the financials. With accurate, reliable data, we can contribute to the company in new and exciting ways that have an outsized impact on the bottom line and beyond. 

Discover how embedded lending can help Payfacs and ISVs grow faster and how alternatives like Pipe can help streamline the process

Unlocking Business Growth with Embedded Lending

How to unlock financial data as a growth tool, no matter your business size

Connect with Kyle on LinkedIn to keep the conversation going.

Kyle Polley

Embedded finance has emerged as a critical component in today's fintech ecosystem, offering an agile, seamless, and consumer-centric way to deliver financial services. This integration transforms many platforms, from online marketplaces to mobile apps, into hubs for financial transactions. While the opportunities are promising, the security of these financial technologies remains a paramount concern. In this post, we will explore the two cornerstone technologies—APIs and iFrames—that enable embedded finance and discuss best practices for securing them.

 refers to the seamless integration of financial services into platforms and applications outside of the traditional financial sector. This integration is facilitated primarily through two technologies: Application Programming Interfaces (APIs) and Inline Frames (iFrames).

APIs act as the intermediary that allows two different software applications to communicate and interact. They enable third-party services to access specific functionalities or data of a primary service provider. For example, APIs are crucial for integrating payment gateways, investment platforms, or insurance services into embedded finance ecosystems.

 allow the embedding of an HTML document within another HTML document. This technology enables the integration of various financial services—like secure payment forms or loan applications—directly into a website. Despite its occasionally negative reputation for being associated with ads and phishing schemes, when deployed correctly, iFrames can serve as a secure and effective tool for integrating complex financial functionalities.

Enforcing SSL (Secure Socket Layer) encryption and HTTPS (HyperText Transfer Protocol Secure) protocols for all API calls is the foundational step in securing API communications. This encryption ensures that any data transmitted over the internet is encrypted, rendering it unintelligible to unauthorized third parties. By doing so, organizations can substantially mitigate the risks associated with Man-In-The-Middle attacks, where an attacker could intercept, read, and potentially modify the data during transmission.

Rate limiting restricts the number of API calls from a particular IP address within a given time frame. This is crucial for protecting against Denial-of-Service (DoS) and Distributed Denial-of-Service (DDoS) attacks, where attackers attempt to flood the system with traffic to make it unresponsive. By implementing rate limiting, organizations can ensure that legitimate users still have access to services even when an attack is taking place, thereby preserving functionality and user experience.

 (ACLs) provide a structured approach to managing permissions. Granular ACLs can be set up to define precisely which users or systems have access to specific types of data or functionalities. This is particularly important for minimizing the potential damage that can be done if an API key is compromised. By adhering to the principle of "least privilege," wherein systems and users are given the minimum levels of access—or permissions—they need to perform their functions, organizations can significantly reduce security risks.

As APIs evolve and new features are added, it's crucial to regularly perform penetration testing. These tests simulate cyber-attacks to find vulnerabilities before malicious hackers can exploit them. Continuous testing, coupled with API hardening strategies such as input validation and output encoding, ensures that APIs remain secure even as they scale and evolve.

 attribute allows website owners to impose restrictions on iFrames, thus isolating them from other elements on the page. This isolation ensures that even if the iFrame contains malicious code, it cannot easily impact the main website or its visitors. Owners can customize the level of access the iFrame has to various browser functions, such as running scripts, submitting forms, or accessing the DOM, providing an additional layer of security.

Limiting Which Websites Can Render an iFrame

To prevent Clickjacking attacks—where attackers trick users into clicking hidden elements within an iFrame—it's essential to control which websites can render your iFrames. Using HTTP headers like 

 can limit the rendering to trusted domains or even restrict it to the same origin.

Validation and sanitization of user input are vital for preventing Cross-Site Scripting (XSS) attacks, where attackers inject malicious scripts through input fields. Utilizing modern browser features like the 

 interface allows for secure two-way communication between the iFrame and the parent document.

Moreover, sanitization techniques should be applied to strip out or neutralize characters that have special meanings in HTML, JavaScript, or SQL, thereby reducing the risk of code injection attacks.

The integration of financial services into various platforms through embedded finance offers unparalleled convenience and functionality. However, the security of these integrations cannot be compromised. By understanding the unique security concerns related to APIs and iFrames, organizations can implement effective strategies to protect against vulnerabilities and potential attacks.

Security isn’t just a feature —it’s a core foundational element of embedded finance. Every strategic decision must be calibrated with the safety and privacy of a customer’s data as a top priority.

 Type II attestation is a significant milestone that demonstrates a commitment to data protection and maintaining customer trust. Like the penetration testing mentioned earlier, SOC2 attestation invites external testing and scrutiny of a company’s controls and safety measures and serves as concrete evidence that it is meeting industry-leading standards in safeguarding customer data and maintaining a secure operational environment.

As embedded finance continues to evolve, keeping security at the forefront will be key to fostering trust and facilitating seamless user experiences. With robust security measures in place, embedded finance can indeed become a secure and invaluable asset in the evolving digital landscape.

Key points to keep in mind to ensure your embedded finance offering is secure and your users' data is protected.

Key points to keep in mind to ensure your embedded finance offering is secure and your users' data is protected against fraud and unauthorized access. 

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