Ian Hillis
Hi everyone, and welcome back to PayFAQ: The Embedded Payments podcast, brought to you by Payrix and Worldpay. I’m your host, Ian Hillis, and today I’m talking with Renn Salo, Vice President of Payments at Inktavo, about all things Embedded Finance and lending, in particular. Renn, welcome to the show.
Renn Salo
Thanks for having me. Excited to be here.
Ian Hillis
We are thrilled to have you here. So, audience, I want to give you a little bit of background about Renn and why we should be listening to her and her expertise here. It’s exciting. Renn has over 10 years of payment experience across risk and regulatory, PNL ownership, process, design, change optimization, you name it. She’s currently heading up payments at Inktavo, where she’s been for the last two and a half years and as a goal oriented, engaging payments leader with a serious knack for transforming operational environments all while maintaining optimal customer experience, Renn embraced the opportunity to support Inktavo’s business by implementing an Embedded Finance solution into their platform experience. And I’m really excited to chat with her about that decision, what fueled it, how things have been going for her and Inktavo as earlier adopters in this space. And look, personally, I’ve had the chance to know Renn for a while now and could not be more excited for this conversation. So Renn, to kick it off can you tell our listeners a little bit about Inktavo and your role there?
Renn Salo
Sure. Happy to. So Inktavo is a family of companies that develop software solutions to help print shops, promotional product distributors, and branded merchandise businesses succeed. Inktavo was created when Printavo and Inksoft were merged with significant investor support to create a best in class, all in one technology platform that automates essential operations at custom brand and merchandise shops. My role is to make payments a focused and intentional growth strategy to drive customer satisfaction and retention.
Ian Hillis
Excellent. So, Renn, tell me a little bit about the customers that are using Inktavo on a day-to-day basis. What is it like to be a print shop owner? Where does your software intersect with their day to day? Let’s help bring that customer to life for our audience, here.
Renn Salo
Inktavo offers a family of software solutions that serve a broad spectrum of brand and merchandise shops, so there isn’t one ideal customer. So, in the context of what we’re talking about here today, where Embedded Finance has been highly adopted amongst our customers, the ideal customer, there is a small to mid-sized business that does mostly in house production management of custom merchandise. So, think large machines and big production lines, if you will, highly artistic businesses that really focus on bringing their communities together through custom apparel. We really like to focus on shops that are small to mid-size, that are in high growth stages in their business life cycle. Our software brings that production management in house and streamlines that from end to end, moving jobs from order collection all the way to production, as well as order collection and payment remittance.
Ian Hillis
That’s helpful. And I know we are keeping folks in business, because I myself have tons of corporate swag that I’m sure as hit print shops and hit T shirts and all the fun stuff that we get on a day-to-day basis, so excited that that’s where you’re driving growth across all these pieces. Before we jump into kind of the lending and broader Embedded Finance, you’ve got this deep background in payments and expertise here. I’d love to start by hearing a little bit about the journey with Embedded Payments in particular. What payments model are you all leveraging today? What are some of the advantages you’ve seen across that?
Renn Salo
When I joined, Inktavo supported various payment integrations within our software, and so having come onto the team, we identified that a lot of our own internal development processes was going to maintaining all of these various touch points and endpoints for our customers. So, we really wanted to streamline our own internal development. And so Embedded Payments was the right option for us. So, we were looking for kind of a step up from the traditional rev share model, where we were an integrated partner earning nominal rev share into a more embedded experience, where we could own that customer experience and relationship. And so, we chose to do a PayFac-as-a-service, or “PayFac in a box,” if you’d like. And this transition was really important to us for several reasons. Two of those key reasons that stand out to me is so that we could consolidate those various integrations into one go forward solution, allowing us greater focus to bring more features and functionality to our customers and in a more expedited fashion. Again, we really wanted to have more ownership in our customer relationship. So rather than outsourcing all of our payments related questions, this model allowed us to bring that in house, giving our customers one place to go, one number to call, so that we could ensure that the experience for our customers within our software and any other type of ancillary service such as payments, was unified to really strengthen and boast that retention of our customers.
Ian Hillis
That’s really helpful. And I think we hear the customer experience and the desire to be kind of frontline with that as a common area where folks make that move into a PayFac-as-a-service or a PayFac model. How has that turned out? You’ve got experience in the integrated model. You’ve gone through this transition evolution. Are you seeing the benefits of that, from being that frontline and really having that interaction point with your customer base?
Renn Salo
Absolutely, it’s really strengthened our relationships with our customers and allowed us to better understand their needs from end to end and their entire business lifecycle, so that we can better build products and solutions to serve their needs more fully.
Ian Hillis
I’m going to segue us a little bit into Embedded Finance, and really ties well into your previous reaction there, which is, I want to first actually define Embedded Finance, because I think that matters a lot, and to your point around the nature of embedded and really the way we’ve used the definition here is Embedded Finance is embedding financial services into the ecosystems of software platforms and applications, and so presenting those financial products via a trusted brand in a well trafficked environment. And to your point, Renn, these are your customers. You know them really well. You want to be that voice and the first interaction point across all of them. That’s Embedded Finance: as we’re thinking about the definition here. You’re currently engaging with embedded lending. How important is that to your customer base?
Renn Salo
In the beginning of our payments journey, we didn’t realize how important it was for our customers. Going back to my previous answer, you know, really becoming that customer centric focus from Embedded Payments highlighted the need for embedded lending for our customers. You know, like most industries, COVID hit the custom print merchandise businesses very hard from, you know, supply chain issues, shipping issues, you know, across the board, right? And so really, having the access and a fast way to access capital became very paramount for our customers during that time, and has continued to remain an important focal point for them so they can continue to grow their businesses, whether that’s a need for capital investment to purchase large machinery or make a large bulk order for inventory management or whatever it may be, having access to that fast cash is really important. I think what’s even more interesting about the embedded lending is that it’s based off of your sales history, but also is repaid then on future sales. And so, it’s kind of out of sight, out of mind. And so that was really important for them and for us to be able to offer to our customers where traditional loans just maybe weren’t the right answer for them at the time.
Ian Hillis
How do you think that’s impacted your customer’s perception of your value proposition? So, you talked kind of at the beginning here of: there’s a lot of use cases that these underlying print shops are using and running business operations. At Inktavo you’ve put payments into that you’re now putting lending. How has that impacted your customer’s perception of that value proposition for you all?
Renn Salo
That’s a great question. I don’t know that I have a like tangible or quantifiable measurement to put to it, but I do have to say, you know, from our customers that take advantage of it, we’re over 75% of repeat customers that receive that capital lending. And for those customers, you know, the feedback that we’ve heard just one-to-one with customers is how important it was for them to be able to have that and how much they appreciated it. We’re also starting to see some higher retention with our customers based off of that program, but we’re still kind of early days yet to really know exactly what that quantifiable measurement is.
Ian Hillis
I think that topic of early days is a really important one, and Embedded Finance in general, my take still relatively new in the world of software, and there’s a handful of demonstrated use cases we’re seeing emerging use cases. In your mind as someone who’s embarked on this journey, how should software companies be thinking about this broad term of Embedded Finance? Any words of advice for software companies that are contemplating, if they engage with this?
Renn Salo
Great question. I think it really just comes down to your customer profile and what their needs are, right? So, for us, we identified that embedded lending was important to our customers. You know, some other things that we’ve been considering, or things like potentially, insurance or card issuance, or whichever. But you know really comes down to what is the need of your customer, and how can you best provide that for them in a way that improves your experience within your software? I think it’s also important to note that trial and error is probably to be expected, just like anything in early adoption. And so, you might not get it right or just right initially, but give it some time, you know, a chance to breathe. And that’s my greatest advice.
Ian Hillis
That’s really excellent advice. I’m wondering, so clearly, to think about lending, you’re getting some sort of customer feedback that’s indicating that kind of other signals on how it’s going. What does the customer feedback look like at Inktavo? How did you know that lending was going to be something that was going to be important to them, and what are the data sources you’re getting or conversations you have to kind of influence that roadmap going forward?
Renn Salo
Sure, early days again, rolling out Embedded Payments, and just meeting with customers, one to one, and trying to find out what they liked about it, what they didn’t like about it, how we could improve it. And just time and time again, it kept coming up. These were just needs that they were having the ability to have some capital to invest into their shops so that they could continue to grow. And so just really listening to that and digging into it and trying to figure out where their pain points were in that life cycle. And that’s, again, how we identify that not just lending was important, but lending in a way that was part of their already day to day operations, that repayment on that future sale was critical, or a critical one for them, and so trying to find the right partner should be able to facilitate that type of experience was really important for us.
Ian Hillis
Excellent, well, expert advice here that I know our audience, particularly those listening from the software partner perspective, are going to be able to take to heart here. I truly cannot thank you enough for making the time to join us for a conversation today and giving listeners a lot to think about by sharing your forays into Embedded Finance at Inktavo. And truly, I hope we have the chance to bring you back on the show sometime soon and hear more about some of the additional products you’re all contemplating.
Renn Salo
Thank you so much for having me.
Ian Hillis
Amazing. We want to be a trusted resource for software providers who are out there trying to make sense of Embedded Payments and finance to help them get the education they need to make the business decisions their customers and investors will thank them for. Thank you to everyone for joining us today. I look forward to continuing the conversation in our next episode.
