The Swedish retail brand Hemköp has announced the launch of a new consumer banking product. They also shared that they will partner with the banking-as-a-service unit SEB Embedded from the Swedish bank SEB (Axfood). It was expected that SEB Embedded will announce a new client very soon and if you take a closer look, Hemköp doesn’t come as a surprise at all.
Firstly, SEB Embedded announced already in April 2022 that it partnered with Axel Johnson (SEB), the conglomerate that owns Hemköp through its food subsidiary Axfood. More specifically, SEB Embedded partnered with Axel Johnson’s then newly launched startup Humla. Humla is a B2B service for retailers and aims to enhance “customer offerings and increase loyalty through embedded finance.” Humla is described as the first client of SEB Embedded. This may technically be true in terms of a paying customer. But as far as I can see, there was no product launch at that point of time. Humla and SEB basically did the ground work for Hemköp’s banking launch a bit over two years later.
Secondly, Hemköp positions itself as a retailer that values sustainability. And if consumers believe that, this will be helpful to promote adjacent products like a banking offering. Consumers typically choose a bank based on their functional requirements but will also take the brand into consideration. Even though this applies to any provider, it is especially important for decisions where others can see our choice, such as the (virtual) card at the cashier or sharing the IBAN with friends.
Hemköp’s partnership with SEB Embedded might be one of the few embedded banking partnerships where I am more excited about the underlying infrastructure provider than the frontend brand. With UniCredit’s acquisition of Vodeno and NatWest’s partnership with Vodeno, SEB is a third incumbent bank with a substantial banking-as-a-service offering in Europe. Personally, I believe banks have a massive opportunity if they can figure out tech and compliance. Fingers crossed for team SEB Embedded; they seem on a good path!
But coming to Hemköp. As a frequent reader, you'll also recall Coop's story. The Swiss retailer launched a banking product in 2023 and shut it down just nine months later. We have discussed the potential reason for this failure in our podcast. From my perspective, there are two key success factors I want to touch on in regards to Hemköp’s launch. Firstly, the embedded finance team needs to ensure leadership support. If you read up about the Coop story, you would likely agree with me that the support for their banking strategy has shifted significantly. The ongoing investment in Humla since 2022 and the launch of a new product indicate that this is hopefully different for Axel Johnson. Secondly, and this is likely the biggest challenge for Hemköp’s banking product, the product offering needs to be attractive for customers. It seems Hemköp’s most attractive differentiator to other banking products is that customers can earn 25% more in loyalty points. While this may be attractive for some, it is to be seen if its sufficient to win market share. Especially when their direct competitors, such as ICA and Coop Sverige, have similar product offerings. Hemköp might be planning to launch other features or embed its banking product conveniently into the existing customer journey. But we will need to see if this is enough to win.
