What happened: The German wholesaler Metro is shutting down its subsidiary, Metro Financial Services (Metro FS; screenshot of customer mailing). The company's main product was a decoupled debit card that targeted businesses in the restaurant, catering, and hotel industries and offered them 1% cashback on all card transactions.
My comment: I have closely followed the Metro FS journey and published a podcast episode with Metro FS Michael Zyber (podcast) in June 2024. In this episode, Michael explained Metro’s decision to launch Metro FS and shared that the company has onboarded over 25,000 customers. But that was not enough, as Metro started to inform customers in January of this year that the service would be shut down on March 21st (this Friday). We do not know the internal expectation of customer numbers or how much customers used their cards. However, based on what I have gathered, it seems that Metro has decided that it wants to re-focus on its core business and is currently shutting down activities in adjacent sectors.
I have always used Metro FS as an example of a traditional corporation to launch an embedded finance product. Thus, it is a pity that they have not been able to make it work. However, Metro is not the first retailer (Metro is a wholesaler, but my point stays the same) that has failed with an embedded finance product (e.g. Coop in Switzerland). I would argue that it is extremely difficult for retailers and wholesalers to create magical customer value by adding a financial product. The major difference between a retailer offering a banking product and a fintech company or a traditional bank is often the brand and perhaps cashback (or discounts, loyalty) features. While this can work, it is not easy to achieve. Maybe this was different 10-15 years ago, but with fintech's rise, the number of available products has increased significantly.
If a retailer considers building a banking product, I would highly advise them to invest a lot of time and focus on how it intersects with their core product. Building a great financial product might not be sufficient; it must be the logical choice for many core product users/customers.
