Hypothekarbank Lenzburg is a small regional bank in Switzerland. However, it may be one of the European banks that has adopted Embedded Finance the most. Dr. Manuel Thomet, Associate Partner at Synpulse and co-author of the Swiss Embedded Finance and Banking-as-a-Service study, describes "Hypi" (as Hypothekarbank Lenzburg is commonly known) as combining foresight, innovation, a healthy portion of risk-taking, and the right people in the team. These qualities have enabled them to strategically develop their Banking-as-a-Service model alongside traditional banking.
In a recent interview, Hypothekarbank Lenzburg CEO Silvan Hilfiker shared a recap of his first year in the CEO role. The most critical steps for the bank in his tenure were acquiring a stake in German bank Sutor Bank and the takeover of Swiss Bankers.
Strategic Acquisitions Open European Market Access
Sutor Bank can perhaps best be described as the German version of Hypothekarbank Lenzburg. A smaller bank that began its fintech partnerships many years ago, it has since then grown its as-a-service unit into a core offering for the bank (from my point of view, even more the case for Sutor Bank than Hypothekarbank Lenzburg). I covered the minor investment previously.
Beyond the strategic partnership, Sutor Bank represents a concrete business opportunity for Hypothekarbank Lenzburg's technology arm. The German bank needs new core banking software, and Hilfiker sees this as a chance to expand their Finstar platform. The bank has spun Finstar off into a separate entity to accelerate sales, and they're co-developing the platform with Sutor to make it "EU-ready" for the broader European market.
Swiss Bankers, on the other hand, is a travel prepaid card that appears to be quite popular in the market. Hilfiker highlights that the distribution partners and the e-money licence in Liechtenstein are two very crucial assets of Swiss Bankers. A Swiss bank with an e-money licence abroad? Now it’s getting interesting.
Why Switzerland's Market Size Forces European Expansion
But the Swiss bank doesn’t seem to stop there. Hilfiker highlights that the market size in Switzerland for certain products is limited and that the expansion to other European countries is a necessary step. This is particularly true for their Finstar core banking software, where the Swiss market is too small for significant growth. The team has already studied Germany as its first focus market and is convinced that their core banking and open banking solutions can find sufficient customers. Obviously, the strategic partnership with Sutor Bank could be handy here.
The full interview can be found on SchweizerAktien.net (in German).
Mentioned in this story: Silvan Hilfiker, Hypothekarbank Lenzburg, Sutor Bank, Dr. Manuel Thomet, Synpulse, Finstar
