Episode 1 of the Embedded Finance Review Podcast, published 4 June 2024. Guest: Michael Zyber, CEO of Metro Financial Services. Host: Lars Markull.
Lars Markull: Hi there, and welcome to the very first episode of the Embedded Finance Review Podcast. I'm your host, Lars Markull. Embedded finance is reshaping the way how we consume financial services. Instead of going to a bank, digital or offline, we can use banking, lending, payment, insurance or investment products from non-financial companies.
In this first episode, I interview Michael Zyber. Michael is the CEO of Metro Financial Services, a 100 per cent subsidiary of the food wholesaler Metro. Metro was founded in 1964 and operates 674 stores in 21 countries. A few years ago Metro decided to enter the world of embedded finance and launched a card product. With this product it targets restaurants, hotels and catering companies, and offers them 1% cashback for every transaction.
In this podcast I'm speaking with Michael about how Metro set up their fintech unit, why they violated the rules of the digital banking playbook, and how they define success for their embedded finance activities. Let's dive in.
Welcome
Lars Markull: Hi Michael. Welcome to the show, and a very special thanks for being the very first guest on my show. How are you?
Michael Zyber: Thanks Lars. It's a big honour to be your first guest. I hope I can live up to the expectations here.
Why a food wholesaler went into financial services
Lars Markull: Yes, I'm certain you will be able to do that. Michael, you are the CEO of Metro Financial Services. Metro Financial Services is a subsidiary of Metro, a wholesale food store, which is offering financial products, or embedding financial products. When we are looking at the landscape of embedded finance companies, typically we're seeing vertical SaaS, marketplaces and similar companies, not so often a food wholesale store.
Can you maybe take us back in time to the moment Metro made the decision to launch financial products, and tell us a little bit, how was the company at that point of time, and what was really the main driver for embarking on this journey?
Michael Zyber: Yeah. Actually, what we realised as Metro is that we have a very great access to the hospitality sector, but we were very much focused on only one product, as you mentioned, mainly food products. And the goal was really, and we called it at that time wholesale 360, to leverage existing business relationships to the millions of professional customers that we have, to offer additional value adding products and services for that sector.
And the purpose was very clear. First of all, we wanted to generate new additional revenue streams for Metro, but also create through those new activities positive spillover effects to our core business and generate also more revenue in the core business. For example, when you speak about financial services, a credit solution to allow people to buy more at Metro. But also other activities, like in the professional kitchen equipment space, where we were offering special discounts to customers which committed to buy more at Metro. That was basically the idea, to leverage existing customer relationships to drive business.
Today you would call it probably an ecosystem play. At that time, I think the term was quite new, so we didn't call it that way, but that's what it is essentially. And the reason for financial services, and we looked at a very broad landscape of potential services that we could offer, but we realised, first of all, it's a big benefit for the customer, because the hospitality sector was very much underbanked, especially after the subprime crisis. A lot of banks stopped activities in the SME space. I think that changed now a little bit, but at that time it was definitely the case.
And we also saw that a lot of traditional banks, for example Volksbanken, Sparkassen, they didn't offer those modern neobanking features at that time, which were definitely attractive for the sector, like real time notifications, employee cards, post-transaction BNPL. That was not really available or not offered by traditional banks. So the access for the hospitality sector to those features was limited.
At the same time, financial services are quite interesting also in terms of data access. So it gave us as Metro also a better view, a better understanding, by getting access to a new data source to understand customer behaviour better.