Hi {{first name|embedded finance friend}}
Last week, we hosted our Embedded Finance Masterclass during TechQuartier’s Digital Finance Accelerator (LinkedIn Post). Additionally, we partnered with TechQuartier for the public networking event Beyond Banking: Embedded Innovation. And despite the hot weather in Frankfurt (33°C), we welcomed ~60 guests for insightful presentations and networking.
A big thanks to our two sponsors:
Hartmut Giesen provided an introduction to Embedded Investments, discussed different use cases, and explained how Sutor Bank enables these players with investment products.
Marko Koić’s presentation was titled “Make Compliance Sexy Again”. He chose DORA as an example, described the requirements, and shared how CyberUpgrade can help companies comply (incl. this online questionnaire).
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From Food to Embedded Finance: Wolt’s journey into Financial Services
Some companies have Fintech in their DNA, even though they're not from the financial services industry. Wolt, the Finnish food delivery platform, is one of these companies that has built embedded finance operations across Europe.
In the latest podcast episode, I speak with Anniina Heinonen, Managing Director at Wolt Payments, about PSD2, payouts, e-wallets, lending, and much more.
My personal highlights:
How PSD2 accelerated Wolt’s Embedded Finance strategy
Why Anniina doesn't mind if a restaurant owner decides against Wolt Capital and receives funding from somewhere else
Her advice for builders of fintech products at other non-financial brands
You can find the episode on Spotify, Apple Podcasts, and YouTube.
Saga Partners with NatWest Boxed for Embedded Savings Products Targeting Over-50s Market
What happened: British Saga, which targets consumers aged 50 and above, is negotiating a deal with NatWest Boxed to provide savings accounts and other financial products (Finextra).
My comment: Saga’s main offerings include holidays (e.g., sea cruises), insurance and money-related products. Thus, Saga is not purely a non-financial brand, but it cannot be considered a Fintech company either - maybe something in between. Either way, Saga is unlikely to be the kind of company that would want to get regulated, instead partnering with regulated financial institutions (it already offers products from Goldman Sachs and other banks). It will be interesting to see if NatWest Boxed will be “just one more provider” in Saga’s marketplace offering or perhaps if NatWest Boxed becomes the leading provider for Saga’s financial services. Since Saga’s financial services are mostly savings and investment products, and interest rate will likely matter more than “how well embedded the products are”, I would guess it is the former. The deal is still being negotiated, but when it is signed, Saga could become the second partner announcement from NatWest Boxed, following AA's announcement earlier this year.
Adyen Co-CEO Reveals Plans to Double Down on Embedded Finance After 63% Revenue Growth
What happened: Adyen’s Co-CEO, Ingo Uytdehaage, gave an interview with German Manager Magazin and described Adyen’s increasing focus on Embedded Finance (Manager Magazin; Paywall and in German).
My comment: Uytdehaage describes Adyen as a fast follower that does not jump onto every single hype. He also explains that Adyen is actively investing in stablecoins and AI, but only when the company has a firm conviction of its benefits. While Adyen already has several customers in the world of Embedded Finance (as noted in my previous newsletters), the company is now convinced that this is the area to double down on. And they can use data to justify the decision: revenue from Embedded Finance customers has grown 63% in the last quarter, almost three times the overall revenue.
Unfortunately (and perhaps as expected), Uytedehaage doesn’t explain what Adyen’s double down on Embedded Finance exactly entails, but I guess we can expect more presence, activities and partnership announcements over the next few months.
Xero Acquires Fintech Melio for $3B to Embed Payments in Accounting Platform
What happened: Digital accounting provider Xero to buy the US Fintech company Melio for up to $3 billion (Reuters).
My comment: This acquisition is likely driven by two reasons, both of which are aiming to compete strongly with QuickBooks. Firstly, Xero is looking to grow its presence and customer base in the US, where it is well behind QuickBooks (and Xero’s market share in the US is much lower than in other key markets). Secondly, it lacks a proper accounts receivable and payments solution, the core product of Melio (see Rex Salisbury’s post on LinkedIn).
In the context of Embedded Finance, this acquisition represents another non-financial brand (perhaps a bit of a stretch for an accounting provider, but you know what I mean) acquiring a Fintech company. Until today, Xero’s customers have had to combine the two tools themselves; however, this will likely be nicely embedded after the acquisition and technical integration. Will more non-financial brands follow suit and acquire fintech companies? What do you think?
In other Embedded Finance news
Unlimit has expanded its existing principal license with Visa in Mexico to include card issuance as part of the fintech’s local offering (Finextra).
How Embedded Finance is positioning J.P. Morgan Payments as a key marketplace infrastructure player (Tearsheet).
What are customers asking for with embedded financial services? Jas Shah shares his advice on the popular topic of embedded technology, specifically discussing how and why embedded tech benefits customers (Fintech Futures).
A new breed of lending products in mobile games and apps: Martin Macmillan shares his insights on a new financing mechanic for games that hasn’t been seen before (PocketGamer).
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Best wishes from Berlin,
Lars Markull (LinkedIn)