Why is this Swiss bank expanding European partnerships? Plus Uber's lending move

Hi {{first name|embedded finance friend}}

I am still testing a few things with my newsletter and processes. You might have noticed that I started to publish individual news stories on my website. I have featured the same stories in this newsletter below, but also linked to the (slightly longer) posts on my website.

Why am I doing this? I am trying to evolve my content from a newsletter into a broader knowledge platform. Basically, less “breaking news” and more “how does this work”. I have spoken to a few readers about this in the past weeks, and so far, all of them liked the idea. The biggest change for readers will happen when I make the eventual necessary move to leave my beloved newsletter tool, Beehiiv, for a broader publishing platform. Stay tuned, and please continue to share your feedback (end of this mailing).

And finally, we have one (!) spot left for our Embedded Lending Dinner during E-Commerce Expo in London next Wednesday. Check out the event page, register and/or share with your needwork.

And now let’s dive in 👇

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Hypothekarbank Lenzburg, a small Swiss regional bank, may be one of Europe's most advanced adopters of Embedded Finance. Known as "Hypi," the bank has strategically developed its Banking-as-a-Service model alongside traditional banking, leveraging a combination of foresight, innovation, and calculated risk-taking (comment from our reader Dr. Manuel Thomet on LinkedIn). In his first year as CEO, Silvan Hilfiker made two critical moves: acquiring a stake in German bank Sutor Bank and taking over Swiss Bankers.

Sutor Bank can be best described as the German equivalent of Hypothekarbank Lenzburg: a smaller bank that has grown its fintech partnerships into a core offering. According to Hilfiker, the strategic partnership creates opportunities to expand Hypi’s Open Banking platform Finstar. The platform is currently made "EU-ready" with the support of Sutor Bank. Secondly, the popular travel prepaid card service Swiss Bankers gets Hypi valuable distribution partners and an e-money license in Liechtenstein.

Switzerland's limited market size is driving this European expansion strategy. Hilfiker emphasises that the Swiss market is too small for significant growth, making expansion to other European countries necessary. The team has identified Germany as their first focus market, where they believe their core banking and open banking solutions can find sufficient customers. And of course, the partnership with Sutor Bank provides a strategic advantage in this expansion.

Longer News (EF Review), Full German interview (SchweizerAktien.net)

Uber Eats has launched an embedded lending service for US restaurants through a partnership with Pipe, delivering pre-approved capital offers directly within the Uber Eats Manager app. It follows many of its competitors, especially in Europe. Companies like Wolt, Bolt Food, Glovo and more have launched similar lending services, indicating that embedded lending is becoming a standard offering in the food delivery ecosystem.

The entire process is embedded within the Uber Eats Manager dashboard, where eligible restaurants can see customised offers based on their platform performance. Uber selected Pipe specifically for its small business focus and seamless integration capabilities. The Uber Eats partnership is likely Pipe's biggest partnership since the company pivoted from direct lending to focus primarily on embedded finance solutions a few years ago.

Similar to other platforms, Uber's program uses flexible repayment terms tied to business performance rather than fixed monthly payments, with the rollout beginning this week across US restaurants. What's particularly interesting to me is that Uber Eats remains the only major food delivery platform in Europe without an embedded lending offering (correct me if I am wrong!). So, given this US launch and the competitive trend, maybe a European expansion could follow soon?

Longer News (EF Review), Press release (Pipe)

As regular readers know, embedded finance in vertical SaaS is a recurring theme for me. Two developments in the US potentially indicate where Europe's journey will follow.

Rainforest, the embedded payments platform, just closed an oversubscribed $29 million Series B round led by Matrix Partners. CEO Joshua Silver's positioning of "purpose-built for software platforms" versus competitors like Stripe Connect, which were "initially built for merchants and then retrofitted for the SaaS market," signals essential market maturation. Rainforest has grown revenue by more than 10x since their last funding round, processing billions in annual volume. Meanwhile, Flagship Advisory Partners released part two of their comprehensive SaaS embedded finance survey, discussed at Vertex: The Vertical Software Conference that Rainforest and Matrix Partners co-hosted.

The survey of 100 North American SaaS platforms reveals significant opportunities: while 90% accept card payments, nearly 60% generate less than 40% of their profits from embedded finance, suggesting untapped potential. The future outlook is bullish - 90% expect their embedded finance profits to grow over the next three years, with 35% expecting it to outpace core business growth. More than one-third plan to roll out business lending, payment card issuing, or consumer lending within three years. While these developments are US-focused, the trend toward embedded finance as a core value proposition rather than just a revenue stream is unmistakable, and European providers appear to be experiencing similar traction.

Longer News (EF Review), Rainforest funding (Crunchbase), Embedded Finance Survey Part 2 (Flagship Advisory)

Thank you for reading. I hope you enjoyed this edition.

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Best wishes from Berlin,

Lars Markull (LinkedIn)