Embedded Finance Review Podcast, episode 5. Published 30 July 2024. Guest: Shaul David, London-based embedded finance advisor. Host: Lars Markull.
Lars Markull: Welcome to the Embedded Finance Review Podcast. My name is Lars Markull. In this episode I'm speaking with Shaul David, a London-based embedded finance expert. Shaul has been involved in many different ventures. Most importantly, he was Head of Banking at the British banking as a service provider Railsr from 2019 until 2023.
Last week Italian bank UniCredit announced that it is acquiring Polish banking infrastructure provider Vodeno and Belgian Aion Bank. Both companies jointly offer an embedded finance product in the European Union. This acquisition is not the first time a European bank is acquiring a banking as a service provider, but it might be the biggest one so far. With Shaul I'm speaking about what we know about the acquisition, and what this could mean for embedded finance and the banking landscape. Let's dive in.
Welcome
Lars Markull: Hi Shaul, welcome to the podcast. How are you doing today?
Shaul David: Oh, I'm great, Lars. Good to be chatting again.
Lars Markull: It's great to have you finally on the show. I think when I started the podcast a couple of weeks ago, I knew at one point I will have to invite you. And last week there was a big announcement in the world of embedded finance, so I thought we had been chatting about the news anyway, so I thought it's a great moment to invite you to the podcast to speak a little bit about that.
Shaul David: Absolutely. I'm saying that Revolut kind of stole the limelight for a little while from this really interesting development in embedded finance.
Lars Markull: I guess I got the news in embedded finance. I still have not missed the announcement of UniCredit acquiring not just one but two brands in Europe. The Polish banking infrastructure company Vodeno and the Belgian bank Aion Bank, which together jointly offer a banking as a service offering in the European Union. Plus there's also some activities through another joint venture in the UK.
I think, Shaul, it's fair to say that both of us have spent a bit of time in the world of embedded finance, and I think it's also fair to say that both of us are publicly advocating for banks getting into the space. So I guess it's finally happening. We had some other banks getting there as well, but this was definitely one of the biggest ones this year, probably in the last couple of years. So great news for us, but I think there are also a lot of questions that we need to dive into to understand a little bit better. And probably some of them we will only be able to understand in the next weeks and months, when we see how things unfold.
But let's kick things off. UniCredit bought two companies, or two brands to be specific, Vodeno and Aion Bank. Both of them offer banking as a service together. Maybe let's unfold it a little bit. Do you want to walk us a little bit through what these companies exactly do, how they work together, what kind of customers they have, and what their key markets are?
Who Vodeno and Aion are
Shaul David: So I think we have to take a step back first and look at how the story started for those two brands coming together. Both Aion and Vodeno were acquired by the private equity firm called Warburg Pincus. And Warburg acquired what was then a 70-year-old Belgian bank branch of an old Italian, Monte dei Paschi. That was in 2018. And in 2020 Warburg acquired Vodeno. And they put those two companies together into what is now called Vodeno Group, which is the group that NatWest invested a minority stake in a couple of years ago, and was sold in its entirety to UniCredit last week. So that's kind of how things went, and why those two brands are grouped together.