What happened: NatWest Boxed announced the British Automobile Association (AA) as its first customer. AA offers car owners a breakdown protection service and other car-related services. Through its partnership with NatWest Boxed, the joint venture of British bank NatWest and Polish Vodeno Group, AA will offer its members savings and lending products (AA announcement).
My comment: The industry has heard many rumours that NatWest Boxed would announce its first customer ‘soon’. From what I have heard, many had their bets on a retailer being NatWest Boxed’s first customer, but this did not turn out to be true (at least for the first customer). That NatWest Boxed’s first customer is in the size of an AA had to be expected since the banking-as-a-service provider focuses on enterprise-sized customers and not the startup longtail. AA has over 14 million members in the UK and plans to launch a savings account (end of March 2025) and personal loan (“followed closely”, aka later this year).
The announcement mentions a few details about the financial products (“FSCS-protected savings account” and “personal loan with market-leading rates”), but it’s not clear to me how AA plans to integrate its financial products into the existing customer journey. To be fair, the first partnership announcement might not need to cover this.
You will hopefully not be surprised when I say AA might have an excellent brand for an embedded finance offering, but what’s more important is how they embed it. For example, embedding the personal loan into the customer journey when the car owner needs it (e.g. after the car breaks down and unexpected expenses arise) is a great way. According to the announcement, personal loans can be dispersed within minutes, which is also an extremely helpful feature. However, I am wondering how the savings account will be integrated. At this point, I assume it’s a pure brand play, where AA expects customers to move their savings to them because they know and like the brand (and perhaps better rates). And yes, this can work out. You can argue that the German version of AA, ADAC, is doing precisely this with their co-branded credit card: a good financial product, but it lacks the embedded finance magic (What I describe as the 1+1=3 customer value in my slide deck).
But that’s just me thinking out loud. We will know the answer to these questions when the product is available. Luckily, the AA has teamed up with the smart folks at NatWest Boxed, so I am confident they have good answers to all these questions. Congrats to both teams on the announcement, and I'm looking forward to seeing the live product.
