Doctolib enters embedded finance

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Hi embedded finance friend

It is officially the year-end atmosphere. We have entered December, and roughly three work weeks are left. I am in Dubai for a few more days, so the Christmas vibe has gotten to me. Perhaps this will change later this week when we return to Berlin.

I haven’t been to Dubai in seven years, and it is crazy how the city has developed in such a ‘short’ period. And it seems the cost of living has risen too, which I realised when I bought three coffees for our group and paid 25 EUR. And yes, I will have coffee made at home for the rest of the trip ;-)

And now let’s dive in 👇

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Which brands should be getting into embedded insurance?

In the newest Embedded Finance Review podcast episode, I speak with KASKO cofounder Nikolaus Sühr. We explore the world of embedded insurance.

It's my first podcast episode about embedded insurance, so take it as a primer for all future episodes. We discuss the most common embedded insurance products, the kinds of brands that are launching embedded insurance products, and the role of traditional insurance companies.

You can find the episode on Spotify, Apple Podcasts, and YouTube.

Doctolib launches embedded payments offering

What happened: The French technology company Doctolib announced a partnership with Adyen (The Paypers). Doctolib is most known for its appointment booking solution in the medical space, and perhaps many of the readers have used it in Europe to book a doctor’s appointment or even a Covid vaccination slot. Initially, the partnership is focused on improving payment acceptance, enabling patients to store their preferred payment method in Doctolib, and medical professionals could use online payment for teleconsultations.

My comment: The intersection of healthcare and fintech has seen quite some activities in the past few years. We have seen pure fintech companies trying to enter the space, but even more so companies connecting financial and non-financial services for doctors. The German tech company Nelly, whose CEO was also on my podcast, is combining a digital patient onboarding journey with payment acceptance and other financial products. We can all agree that this intersection will look very different in 5-10 years, but I wonder who’s most likely to win. Doctolib’s existing network of doctors and general market acceptance will be a massive asset. Also, it is noticeable that many companies operating at this intersection partner with Adyen.

HR provider Deel acquires fintech startup Atlantic Money

What happened: Deel has announced it has taken over Atlantic Money, a provider of international money transfers (The Paypers). Deel is an HR tool provider most known for its employee-on-record offering, making it easy to hire staff worldwide without dealing with the local requirements and compliance aspects. Atlantic Money was founded in 2020 and aimed to disrupt Wise’s international money transfer offering with a flat fee pricing. Instead of charging the market standard variable fee, Atlantic Money charged a flat fee, making it especially interesting for bigger transactions.

My comment: Deel’s acquisition of Atlantic Money aims to improve its payroll product. Deel’s position at the intersection of employees (or contractors) and employers makes it ideal for launching financial service products. Payroll is the most obvious financial product, but Deel has also tested contractor card products. By definition, an important aspect of Deel’s payroll product is the international money transfer feature. For example, a German company hiring an employee in India means Deel is being paid in Euros but needs to pay the employee in Indian rupees. Deel’s customers are already paying for this today. Still, any improvements in cost can either increase Deel’s profit or enable them to reduce pricing and make them more attractive.

Deel is one of the big international companies I closely monitor regarding their financial product development. Their core product and traction position them perfectly for embedded finance. I expect a lot more financial product announcements from Deel in the future.

Spendesk receives payment institution licence

What happened: The French expense management provider Spendesk announced that it had received the payment institution licence and launched Spendesk Financial Services (Spendesk). At the same time, Spendesk became a principal member of the Visa network and will, thus, take many of the financial services-related tasks in-house.

My comment: Spendesk can hardly be categorised as a non-financial brand, as payment is written all over them. But they are not a pure fintech company either. That said, I wonder if their move to become regulated is something that other, perhaps ‘real’ non-financial brands will follow. Almost all non-financial brands start with partnering and do not apply for a licence on day one (similar to Spendesk). However, similar to neo banks, with scale and growth, there is a benefit to taking some of these activities in-house. Also, a payment institution or even an e-money licence is not far out of reach; thus, it is more of a strategic question than one of feasibility.

I would assume that most non-financial brands will avoid their licences as long as possible. However, if their fintech businesses became the biggest revenue driver, combined with potential friction on the provider side, then why not? Or what do you think?

OVO Energy partners with HSBC for a solar panel financing solution

What happened: The British bank HSBC announced it had entered the POS financing market (Finextra). The offering is dubbed Flexipay, and it is available to consumers regardless of whether they bank with HSBC. The first merchant to integrate Flexipay is Ovo Energy, which enables customers to purchase solar panels in instalments. According to Ovo, the high upfront costs were a big challenge for many consumers.

My comment: Financing solutions for solar panels have been a hot topic for some time. In this newsletter, I covered Enpal's move into financial services and interviewed Cloover’s CEO on my podcast. I assume that all of us agree that financing products for solar panels is necessary and should be embedded into the customer journey. But how embedded do they need to be, and is the brand of a traditional bank required? Most of the existing embedded solutions are powered by innovative providers without the brand of traditional banks. Therefore, the HSBC offering is different. However, the products have many differences, so we should not compare apples with pears. But it will be interesting to see if product offerings with a traditional bank involved receive greater traction (OVO Energy seems to expect this).

Short stories

• Last week, I shared ServiceTitan’s IPO filing and embedded finance offering. To dive deeper into their overall business, check out this breakdown (Overlooked).

• Podcast: NatWest Boxed’s CCO George Toumbev believes that banking-as-a-service will account for at least half of banking activity in the long term (Tech EU).

• British Embedded Insurance platform Embri has announced that it expanded its suite of products to include embedded bikes and high-end tech insurance (The Paypers).

• Dutch No-code payment orchestrator Norbr raises €3 million for new product development, compliance tools and hiring. (Finextra)

• The aftermath of the collapse of US BaaS provider Synapse continues, with several partner banks facing a lawsuit alleging mishandling of customer funds and one of those banks insisting that the BaaS platform moved end-user funds it once held before it went bankrupt (Finextra)

• The US-embedded credit card platform Cardless raised $30 million. The company offers cards with Qatar Airways and Alibaba and has doubled its cardholders in the last six months (Finextra).