Pliant's Insurance Card Play & Rakuten Acquires BaaS Technology

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Hi embedded finance friend

After a few rather quiet weeks, this is a packed edition. It features three bigger news stories, the latest podcast episode, as well as a few more interesting announcements in the In Other Embedded Finance News section.

Additionally, I am working on a few new and exciting activities with Embedded Finance Review, which I hope to share with you shortly. If you can’t wait, you know where to find ;-)

And now, let’s dive in 👇

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What’s next for banking-as-a-service? Podcast with Sophie Guibaud

In the newest podcast episode, I speak with Sophie Guibaud. Sophie has worked with several banking-as-a-service providers in Europe, written a book about Embedded Finance, and recently moved to Saudi Arabia.

Thus, she is the perfect person to speak about:

• How has banking-as-a-service evolved over the past 10-15 years?

• Why should more incumbent banks launch a banking-as-a-service offering?

• How does the development of Fintech in Saudi Arabia compare to Europe?

• Why is banking-as-a-service so crucial for the Saudi Vision 2030?

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

Pliant acquires Hi.Health and increases its focus on insurance companies

What happened: Berlin-based Pliant has made two interesting moves in the past few days: Firstly, it acquired Hi.Health (EU Startups) and secondly, it announced its partnership with Pflegenavi (Caritas Pflege).

My comment: Pliant’s core product is a corporate credit card product, similar to Brex or Ramp in the US. What makes Pliant relevant for Embedded Finance is its card-as-a-service product. This enables other companies, such as corporate expense management provider Circula, to offer corporate credit cards.

Hi.Health → Hi.Health, which previously presented itself at our Embedded Finance Review Event in Berlin in 2024, offers insurance companies a card product for their own customers. For example, privately insured patients typically need to prepay their bills at the doctor’s office before being reimbursed by their insurance, which can take weeks or months, depending on the country and insurance provider. The insurance company can give its customers a Hi.Health card (likely virtual) with a zero balance but will be funded in real-time whenever a transaction is approved (e.g., only for healthcare expenses within specific amount ranges). Since the insurance provides the funding for the Hi.Health card, the customer does not need to prepay the medical bill. Additionally, the customer can use the Hi.Health app for submitting invoices and managing medical payments. Hi.Health has received some positive attention in the industry, but we have not yet seen a customer announcement, which might explain the sale to Pliant. On the other hand, Pliant was likely interested in selling its card-as-a-service product directly to insurance companies, but might have realised that a more focused card product is required. According to the announcement, Hi.Health will continue to operate independently, and having a company of Pliant's size in the background may make it easier to sell to insurance companies.

Pflegenavi → The Austrian startup targets care facilities that take care of patients in various ways. With Pflegenavi, these care facilities can replace cash and paper processes with a digital solution. All expenses related to a patient (e.g., a haircut) can be managed and approved within the software, which relatives can also access. With the Pliant card, these payments can not only be made “post-paid” (after uploading the invoice and approval), but can also be made directly at the point of sale. This is possible thanks to specific rules that can be set up (e.g., only supermarket purchases below €50 each transaction, with a monthly limit of €100).

Over the past few years, I have spent some time exploring Embedded Finance opportunities for insurance and adjacent companies. I don’t think it's a question of whether we will see a broad adoption of cards and other payment options, but rather when and which approach will prevail. Pliant has made some interesting moves; let’s see how they play out.

Rakuten acquires technology from insolvent banking-as-a-service provider Dock Financial

What happened: The Japanese internet and fintech company Rakuten has acquired parts of the German banking-as-a-service provider Dock Financial (LinkedIn). Dock Financial went insolvent last year, as I covered in this newsletter edition. The origin of the company dates back to 2006, when PPRO founded Crosscard, the company's previous name. The company was renamed to Dock Financial when Marko Wenthin, Solaris’ founder and first CEO, became CEO and part-owner of the company.

My comment: There is not much information about Rakuten’s acquisition of Dock Financial, but it seems the Japanese company is acquiring Dock Financial’s technology and has also hired a few of Dock’s former employees. We can only speculate what Rakuten’s intention is with this acquisition. Rakuten owns Rakuten Europe Bank, which holds a licence in Luxembourg. Back in 2017, when the bank's launch was announced on Rakuten’s website, Rakuten aimed to focus on SME banking products. However, as of today, it appears that it only offers a reward solution for both consumers and businesses. Back in its home market, Japan, Rakuten partners with non-financial brands (e.g., East Japan Railway Company) and describes its effort as banking-as-a-service. Perhaps the company wants to launch a similar offering in Europe, which is why it acquired Dock Financial. At this point, this is just a guess, as Dock’s technology could likely be helpful for consumers or businesses facing bank products as well.

BKN301 secures €21.5 million funding to expand Banking-as-a-Service from MENA to Europe

What happened: The banking-as-a-service orchestrator provider BKN301 has announced fresh €21.5 million funding from various investors (EU Startups). The company is headquartered in London, but its roots are in the Italian region, with offices in Milan and San Marino. The company places a strong emphasis on the Middle East and North Africa (MENA) region.

My comment: BKN301 has already secured a €15 million funding round in July 2022, bringing its total funding to at least €36.5 million, which places it among other well-known banking-as-a-service providers (Finextra). BKN301 is not well-known, likely due to its focus on the MENA region and its emphasis on financial institutions, which results in a limited number of deals, as it lists only eight customers on its website. From what I have gathered, the company is currently a pure tech player without a license (some of the messages on their website indicate their own licence, but I could not verify this - maybe an Italian e-money license?) and is currently only working with regulated companies, such as traditional banks and neobanks.

The funding announcement mentions a stronger focus on Europe, which I found particularly interesting. Firstly, the European market already has several established players, whereas the MENA region is likely to have less competition. Secondly, I wonder how BKN301 would position itself in this market. It uses core-banking products from Finastra, so it’s not a core-banking provider itself, but without a licence, it’s not really a banking-as-a-service provider either. Therefore, perhaps they target traditional banks that plan to launch their own neobanks but want to start fresh? If you have any better insights, please let me know.

In Other Embedded Finance News

• HBX Group has launched the HBX Group eWallet, a B2B payments platform for the travel industry. HBX Group is a global, independent B2B travel technology marketplace that has partnered with FinPay for its wallet solution (The Paypers).

• The Spanish-headquartered online B2B wholesale marketplace Thokmandee launched a B2B buy-now-pay-later product with Finmid, resulting in a 31% increase in average order size (Finmid).

• Instacart launches an embedded invoicing product in partnership with Balance, allowing its merchants to apply for invoicing, receive instant credit decisions, and manage payments directly in the Instacart app (Finextra).

• Lili launches embedded banking tools for e-commerce companies in the US, enabling them to offer banking, accounting, and tax solutions to their own customers (Finextra).

• The US-based embedded lending provider Pipe has acquired Glean.ai, a spend management provider, to expand its product offering (Finextra).

Event Calendar

• May 15th, Helsinki: Nordic Fintech Summit - I will be hosting a panel discussion [Register here]

• May 21st, Zurich: Embedded Finance Event hosted by newly founded Swiss Embedded Finance Association [More details]

• June 25th, Frankfurt: TechQuartier Digital Finance Accelerator - I will be hosting a Masterclass [More details]