Three banks show how to enter Embedded Finance: Partner, build or invest

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Hi embedded finance friend

I am excited to welcome many embedded finance enthusiasts tonight for our fifth Embedded Finance Review Event in Frankfurt! We are sold out and have a growing waiting list. I hope to see many of my subscribers at the event, and I will also post a write-up about the event later this week.

Job Board: An accounting startup in my network is looking for a Product Manager in Germany to expand its embedded banking product offering. Does this sound interesting? Hit reply, and I will tell you more.

This edition covers

• Why is a food retailer offering pet insurance products?

• BMO, OMB and DNB: Three ways bank can enter embedd …

• Xero’s multi-approach banking strategy

• Short news

And now let’s dive in 👇

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Why is a food retailer offering pet insurance products?

In the newest edition of our podcast, I speak with Christopher Meyer-Mölleringhof. Christoph is the venture lead for pet insurance at Fressnapf | Maxi Zoo, Germany's biggest pet retailer.

I don't own any pets. However, after talking to Christopher about pet owners' needs and Fressnapf's goal of supporting them at various points, it became clear that a pet retail store is a great place to offer insurance products.

• How Fressnapf leverages its brand trust and customer relationships to enter the insurance space

• Their multi-channel distribution strategy, combining digital platforms with in-store experiences

• The integration of additional services like digital vet consultations

• Why non-insurance companies might be better positioned to innovate in insurance products

• The future potential of embedded insurance beyond traditional models

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

BMO, OMB and DNB: Three ways bank can enter embedded finance

As you read in the introduction, we are hosting our fifth Embedded Finance Review event tonight in Frankfurt. You might have read that we focus on the role of banks within embedded finance with this event. And quite fitting, this week, I have come across news from three different banks about their own embedded finance activities:

1. Canadian Bank BMO partners with embedded banking provider FISPAN (The Paypers). Through this partnership, BMO business customers can integrate their existing bank accounts in a support ERP system (e.g., Sage, QuickBooks, Xero) and directly access accounts payable, reconciliation, and other features in the ERP system. FISPAN already has other bank partnerships, including eleven bank partners in the US.

2. US community bank OMB has announced the launch of OMBX (Finextra), a dedicated division focused on embedded banking partnerships (Website). The bank already works with seven different fintech clients and seeks to work with more digital businesses to empower them with banking capabilities.

3. Norwegian DNB Bank invests in digital receipt ventures through its investment arm, DNB Ventures (Finextra). While the first two news stories were about “proper” embedded finance activities, investment in a digital receipt startup is not such a big move. However, I still found it relevant that DNB Bank is investing in this adjacent area of fintech.

The three news articles above show the various steps banks can take in embedded finance: partner, build, and invest. If you asked me which is the right choice for most banks, I would probably say “all of them” at different intensity levels depending on the bank’s current setup.

Xero’s multi-approach banking strategy

US business neobank Bluevine has partnered with Xero, allowing its customers to consume financial services directly inside Xero (The Paypers). According to the announcement, business owners who use Bluevine can now use Xero to track expenses, analyse financial performance, and manage cash flow. This is arguably more of an open banking feature than an embedded one, but that’s not what I want to focus on here. A quick search of Xero’s banking activities shows me they have partnerships to leverage open banking, embedded banking, and tight relationships with (neo)banks like Bluevine.

Many of these approaches are in different markets and not directly competitive with each other. However, doesn’t this still show that Xero is exploring various concepts and seeing what works best? In the end, banking and accounting services are tightly connected; in the long term, there will probably be only solutions covering both. Which approach will win? I guess nobody knows, but perhaps trying all of them like Xero does is probably the right strategy to find out.

Short news

• FX provider Okoora announces its expansion to the American market. Through its embedded finance offering, the company is able to offer wallet, payments, and FX capabilities to its partners (Finextra).

• Danish neobank Lunar hires Nanna Bergmann to lead BaaS spinoff Moonrise (Finextra).

• Latin American e-commerce provider MercadoLibre implements the popular Brazilain PIX payment solution inside their payment offering in Argentina (The Paypers).