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  5. Who Says Not Much Happens in the Summer Months? The European Embedded Finance Market Continues to Evolve at Pace

Who Says Not Much Happens in the Summer Months? The European Embedded Finance Market Continues to Evolve at Pace

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12 September 2024
Zilvinas Bareisis

I hope most of you had a chance to disconnect and relax over the summer. I know it's not unusual for many countries in Europe to slow down and for the office life to grind nearly to a halt with cities and towns deserted, as people move to the mountains or seaside resorts, often for weeks at a time. And yet, the perception that not much busines ever happens in Europe over the summer can be misleading.

In mid-July, I published a new Celent report called Scaling the UK and European Embedded Finance Frontiers: Lessons from Pacesetters. I wanted to take an in-depth look at the strategies of four companies we thought were doing something interesting in embedded finance. The report includes lessons learned from and in-depth profiles of four diverse firms:

  • ClearBank, an embedded banking infrastructure provider with a UK banking licence.
  • Jifiti, an embedded finance enabler with a white-labelled embedded lending platform for banks and lenders to embed their loans at any point of sale.
  • NatWest Boxed, a joint venture between NatWest, one of the largest UK banks, and Vodeno, a leading European BaaS player.
  • Weavr.io, a technology company offering 'embeddable by design' financial solutions to B2B SaaS companies, connecting them with a complex partner ecosystem of technology and financial services providers.

In the few weeks following the report's publication, important developments occurred at all those firms:

  • Clearbank secured a Dutch banking license (a Credit Institution license from the European Central Bank, under the supervision of De Nederlandsche Bank, to be precise), which allows the bank's new Amsterdam-based subsidiary to begin serving clients in Europe. ClearBank will now be able provide clients Euro accounts, including operating accounts, virtual accounts, and access to major European payment rails including SEPA Credit Transfer, SEPA Instant Credit Transfer, and TARGET2 (T2).
  • Jifiti made a couple of important announcementsabout new products and features. In July, Jifiti introduced its Tap Now, Pay Later™ technology, which enables consumers and business customers to add their approved loan or credit funds into any digital wallet, including Apple Pay, via virtual card. And in September, it announced a Loan Management System (LMS) Add-On, which banks and lenders can use as a sub-ledger, and then push the originated loans into their main ledger, allowing them to manage and service their point-of-sale loans without a heavy integration.
  • UniCredit announced it would be acquiring the NatWest Boxed partner Vodeno. While this seems like a big deal for all parties involved, it wasn't entirely unexpected: Bloomberg reported back in February that UniCredit is considering the acquisition. NatWest Boxed confirmed as much, sharing this statement with us: "We are pleased with the progress that has been made to date in collaboration with Vodeno, and our plans for NatWest Boxed prepared for the possibility of their acquisition. This announcement is another indicator of market confidence in the future of BaaS. We will continue to work with Vodeno to ensure a smooth transition, and we look forward to working closely with clients to help them grow revenue and customer loyalty."
  • Finally, Weavr obtained an EMI license from the Maltese Financial Services Authority. While regulators are understandably concerned about many BaaS arrangements, the company believes that the "issuance of a licence following an extended period of scrutiny by the MFSA is a testament to Weavr’s ‘embeddable by design’ approach." Again, the license supports Weavr's expansion across Europe, enabling them to add more currencies and introduce new and existing products to new clients.

All these developments demonstrate that the embedded finance market remains vibrant in the UK and Europe. To find out more about all these companies and their strategies, make sure you download our report and don't worry, it's not out of date: these developments validate rather than negate what's in the report!

Oh, and who says that nothing ever happens in the summer in Europe?