- A new Banking as a Service startup wants to sell its offering to non-financial companies.
- This gives an early overview of how embedded banking could develop and the risks it poses for the B2C relationships of financial institutions.
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swan, a non-financial corporate startup from French Banking as a Service (BaaS), has completed a EUR 5 million ($ 5.6 million) startup round. Per TechCrunch. It will According to reports Use the funds to meet regulatory requirements and attract customers to the platform early on.
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Swan recently obtained an e-money license from the French central bank and can now operate payment services, hold deposits, issue payment cards and international bank account numbers (IBANs) and open accounts. As part of its services, Swan will also provide identity verification, fraud detection and risk assessment for new banking customers. The platform would allow non-banks to create bank accounts for limited purposes and issue virtual or physical cards.
This service enables consumer brands to control both the customer experience and the cabling behind their services. Swan sells "embedded finance," a term used to describe non-financial companies that provide financial products and services to their customers while maintaining complete control over the customer experience. For example, a retail brand could instantly issue their own virtual affinity cards as if they were a bank, and customers could manage them through the retailer's digital experience rather than that of a bank.
Large non-financial brands have entered consumer banking with embedded finance and could displace co-branded products. Branded financial services are already available on websites: PayPal or Affirm is integrated into the checkout process on many e-commerce websites.
However, consumer brands are gradually taking full control of the customer relationship: for Apple Cash, which is built into technology giant Apple's proprietary wallet and messaging app partner with Green Dot Bank. And Google has partnered with banks to offer a Google Pay checking account. Although the latter is offer CobrandedGoogle continues to control the user experience.
Financial institutions' influence on the B2C relationship could be loosened thanks to embedded finance, but the BaaS market opportunity is with them. BaaS services can break the bank's direct relationship with the end user. In the context of embedded banking, the consumer could remain a source of income – via deposit financing, exchanges, fees and interest on loans – but the bank's direct relationship becomes the non-financial corporation.
"Consumer" banking in this context would actually be B2B and could render today's digital experiences offered by FIs irrelevant. But banks like BBVA with its BaaS offershow how financial institutions can adapt to take advantage of changes in the market that they still own.
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