Brands have looked to embedded banking in order to create a more frictionless customer journey and remain competitive. Vodeno recently surveyed more than 750 decision-makers from retailing and e-commerce companies in the UK, Germany and Belgium. 56 per cent of respondents cited they plan to launch new embedded finance offerings in the coming year.
The Vodeno survey also revealed 67 per cent said their customers had indicated that they would like to see financial products or services integrated into their platforms. Consumers expect smooth, seamless purchasing journeys from their favourite brands, and Banking-as-a-Service (BaaS) providers are making this possible. BaaS is enabling retailers to focus on personalisation, customer experience innovation and building better equity for their brand.
Wojciech Sobieraj – founder of BaaS provider Vodeno and digital bank Aion Bank – serves as CEO of Vodeno. In 2018, Sobieraj sought to build a fully cloud-native banking platform, which did not exist at the time. Backed by global private equity company, Warburg Pincus LLC, Vodeno was born.
The VODENO Cloud Platform (VCP) covers all aspects of retail and SME banking via hundreds of open APIs. It also has nearly 90 of the best fintechs integrated into its ecosystem. Vodeno and Aion combine their tech stack and access to an ECB banking licence to offer a full-suite of BaaS solutions, empowering brands across Europe with the best of banking.
Tell us more about your company and its offering
The concept for Vodeno was to build a financial services technology company with the latest cloud technologies. A fully cloud-native banking platform did not exist at the time in 2018, so we built the VODENO Cloud Platform (VCP) from the ground up with proprietary software that covers all aspects of retail and SME banking via hundreds of open APIs. We also knew that we needed to tap into fast-moving fintech innovation, so VCP is also a ‘360’ ecosystem with nearly 90 of the best fintechs integrated into the platform.
The combination of our fully API-based, cloud-native platform and access to a European banking licence through our partnership with Aion Bank make us uniquely positioned to offer BaaS to both regulated and non-regulated entities across multiple sectors.
We can cover the full spectrum of banking services, from ‘smart contract enabled’ core banking to accounts to payments to lending and investments – both for retail and corporate end users – and our solutions are flexible and modular to client needs.
What problem was your company set up to solve?
When we launched in early 2018, our belief was that in the future people will not need another retail bank. But they will still need good banking. Banking transactions are shifting away from traditional banks towards platform-based banking via brands.
BaaS providers provide end-to-end digital banking products through APIs. It does so in an efficient way that traditional banks that run costly IT infrastructures are not able to do. I believe in the next 10 years half of all banking will be done via platforms, and in this way, BaaS is helping to democratise good banking for everyone – whether it be via a retailer, neobank or fintech that is focusing on an underserved community.
What has been the biggest challenge or most ‘tricky moment’ to overcome?
One of the biggest challenges facing BaaS providers is that once the solution is delivered, it is up to the client to market and acquire new users. Commercial success of BaaS is largely tied to the client’s ability to be successful on this front.
That said, the key for a successful BaaS provider is being pan-region or global. This allows for true scale, as well as access to local payment rails and understanding of specific compliance requirements in each country. Clients want to be able to operate across multiple markets in multiple currencies, so BaaS providers need to accommodate.
How would you describe the culture of your company?
BaaS is still very new, so we are entering new territory and building brand new solutions every day. The culture at Vodeno has needed to be incredibly nimble and entrepreneurial as a result. From product to sales to marketing, we value the ability of our team to be adaptable, flexible and quick at learning new skills.
We make a big distinction between BaaS and SaaS team culture. Where SaaS follows a waterfall way of working where requirements are defined up front and the development process follows, a BaaS culture is more agile and being consultative is a big point of difference. Our teams listen to client needs and challenges and offer both a business and technology solution. This is before we even start the development process!
What’s in store for the future?
End-to-end digital will become the default expectation for all consumers. From a retail banking perspective, traditional banks optimised their front end – the parts visible to their customer – digitally. Underneath processes were still completed manually though, requiring an expensive headcount. End-to-end digital is important because it provides the best customer experience and is the most cost-effective operating model.
Being API-based is now table stakes with most fintechs, but it is critical to allow speed to market. For example, one of the key aspects of VCP is a proprietary centralised ledger based on blockchain technology. This allows us to deploy multiple clients with development times of three to nine months vs 18 – 24.
VCP can also connect into the front-end of any client to offer turn-key, compliant banking in the back-end. This allows fintechs and brands to do what they do best – make customers’ lives easier, save/or grow money or solve an unmet need.