by Morten Kriek.
Introduction
Embedded finance has emerged as a transformative trend in the financial industry, integrating financial services seamlessly into non-financial platforms and offerings. This article explores the partnership angle of embedded finance and provides insights into the lessons learned from industry leader ABN AMRO.
Role Separation and Collaboration
ABN AMRO recognizes the importance of role separation and collaboration in embedded finance. The company views distribution and customer experience as key areas, while acknowledging the role of banks in providing the balance sheet. Innovation is seen as a driving force for embedded finance, leading to the establishment of a dedicated Innovation team.
Collaboration is vital for successful embedded finance initiatives. ABN AMRO emphasizes the need for multidisciplinary teams, including compliance and legal experts, to navigate the complexities of executing embedded finance solutions.
Shared Vision and Partnership Models
Establishing a shared vision with partners is crucial. ABN AMRO stresses the importance of agreeing on the desired customer outcomes and ensuring both parties have the same ambition for the collaboration. By aligning goals, partners can avoid potential conflicts down the line.
ABN AMRO utilizes two main partnership models:
1. Corporate Innovation: The company launches its own embedded finance innovations, such as ID&PAY (identity payments and treasury banking), buy-now-pay-later solutions, and payday advances. These innovations are then spun out into the business.
2. Corporate Venturing: ABN AMRO partners with accelerators (Techstars) and private equity firms (Motive Partners) to invest in startups and early-stage fintech companies. This approach provides access to future-oriented technologies and ideas.
Criteria for Success
ABN AMRO identifies key criteria for successful embedded finance partnerships:
1. Customer Centricity: Putting the needs of the customer first, ensuring ethical considerations are upheld.
2. Shared Vision: Ensuring partners have a clear understanding of the desired outcomes for both the customer and the business.
3. Collaboration: Fostering a mindset of teamwork and shared ownership.
4. Selecting the Best: Partnering with experienced and reputed accelerators and investment firms.
5. Data-Driven Approach: Iteratively gathering data and making adjustments to optimize the partnership.
6. Investing in Delivery Teams: Attracting and retaining talented individuals who can successfully execute partnership initiatives.
ABN AMRO’s Value Proposition to Partners
ABN AMRO offers the following value proposition to potential partners:
- Partner mentality
- Access to capital
- Access to customers
- Clear vision and strategy
- Strong Innovation team
- Startup-friendly approach
- Deep banking expertise
- Models that align incentives
Focus, Patience, and a Safe Environment
ABN AMRO emphasizes the importance of focus, patience, and creating a safe environment for innovation. The company believes in concentrating on a few areas of excellence and avoiding over-diversification. Patience is crucial as financial services can be complex and time-consuming, especially in the early stages. Finally, creating a positive and supportive environment allows for risk-taking and learning from