The Connector Podcast - DFS 2023 - Revolutionizing the Benelux Market with Embedded Finance by Swan

Get ready to embark on an enlightening journey with Marnix from Swan.io as we explore the fascinating realm of embedded finance. How does the idea of making banking as accessible and user-friendly as hailing a taxi with Uber sound? That's precisely what Swan.io aims to achieve, and with a handsome 37 million in recent fundraising, they're poised to take the Benelux market by storm. With a keen eye on hyperlocalization and innovative offerings like local iBan that foster trust and convenience, Swan.io sets a new benchmark for banking – one where you can open a bank account within hours through their platform!

Do you ever wonder how far-reaching the impact of seamless integration of banking into business services can be? We delve into this with Marnix as we uncover the transformative potential of embedded finance across diverse industries. Whether it's e-commerce, HR, or property management, integrating banking features into services is not just a game-changer; it's a revolution waiting to happen. Listen as Marnix shares an inspiring success story of streamlining banking for VMEs in property management companies. And as we gaze into the future, it's all about enhancing user experience by making banking an integral part of other platforms. Ready to experience the future of finance? Join us!

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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com

#FinTech #RegTech #Scaleup #WealthTech

Transcript

Speaker 1: 0:01

Welcome to the Connector podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Koen van der Hoijdon as you learn more about the latest available trends and solutions in the markets.

Speaker 2: 0:20

Welcome to another podcast of the Connector and Belgium Fintech, live from DFS, and I have with me Marnix from swanio. Who are you guys?

Speaker 3: 0:31

Hi Koen, thank you very much for the enthusiastic introduction. Of course I do my best. No, my name is Marnix. I'm responsible for the Benelux at Swan, which includes Belgium, of course, so hence we have this conversation.

Speaker 2: 0:46

Welcome.

Speaker 3: 0:48

Yeah, thank you. Thank you About Swan. In a nutshell, what we do is like embedded finance, which is a bit of a buzz term at the moment. But yeah, to briefly explain what we do, I think embedded finance you can compare it to, for example, uber. It's a very well-known example. Of course, it used to be very difficult to get a taxi to pay. Everything was in a different way, not like super user friendly, and they all combined it in one app, which is like, I think, a perfect example of how embedded finance works. And, yeah, I think the philosophy of our founders was that it was super difficult to embed banking features, bad payments and bad banking into your, into your company, from both like a technical perspective, from both like a licensing perspective. So they really wanted to build something which was accessible via, like, for example, website. You can go to a website, create your own bank accounts, create your own payment cards, basically, and then pay for Cappuccino the next day. So that was a bit of the philosophy and that's also what they did with Swan.

Speaker 2: 1:56

Interesting, and I think that many, many people are very jealous at you because you guys just recently raised 37 million for expansion, and that expansion includes the Benelux. So I'm just wondering what drove you to this decision to come to the Benelux as a company, and how are you willing to spend your funds wisely?

Speaker 3: 2:17

Yeah, it was. I think our founders were like extremely happy, and then all the employees, of course, as well. I mean raising some funds in difficult times. I mean it's really impressive, I think, what they did. Yeah, the Benelux is a super interesting market. I mean it's quite tech savvy. People like to pay in a digital way. We have the euro, of course, here, so it's very easy to expand and also, from like an European perspective, really want to grow like a European company and being active in all the major markets in Europe. And then, yeah, you cannot do that without going to the Benelux, of course.

Speaker 2: 2:57

And what's the history of the company where you originally from?

Speaker 3: 3:01

Originally from France but we're really positioned as a European company. So that means that we have offices in Berlin, in Milan, milan is coming, barcelona, amsterdam, and we're also looking now into Belgium, for example, because we think that it's a super important market for us for our future growth. And, yeah, it's great to have the local connection with the local people, right, so it lists hyperlocalization strategies. That's super important for us.

Speaker 2: 3:28

No, that is something which is super interesting as well, I think. If you talk about hyperlocalization, then I think you talk about adaptation and getting sort of into a local market. So how do you deal with that from maybe a cultural point of view, but also from a regulatory point of view?

Speaker 3: 3:48

Yeah, we conduct analysis of the market in terms of like compliance, in terms of in what way are people used to pay Like bank contact here in Belgium, for example? What kind of currency do they have? How does the KWC onboarding flow look like? Every market has its differences. So we do a very rough analysis of the market and we act based on that.

Speaker 3: 4:13

And the most important thing is the local iBan. So you really need to be comfortable with using your bank account as your primary bank account and a local iBan although you can use an iBan from any country, I mean, in terms of functionality it doesn't really matter. But people really trust when there is a BE in front of your iBan or an NL in the Netherlands or whatsoever. So to really become local and trusted and used, especially as well, I mean you really need to local iBan in, and that's what we do and our founders are super proud of that. They have a song where they sing about the local iBan and what they need to do to become local, and then we have, for every new feature, our CEO or CPO is making a song for that and that's really like our bed and brother. It's really what we want to be. We want to be local.

Speaker 2: 5:05

Marnix, I hope you realize that we want you to sing a song for us now.

Speaker 3: 5:09

I was already afraid. Luckily, I don't know the song.

Speaker 2: 5:13

Well, I can give you some music if you want.

Speaker 3: 5:16

Something with a local iBan indeed.

Speaker 2: 5:19

So what you do as Embedded Finance, you enable non-financial institutions to integrate banking services. But can you explain a little bit? What's the transformation for that customer? What does it really mean for them?

Speaker 3: 5:33

That's a very good question. What does it add in terms of value?

Speaker 2: 5:36

Correct, would you?

Speaker 3: 5:37

like to use banking through your accounting software platform, for example. I think what many companies at the moment are struggling is with getting a bank account. It's expensive, it takes a while, so the service is not great. So, from a user experience perspective, if you can open a bank account somewhere else, for example at your accounting software company I mean every company has an accounting software company and you can open it for free, you have it within three hours, you have your expense cards for your company to do company expenses all in a few hours, I mean that it adds so much value to the entrepreneur who just needs a bank account, or a freelance who just needs a bank account to get started, and if it's also fully integrated with your accounting software, I mean that's like the best of both worlds in that sense.

Speaker 2: 6:30

So the fact that you actually issue Ibane codes, that also makes you a regulated company. So can you explain us a little bit more? How are you regulated? Are you a PST2? Are you a money license? Are you a bank?

Speaker 3: 6:44

Yeah, we are a money license institution, so that means that we can hold and move funds, basically hold deposits and do payments, and our setup is super unique in that sense we can issue and help our partners and we can use our license so they can lean on our license, basically, which means that they don't have to do anything.

Speaker 3: 7:08

I mean, back in the days it was super complicated to add banking features, especially as a non-financial institution. Let's say it's a non-financial institution and by using us you can do it the next day. And how does it work? I mean, we take care of all the sensitive operations that are part of this license. So that means the KYC, the strong customer authentication. If you want to do a payment, we have the license, of course, in the first place. And because we all have this license and everything that belongs to the license, we can really enable clients without any knowledge about banking or regulation or whatsoever. So that is a very unique setup and that makes us like plug and play for every organization to get started the next day, literally, if you want.

Speaker 2: 7:56

Now, when people talk about embedded finance, then very often the immediate bridge is made between e-commerce. But what I think was unique when looking at your proposal, I saw sectors like HR, property management and several others. How does that combine?

Speaker 3: 8:14

Yeah, yeah, in e-commerce, do you see, often in the context of, for example, embedded lending or abandoned insurance, we are really like the core of embedded finance, which means bank accounts payments, and one of our main focus areas is accounting software, for example, where you can open a bank account directly through your accounting software company. But we can also provide I don't know a B2B lending company or a factoring company with infrastructure to perform their business, so, for example, collect invoices automatically or pay out the loans automatically, and then we can provide them with their customers, with an account where they can pay the loan too. So other companies that just got a loan, they can also immediately have it. They have it on an account, so they immediately have a bank account. They can spend it with a linked card to that account. So you really have the whole infrastructure for these kind of companies. So we have a bit of a different angle there.

Speaker 3: 9:12

Another interesting example is the expense card. An expense card you can have it for general expenses, right, for general business related expenses, which is interesting, for I don't know you have these typical companies who do that, right. But you can also use it as an HR software company. You already have the access to all these employees. You already do many things in terms of the expenses and now you can also integrate the payment yourself and benefit from the revenues that come from that. But you can also use it for mobility. Let's say you have a card and you just say, okay, you can only use the limit for I don't know public transport, e-scooters whatsoever, and all of a sudden you have a mobility card and you can serve as a mobility as a service company.

Speaker 3: 9:52

So this I think we have about 15 verticals where we're active in at the moment. I mean, the use cases are almost unlimited. In that sense, we also have this Belgium client, I think, cindy yourself, one of our first clients, and I think it's a great example of what embedded finance can do for, for example, vmes. But you can replicate this example to any other business. It's super difficult for me to know VME to open a bank account these days. It's super expensive, you don't get any interest on the account, it takes a while, many banks don't accept you anymore from a compliance perspective, and now they integrated our services and now you can open a bank account via Cindy yourself, which is a property management company. Right, and I think what I really like about it? Is the CEO really wanted to build something that looks like Revolute right, revolute for businesses?

Speaker 3: 10:41

And that's exactly what he did, so we are actually pretty proud on what he achieved. He basically built a Revolute for VMEs in his own look and feel, and that makes it like super accessible for everyone. You can open an account, you get interest on your account, you can have a card if you want, and I think that's a perfect example how you can integrate banking features into a this kind. This this time a property management company.

Speaker 2: 11:05

While looking ahead in terms of embedded finance, what can we expect and how do you think your company will play a role in shaping that new future? It?

Speaker 3: 11:16

was a status quo. You had a bank, you had your software company accounting software, hr, whatsoever, but now it's all integrated. So I think the status quo is really, really changing. So you used to go to two different parties and now you're just going to the party where you have everything integrated in one platform. So the user experience is changing drastically in that sense. Think about the Uber example, right, I mean, you had to go to the bank, you pay in cash, you need to order a taxi or on the streets, and now it's all integrated. Same goes for banking. I really think that we can serve clients in a way, more user friendly way.

Speaker 2: 11:53

It's almost saying that the banking is in the background rather than in the front end.

Speaker 3: 11:57

Definitely you will, and that's also a bit what we do. I mean, we're a wide label, so you will never see that you do it with us, right? I mean we have 115 clients, but people know our clients but people don't know us. So I think that that is, I think, a bit of the strength. Indeed, it should be seamless, right it should be. You don't want to wait for two months on a bank account. I think that's not longer the case anymore in the future. Okay, makes a lot of sense.

Speaker 2: 12:22

So I guess many of our audiences are very interested to learn more about you, and my question would be then where can they find you? You can go, I mean, everything is open source.

Speaker 3: 12:34

So you can literally go to our website and install your own and branch your own bank accounts, your payment cards, et cetera, so you can try it out. But there's also a button. If you click it and your IP address is in Belgium, you can automatically, automatically you can go to the bank account. I think you automatically will be sent to my email inbox, so I see you there. Excellent.

Speaker 2: 12:54

Excellent. Marnix, thank you so much for joining this podcast. Thank you also to the audience for staying tuned, and we'll get more news coming from DFS. Thank you so much.

Speaker 1: 13:04

Thanks for listening to another episode of the Connector podcast. To connect and keep up to date with all the latest, head over to wwwjointheconectorcom or hit subscribe via your podcast streaming platform.