The View of Rabobank Regarding the Expansion of Embedded Finance and BaaS

Embedded Finance and Banking-as-a-Service (BaaS) are rapidly evolving trends that are reshaping the financial landscape. To gain insights into the growth of these trends and their future potential, The Paypers turned to Olaf ten Duis, a representative from Rabobank, a prominent player in the financial industry.

In the interview, Mr. ten Duis emphasized several key drivers contributing to the expansion of Embedded Finance. Firstly, he noted that consumers now expect quick, seamless, and user-friendly experiences, not only in their personal lives but also when managing their businesses. This shift towards online operations has driven Rabobank to adapt and be available wherever their customers require them.

Technological advancements have also played a pivotal role, with Open Banking strategies at the forefront. The implementation of PSD2 has particularly empowered Rabobank to better serve the underserved SME market by streamlining digital credit decisions and enhancing SME lending profitability.

Regarding Rabobank’s role in the Embedded Finance and BaaS space, Mr. ten Duis highlighted the bank’s commitment to providing end-to-end solutions for distribution partners. These solutions are PSD2-based and offer seamless integration within a week. Rabobank distinguishes itself with a cutting-edge underwriting model and provides access to cost-effective capital, resulting in fair-priced solutions for SMEs.

Furthermore, Rabobank remains committed to enhancing its lending value chain through automation and innovation, often collaborating with partners possessing superior solutions. An example of this collaboration is their work with an external PSD2 data aggregator to collect essential data.

Rabobank’s Embedded Finance offering encompasses a wide range of products, including short-term loans, credit based on revenue data, and invoice financing. They also offer Banking-as-a-Service solutions through various APIs, such as identity services, payments, and account information. A notable innovation is Credit Estimate, providing accurate client creditworthiness assessments.

In terms of partnerships, Rabobank actively seeks collaborations with fintechs, BaaS platforms, and other companies to bolster its Embedded Finance solutions. Striking a balance between in-house development and partnerships is crucial. Rabobank leverages its strong history, risk model, brand reputation, and customer base while recognizing the need for fintech agility and access to alternative data sources.

Looking ahead, Rabobank is fully committed to the Embedded Finance strategy. They aim to pool different financial services and make them easily accessible across various channels. Mr. ten Duis predicted that approximately 30% of all SME financing would shift to non-banking channels by 2030. As a leading SME bank, Rabobank seeks to lead this transition and remain the preferred strategic partner for Dutch businesses.

Rabobank’s perspective on the growth of Embedded Finance and BaaS underscores their commitment to innovation, collaboration, and customer-centric solutions in the evolving financial landscape.

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