Thank you for joining the Ross Republic podcast. In our forty-sixth episode, your host Adrian Klee is joined by Eleonor Hedström, Director at the Wärtsilä Next Business Lab, to discuss the opportunities of venture clienting for large industrial companies.

In the recent podcast episode, I had the pleasure of speaking with Eleonor Hedström, Director of Wärtsilä Next Business Lab, to explore the critical role of innovation in the energy sector and how industrial companies can best leverage new business labs to achieve their strategic objectives. Wärtsilä, a global leader headquartered in Helsinki, focuses on innovative technologies for the marine and energy sectors, striving for decarbonisation and sustainability. Wärtsilä is known for its engineering expertise and is dedicated to providing efficient, flexible, and environmentally friendly solutions, ranging from power generation systems to advanced marine technology. In our conversation, we discussed the evolving role of the Next Business Lab, how it aligns with Wärtsilä’s broader mission, and the broader challenges and opportunities presented by innovation in today’s industrial landscape.

Eleonor provided a comprehensive overview of the Next Business Lab’s mission. The lab operates as an internal support function that connects Wärtsilä’s three primary business units—power plants, energy storage and optimisation, and energy services—to innovative solutions. The lab’s goal is to identify, scout, and collaborate with growth companies, research institutions, and external technology providers that can help address specific challenges faced by the business units. Eleonor described her role as akin to wearing three different hats: leading a small scouting team, enhancing the company’s innovation capabilities, and managing the WISE ecosystem initiative.

The WISE ecosystem, or Wide and Intelligent Sustainable Energy initiative, is a significant undertaking funded by Business Finland, with a contribution of €100 million from Wärtsilä. Its purpose is to develop zero-emission balancing power—an ambitious step toward a carbon-neutral future. Through the lab, Wärtsilä aims to explore partnerships in areas like monitoring and analytics, sustainable fuels, and predictive maintenance, thereby pushing the boundaries of efficiency and sustainability in energy markets.

One key topic of our discussion was the recent repositioning of the Next Business Lab. This repositioning was largely a response to broader strategic shifts at Wärtsilä, which Eleonor described as “the Wärtsilä way.” The company’s overarching strategy now focuses more directly on decarbonisation and achieving 5% annual growth while ensuring sustainability across its operations. As part of this reshaping, the Next Business Lab has been framed as a support function, making it more integrated with the business units rather than operating independently.

Eleonor explained that this repositioning provided clarity in terms of governance, budget, and the lab’s specific contributions to the overall innovation process. The lab works closely with business units to support their objectives, particularly in developing new business models and technologies aligned with the company’s sustainability mission. By integrating more closely with core operations, the lab helps ensure that innovation is not isolated from day-to-day business needs but instead serves as a direct enabler of the company’s strategy.

The repositioning of the Next Business Lab is also a reflection of changes in the broader economic environment. During the “zero interest rate decade”, when capital was relatively inexpensive, many companies invested heavily in explorative innovation and in-house development of new technologies. However, with rising capital costs and increased pressure on efficiency, there has been a shift towards more collaborative innovation approaches, including working with external technology providers and growth companies—an approach often referred to as “venture clienting”, which is a model where established companies act as customers for startups or growth companies, using their solutions directly within their business operations. This approach allows the larger firm to accelerate innovation by leveraging external capabilities, while providing the startups with valuable market feedback, real-world testing, and a significant reference customer. The benefits of venture clienting include faster adoption of cutting-edge technology, lower innovation costs compared to in-house development, and fostering a culture of open innovation that benefits both parties..

Eleonor and I discussed how Wärtsilä has adapted to these shifts by looking outside its walls for solutions and prioritising collaboration with external partners. Instead of building everything in-house, the lab focuses on finding the best technology solutions globally and bringing them into the organisation through well-structured partnerships. This not only speeds up the innovation cycle but also allows Wärtsilä to tap into new capabilities without committing to the large budgets required for in-house development.

One of the core functions of the Next Business Lab is to scout and select suitable partners for collaboration—often growth companies or university spin-offs. Eleonor outlined the structured process they follow, which involves creating long lists and short lists of potential partners before engaging with those who show the highest promise. A recurring theme in our conversation was the importance of alignment, clarity, and trust in making these partnerships work effectively.

Alignment on goals is crucial—both Wärtsilä and its partners must share a clear understanding of what they want to achieve together. Eleonor noted that cross-functional teams are established to work on the initiatives, ensuring that internal resources are allocated appropriately and that the collaboration is as seamless as possible. Trust is built through effective communication, transparency, and by setting well-defined success criteria from the outset. These criteria often include the technology’s scalability, sustainability, manufacturing capabilities, and overall life-cycle impact.

Eleonor also highlighted some of the challenges inherent in partnerships between large industrial companies and smaller, more agile growth firms. Differences in culture and processes can lead to friction, which is why the lab plays such a critical role in bridging the gap between the “big corporate” world and the more dynamic environments of growth companies. The Next Business Lab acts as a facilitator, ensuring that growth companies understand Wärtsilä’s processes and requirements, and helping them navigate the often-complex procurement and compliance landscape of a large industrial firm.

Throughout our discussion, it became clear that the Next Business Lab plays a pivotal role in Wärtsilä’s broader innovation strategy, acting as both a catalyst for technological adoption and a bridge between internal needs and external solutions. The lab’s activities not only focus on addressing operational challenges but also contribute to potential mergers and acquisitions, providing a valuable pipeline of innovation-led opportunities that might be ripe for acquisition in the future.

Eleonor emphasised the importance of keeping innovation closely tied to core business operations. In the past, many industrial companies set up innovation activities that were too far removed from their core operations, making it difficult to transfer and integrate new solutions back into the business. Wärtsilä has taken a different approach by ensuring that the Next Business Lab is directly aligned with the business units from the outset, ensuring that innovations are relevant and can be seamlessly implemented.

In concluding our conversation, Eleonor offered advice to other companies looking to set up or reform their innovation labs. She stressed the importance of fostering strong internal relationships and building diverse teams that combine various competencies. She also highlighted the need for a clear mandate for the lab’s activities—one that is closely aligned with the company’s overall strategy and culture.

In summary, the Wärtsilä Next Business Lab represents a thoughtful approach to corporate innovation: one that recognises the need for external collaboration, alignment with core business objectives, and a nuanced understanding of how to balance in-house development with external partnership opportunities. As the energy sector continues to evolve towards greater sustainability and efficiency, such labs are likely to play an increasingly important role in helping companies navigate these changes while staying competitive.

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Thank you for joining the Ross Republic podcast. In our forty-fifth episode, your host Adrian Klee is joined by Anna Werntoft, an independent advisor and ex-CTrO at Ikano Bank, to explore how legacy institutions can achieve successful turnaround and transformation programs.

Together with Anna Werntoft, independent advisor, board member and ex-Chief Transformation Officer at Ikano Bank, we explored the complexities of transformation—specifically, how large-scale changes impact technology, culture, and customer experience. In the podcast, we delve into key insights from Anna’s leadership during Ikano Bank’s transformation journey. Her role offers a rich case study in how to navigate both the challenges and opportunities of transforming legacy banking systems into agile, customer-centric operations.

When businesses are constantly in a state of transformation, the term itself can lose its significance. During our conversation, Anna and I agreed that true transformation represents a fundamental shift in an organisation’s operating model—one that impacts all levels and is often triggered when technological and organisational debt reaches a critical point, severely hindering the company’s ability to compete. In contrast, operational improvements and incremental innovation should be ongoing, integrated into the organisation’s daily processes.

The banking sector, particularly in Europe, is facing increasing pressure from high operating costs, regulatory changes, and rising customer expectations. For Ikano Bank, as with many others, incremental adjustments were no longer enough—a full-scale transformation was required. Ikano Bank’s experience mirrors a broader trend in financial services: transformation must be proactive, not reactive. As Anna highlighted, organisations that wait for a crisis to initiate change often find themselves struggling to catch up. Instead, legacy banks should embed continuous organisational improvement and innovation into their core operations, ensuring they remain agile and competitive in a constantly evolving landscape.

One of the biggest challenges Anna faced was reimagining Ikano Bank’s operating model across its eight markets. The bank’s legacy systems, typical of many traditional financial institutions, had become a barrier to efficiency. As Anna explained, the initial trigger for the transformation was technology—specifically, the need to modernise an outdated tech stack. However, it soon became clear that changing the technology alone wouldn’t be enough.

Anna’s leadership emphasised a holistic approach to transformation. The bank’s governance, processes, and team structures all needed to evolve alongside the technology. This comprehensive rethinking of the operating model was key to ensuring that the transformation would deliver long-term value, not just short-term fixes.

A major theme of our discussion was the critical role of culture in any transformation effort. As Anna and I explored, cultural alignment is often the overlooked but essential ingredient in driving change. Ikano Bank, with its strong entrepreneurial spirit inherited from its IKEA roots, had an advantage: This culture of innovation and adaptability helped smooth the transition to new technologies and ways of working.

However, Anna also acknowledged the challenges of integrating new talent—particularly those with digital and agile expertise—into a traditional banking environment. To manage this friction, she focused on clear communication and fostering a shared vision across the organisation. By aligning everyone around the ‘why’ of the transformation, Anna ensured that teams from different backgrounds could collaborate effectively.

Our conversation also touched on the growing importance of Environmental, Social, and Governance (ESG) factors in business strategy. For Anna, ESG was not just a regulatory obligation—it was a strategic opportunity. Ikano Bank’s transformation was deeply intertwined with its sustainability goals, reinforcing the bank’s commitment to long-term profitability through efficiency and transparency.

Anna emphasised that ESG needs to be embedded into the core of the business, rather than treated as a separate initiative. At Ikano Bank, this was particularly evident in how the bank’s vision of sustainability shaped its transformation. By integrating ESG into the broader strategy, the bank ensured that its transformation was not only about meeting today’s requirements but also about positioning itself for the future.

Operating across eight markets presented a unique set of challenges for Ikano Bank. As Anna noted, different countries have varying regulatory frameworks and customer behaviours, which made it difficult to implement a one-size-fits-all solution. This complexity required a flexible approach that balanced the need for standardisation with the need for localisation.

One of the lessons Anna shared was the importance of simplifying processes wherever possible. While it was critical to reuse technological components and systems across markets, the bank also had to remain adaptable to local nuances. By focusing on scalability without overcomplicating the system, Ikano Bank was able to implement changes that worked across markets while respecting the unique needs of each region.

During the episode, we emphasised the importance of keeping the customer at the centre of the transformation. In today’s banking landscape, where fintechs and neo-banks have redefined customer expectations, traditional banks must offer seamless, user-friendly experiences to remain competitive. For Ikano Bank, improving the customer journey was a key priority. The bank’s legacy systems had created pain points for customers, from slow processing times to inefficient interfaces. Addressing these issues through the transformation was essential, and the bank leveraged data to make informed decisions about how to enhance the overall customer experience. By focusing on online-offline integration and streamlining processes, Ikano Bank aimed to deliver tangible benefits to its customers.

One of the key takeaways from my conversation with Anna was the importance of regularly measuring progress during the transformation. At Ikano Bank, transparency was crucial to maintaining momentum. Anna’s team made a point of regularly communicating both successes and setbacks, which helped keep the organisation engaged and aligned. Interestingly, Anna noted that resistance to the transformation was lower than expected. Many employees recognised the pain points caused by the outdated systems and were eager for change. By fostering a culture of transparency and involving employees in the process, Anna was able to maintain a high level of engagement throughout the transformation.

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Thank you for joining the Ross Republic podcast. In our forty-fourth episode, your host Adrian Klee is joined by Nicolas Grilly, CTO at IP firm Zacco and Ex-Head of Group Innovation at Husqvarna, to explore how industrial companies can achieve successful innovation returns.

In a world where higher interest rates and economic turbulence are the new normal, top companies are rethinking their growth strategies. In this episode, I had the pleasure of sitting down with Nicolas Grilly to explore how industrial companies can set up their innovation efforts for success and avoid common pitfalls to ensure those efforts pay off.

Nicolas is currently the CTO at the global IP firm Zacco. Until recently, he was VP of Group Innovation at Husqvarna Group, a Stockholm-based global leader in outdoor power products—think chainsaws, robotic lawn mowers, and garden watering gear, generating roughly USD 4.8 billion annually. Before that, Nicolas was the Head of Digitalisation at Northvolt Systems, Europe’s fastest-growing battery producer, where he led the digital transformation of their battery systems and factories.

In today’s fast-paced business environment, companies face the challenge of balancing the need for continuous innovation with the demands of day-to-day operations. Our chat shone a light on the delicate dance between making small, incremental improvements and chasing big, transformative projects.

One of the key takeaways? Companies often fall into the trap of placing small bets—those low-risk, incremental innovations that, while safe, rarely make a dent in the bottom line. As Nicolas put it, “The problem with making small bets is they don’t matter regardless of the outcome.” Sure, this cautious approach might shield you from potential losses, but it also means missing out on substantial gains. If companies really want to drive growth, they need to shift from just minimizing risks to maximizing opportunities.

If this innovation succeeds, can it grow into a new division or business unit? If not, should we even pursue it?

We also dug into the best ways to structure innovation teams for maximum impact. Should innovation projects stay close to the core business, or should they be spun off entirely? It turns out, the answer depends on the type of innovation you’re pursuing.

For incremental innovations or those closely linked to existing products, keeping teams close to the core business can foster collaboration and ensure everyone’s on the same page. But when it comes to more radical innovations—those that bring significant changes in technology, business models, or target markets—keeping them separate is often key. As Nicolas emphasized, “If it’s a radical change, it should absolutely be separated.” This kind of separation gives these projects the breathing room they need to develop without being boxed in by the existing business structure.

Another crucial point we discussed was the importance of strong strategic alignment between innovation projects and a company’s core strengths. It’s all about constantly asking, “Why us?” Why should our company be the one to succeed with this innovation? If the answer isn’t clear, it might be time to rethink the project.

We talked about a corporate startup that, despite its potential, ultimately failed because the connection between the new venture and the company’s existing strengths was too weak. As Nicolas noted, “It’s good to have some kind of connection between that new venture and an existing strength of the business.” Without that link, even the most promising innovations can struggle to gain traction.

With many companies scaling back their innovation labs and focusing on core operations, keeping innovation alive can be tough. Our conversation highlighted how innovation often goes through cycles—companies swing between investing in transformative projects and retreating to safer, incremental innovations depending on the economic climate.

However, as we agreed, long-term success hinges on a commitment to innovation, even when the going gets tough. Nicolas summed it up perfectly: “There are some shifts that you cannot change that will happen no matter what you do.” Companies need to stay alert and keep adapting their strategies to ensure they’re not left behind as the world continues to evolve.

The insights from this podcast offer a valuable guide for companies navigating the complexities of corporate innovation. By balancing small bets with big ambitions, structuring innovation efforts wisely, and ensuring strong strategic alignment, businesses can set themselves up for long-term success. And in a world where external forces are constantly shifting, maintaining a commitment to innovation—especially during challenging times—will be essential to staying ahead of the curve.

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Thank you for joining the Ross Republic podcast. In our forty-third episode, your host Adrian Klee is joined by Ken Knoll, coach and interim CPO, to explore how companies can build, transform and lead successful product organizations that continuously discover and deliver high-value products for their customers.

Listen now on Spotify / Apple Podcasts

After a decade of ZIRP-driven expansionary growth strategies, many companies are now refocusing on generating organic growth within their core or adjacent business areas. Instead of outsourcing growth activities to greenfield innovation labs, leading companies are shifting towards creating empowered, cross-functional core teams that own business outcomes end-to-end. After all, it’s about leveraging technology effectively and building the best possible solutions for a company’s target users. This approach has been coined as product organisation, hence we’re excited to explore this topic together with Ken. He’s currently working as interim CPO, where he focuses on building and transforming successful product organizations that deliver high value for their customers. Before that he spent almost six years at BCG X, where he built ventures and products in the climate tech, health, mobility, logistics, automotive, insurtech and fintech space. You can check out his website here and LinkedIn here.

Ken emphasised that a strong vision is the cornerstone of any successful product organization. It’s not just about setting a direction but inspiring and rallying the team around a shared goal. The vision should articulate why the company exists and the positive change it aims to bring to its customers’ lives. It’s crucial to start with the customer problem and envision a solution, rather than starting with a technology or product and searching for a problem to solve. This vision must be clear and compelling enough to drive the team through the inevitable challenges and setbacks they will face.

We discussed how many companies often make the mistake of starting with a solution and then looking for a problem. Instead, the focus should be on understanding and defining the customer’s problem first. A well-defined vision answers the fundamental questions of why the organization exists and what it aims to achieve, painting a vivid picture of the future where the customer’s problem is solved. This vision should be communicated consistently and integrated into the daily operations and culture of the organization.

The discussion highlighted the distinction between strategy and planning. A good product strategy translates vision into actionable steps while allowing the organization to focus on what truly matters. It involves placing strategic bets and understanding that not all will succeed. The ability to say “no” to non-essential activities is a hallmark of a sound strategy. This focus ensures that resources are directed towards efforts that align with the strategic goals of the organization.

Ken pointed out that many companies fail to differentiate between a strategy and a plan. A plan is a detailed roadmap outlining steps to achieve a goal, while a strategy is a broader framework that guides decision-making and prioritization. A robust product strategy should help the organization prioritize the key initiatives that will drive the most significant impact, allowing it to focus its efforts and resources on these areas. This often involves making difficult decisions about what not to pursue, ensuring that the team’s efforts are not diluted across too many initiatives.

Culture is a critical component that supports the vision and strategy. A culture that fosters psychological safety allows team members to express their ideas and take risks without fear of failure. This environment is essential for innovation and continuous improvement. Practical tools, like using OKRs (Objectives and Key Results) to set strategic bets, help embed a culture of learning and experimentation. Failure should be viewed as a learning opportunity, not a setback.

Ken explained that creating a culture of experimentation and learning is crucial for a product organization. This involves encouraging open communication, where team members feel safe to share their thoughts and ideas without fear of retribution. Psychological safety is the foundation for healthy conflict, which is necessary for innovation. When team members can challenge each other’s ideas constructively, better solutions emerge. Moreover, using OKRs to set ambitious yet achievable goals helps teams focus on what matters most and measure their progress effectively. Celebrating successes and learning from failures are both integral to this process.

Reorganizing around cross-functional teams was another key point we discussed. Effective organizational design supports collaboration and accountability. In many companies, particularly large ones, silos can hinder innovation and slow down processes. By ensuring that all relevant functions, including IT and compliance, are involved from the beginning, organizations can better align their efforts towards common goals.

Ken shared his experience working with an Australian bank, where a large-scale transformation involved 500 people. The bank aimed to center its organization around customer journeys and adopt agile methodologies. However, the initiative faced challenges because the deeper layers of IT, responsible for compliance and other essential functions, were not adequately considered into the transformation process. This highlighted the importance of involving all necessary stakeholders from the start and ensuring that the organizational design facilitates collaboration across different functions.

Empowering teams to take ownership of their work from discovery to delivery is crucial for fostering innovation and accountability. I mentioned a case where a financial services organization successfully implemented Marty Cagan’s principles by giving product managers end-to-end responsibility. This approach ensures that the people who come up with concepts are also involved in the delivery, which helps them understand the practical challenges and constraints.

By breaking down silos and creating cross-functional teams, organizations can enable better communication and collaboration. This structure allows teams to be more responsive to customer needs and adapt quickly to changes in the market. It also ensures that all relevant perspectives are considered, leading to more holistic and effective solutions.

Transforming into a product-led organization requires a clear vision, a focused strategy, a supportive culture, and an effective organizational structure. While the journey is challenging, starting small with cross-functional teams and iterating on successes can pave the way for broader transformation. The principles we discussed in the podcast provide a valuable framework for companies looking to stay competitive and innovative in today’s fast-paced market.

Understanding and implementing these principles can be daunting, but as Ken noted, it’s a journey worth embarking on. Starting with yourself and committing to the process is the first step towards creating a resilient and customer-centric product organization. It’s not about overnight changes but about making continuous improvements that align with the company’s vision and strategic goals. By fostering a culture of experimentation and collaboration, and by empowering teams to take ownership of their work, organizations can unlock new levels of innovation and organic growth.

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Thank you for joining the Ross Republic podcast. In our forty-second episode, your host Adrian Klee is joined by Dieuwertje de Rover from Rabobank to explore how Rabobank enables third parties to embed banking services directly into their own customer journeys.

Listen now on Spotify / Apple Podcasts / Google Podcasts

Embedded finance, i.e. to ability to offer banking services as a seamless part of a customer journey, is a trend that is here stay. After exploring this topic with Christoffer Malmer from SEB Embedded as well as Dee Mitra from Deutsche Bank, we invited Dieuwertje de Rover to our podcast to hear how one of the leading Dutch banks is approaching this new business opportunity. Dieuwertje is the area lead for banking-as-a-service (BaaS) at Rabobank, a cooperative bank, based in the Netherlands where it serves around 9.1 million retail and corporate customers

This episode provides an in-depth look at how Rabobank is steering the future of banking by integrating financial services into broader consumer and business platforms. Dieuwertje began her tenure at Rabobank as a digital strategy consultant, where her initial project involved developing a vision for banking-as-a-service (BaaS).

Over the past five years, she has spearheaded the transformation of this vision into a strategic operational component of Rabobank, highlighting her journey from strategy formulation to leading a critical area within the bank.

Dieuwertje explains the distinction between general banking-as-a-service (BaaS) and Rabobank’s approach to embedded finance. While BaaS often entails providing banking infrastructure to other companies on a white-label basis, Rabobank focuses on embedding its financial services into the ecosystems where their customers are active, ensuring the bank’s brand is part of the customer experience. This approach not only leverages Rabobank’s strong brand equity but also aligns with their strategic goal to meet customers on their preferred platforms.

Our conversation also covers the significant role of regulation in shaping the future of banking services. Dieuwertje discusses the impact of the Payment Services Directive 2 (PSD2), a European regulation designed to increase competition and participation in the payments industry, including from non-banks. This directive mandates banks to open their payment services to third-party providers on behalf of their customers. She anticipates the introduction of PSD3, expected to further enhance these provisions and possibly introduce new ones aimed at tightening security and extending the scope of regulated services. Another upcoming regulation, the Financial Data Act (FIDA), aims to promote greater access to financial data, enhancing transparency and enabling consumers to benefit more fully from their financial data. These regulations encourage innovation and competition, pushing Rabobank and other banks to adapt and innovate in response to evolving market demands and consumer expectations. Dieuwertje highlights how these regulatory changes are driving banks to develop more customer-centric products and services, fostering a more dynamic and interconnected financial ecosystem.

Dieuwertje touches on the shift in customer expectations towards instant and integrated services, akin to experiences offered by platforms like Spotify. This shift is driving banks to offer financial services that are not only accessible but are also seamlessly integrated into other services and platforms that customers use daily. Related to this point, we discussed the complexities of developing new financial products that meet both regulatory standards and succeed customer needs.

Looking forward, Dieuwertje is optimistic about the role of embedded finance in transforming the banking sector. She foresees a future where banking is not only about transactions but about being an integral part of a customer’s daily digital experience. The conversation concludes with thoughts on the potential for banks to innovate and remain competitive in a rapidly evolving digital landscape, where collaboration between banks and fintechs could redefine traditional banking models. We are excited to see the offerings that Rabobank’s banking-as-a-service unit will launch next. You can check out its current services here. 

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Thank you for joining the Ross Republic podcast. In our forty-first episode, your host Adrian Klee is joined by Piotr Pisarz from Uncapped to explore the current state of debt financing for digital companies and how Uncapped is becoming the leading provider of next-generation debt products.

Listen now on Spotify / Apple Podcasts /Google Podcasts

As outlined in our latest digital lending whitepaper, business lending is an area that is ripe for disruption. In particular, the fast-growing segment of digital businesses – think e-commerce, software, gaming or marketplaces – have been underserved by the traditional banking industry due to their lack of collateral and lower/negative EBITDA levels, which negatively impact their creditworthiness at traditional banks. Due to recent regulatory developments, tech debt and unfit underwriting/lending policy approaches, traditional banks have therefore left the field wide open for alternative lenders to serve small and medium-sized businesses (SMEs). In order to see where the market is headed, take a look at the UK: Challenger and specialist banks’ share of total gross lending reached a record high in 2022. Nominal gross lending excluding overdrafts to SMEs by challenger and specialist banks in 2022 was at £35.5bn, according to BoE data. This is the highest level since records began in 2012:

Gross bank lending (UK)

Although these stats are impressive, alternative lenders are more exposed to the recently strongly increased cost of funding compared to large established banks. Since February, there has been a notable rise in interest rates, especially in SONIA swap rates that incorporate expectations for the Bank of England’s Bank Rate. This has led to a roughly 50% increase in the cost of wholesale funding for marketplace lenders, asset finance providers, and Community Development Financial Institutions (CDFIs). This uptick in costs, coupled with more limited access to funding, higher expenses for wholesale funding, and possibly decreased equity valuations, may lead to fewer new lenders and business models entering the EU/UK market.

Alternative lenders now need to show resilience and proof the efficiency of their business models. With a recently closed funding round of about €230mn, this was a perfect time to speak to Piotr Pisarz, the co-founder and CEO of Uncapped.

Founded in 2019 and now at around 90 FTE,  the vision behind Uncapped is that founders shouldn’t have to give away ownership of their company to fund growth. Uncapped provides no-security and no-equity investments from €100k – €10 million to digital companies, such as e-commerce, direct-to-consumer (DTC), fashion, SaaS, gaming, and app development. In our podcast episode, we cover why these segments fall between the cracks of the lending industry, as they often neither fit the venture capital model nor the traditional bank lending model. John Luttig from Founders Fund recently summarised how new lending approaches will emerge to fill the gap:

As the ROI of SG&A spend becomes more predictable, a non-VC financial layer will emerge(…), similarly helping to fuel its growth.This suite of services will benefit from a tech-specific approach: real-time debt offerings based on operating KPIs, securitization of software ARR, and retail investor-facing SaaS bonds.

This is exactly where Uncapped comes in. With a deep understanding of digital businesses and their underlying KPIs, Piotr and his team built the lending product to incorporate real-time data through APIs and automated large parts of the underwriting and servicing process:

Uncapped Customer journey schematic (Source: RR)

Lending has become an automation and data game, where the player with the best dataset and decisioning model as well as operational velocity wins. At Ross Republic, we’ve helped both large European banks and leading fintech-scale-ups in developing their business lending products. Get in touch with me here to learn more.

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Thank you for joining the Ross Republic podcast. In our fortieth episode, your host Adrian Klee is joined by Dee Mitra from Deutsche Bank to discuss how traditional banks can capitalize on embedded finance and banking-as-a-Service.

Listen now on Spotify (link coming soon) / Apple Podcasts /Google Podcasts

In our latest podcast episode, I had the privilege of hosting Dee Mitra, the Managing Director and Head of BaaS (Banking as a Service) and Embedded Finance Platforms at Deutsche Bank. The episode sheds light on how Deutsche Bank is leveraging embedded finance to redefine banking experiences for its clients.

Deutsche Bank stands as a key player in the global banking sector, continually adapting to the dynamic world of finance and fintech. One of the most impactful fintech business model shifts is embedded finance, i.e. the integration of tailored financial products into non-banking propositions. In the background, such services are enabled by banking-as-a-service providers, which are essentially APIs wrapped around the major functions of a bank. One example of how Deutsche Bank enters the embedded finance market is its API program, which offers services such as a Cash Account Opening API and Decoupled Wallet SDK, allowing for seamless access to banking data and services.

For a traditional bank, API-driven embedded finance offerings are a significant shift in how the bank’s end-users interact with financial products. Dee Mitra, with her extensive experience in leading Deutsche Bank’s embedded finance and BaaS initiatives, provides an insider’s view on the transformational journey from traditional banking to embedded banking ecosystems. Under her leadership, Deutsche Bank has embraced embedded finance, recognizing its potential to offer tailored financial products that enhance customer experiences directly at point of need. Our discussion delves into the factors driving Deutsche Bank’s decision to enter the embedded finance market, the strategic vision behind their offerings, and the challenges and opportunities this new banking paradigm presents.

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Thank you for joining the Ross Republic podcast. In our thirty-ninth episode, your host Adrian Klee is joined by Joost Diepenmaat, Co-founder & COO at Moneybird as well as Lars Markull, founder of Embedded Finance Review. In this episode, we discover the benefits of embedded finance for SaaS platforms.

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Currently, it’s predominantly the provider-side of Banking-as-a-Service solutions that is pushing the embedded finance narrative. Our aim with this episode is to explore first-hand how leading operators in the European SaaS segment are experiencing the embedded finance trend and how they’re implementing embedded finance solutions. During the episode, Joost, Lars and Adrian explore how the direct integration of financial services by B2B SaaS providers can enhance the overall customer experience, improve automation and generate new revenue streams. Beyond that, critical challenges when integrating business bank accounts and card issuing capabilities are highlighted.

To begin with, Joost laid out the journey of Moneybird. The company was founded already in 2008 and evolved from an invoicing tool to a full-stack, integrated accounting platform now serving over 300.000 users across the Netherlands and Belgium. When building Moneybird, Joost mentioned one of the key challenges was to anticipate the seamless integration of banking services within software, as pre-PSD2 it was almost impossible to get private API connections to traditional Dutch banks. After PSD2, many operators realised that the regulatory (PSD2) APIs are not meeting performance standards required by modern SaaS apps. From the start, their vision, as Joost mentioned, was to make banking and bookkeeping a unified digital experience. Ultimately, with the emergence of Banking-as-a-Service APIs, the time was finally right: instead of solely pulling external data, the direct integration of accounts, card issuing and payment features into the accounting platform unlocks completely new levels of user experiences and accounting automation. For instance, an integrated solution enables the seamless reconciliation of bank transactions and respective accounts receivable and payable data.

Schematic of embedded finance providers. Source: RR

Actualizing this vision was not without challenges. The process involved substantial elements of product design, API implementation, and regulatory compliance, such as handling KYC requirements. Joost stressed that integrating with a Banking-as-a-Service API was not a one-off task, but a continuous one due to constant updates and security measures. Hence, one key success factor that was highlighted is the importance of choosing a trustworthy and established Banking-as-a-Service provider, which continuously improves the underlying services and can offer a whole product suite beyond plain vanilla banking. For software companies contemplating integrating financial services, Joost recommended focusing on the value it adds to the customer experience. He emphasized the project’s complexity, suggesting it be treated as a principal focus endeavor, not a side project.

Crucial to the discussion was the understanding that banks lack contextual information about transactions, which software companies often have at their disposal. In essence, banks know ‘what’ is done, but not ‘why.’ Hence, adding banking functionality to a software platform that already possesses transactional context, empowers entrepreneurs with deep financial insights originally unavailable with traditional banking models.

In conclusion, it was clear the merger of banking and accounting via embedded finance, despite initial hurdles, is well underway.

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The post The embedded finance case for SaaS w/ Moneybird appeared first on Ross Republic - A strategy consultancy.

Thank you for joining the Ross Republic podcast. In our thirty-eighth episode, your host Adrian Klee is joined by Claudio Wilhelmer, Chief Commercial Officer at Dock Financial.

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One of our key hypothesis at RR is that the rapid digitalisation of the banking industry results in the split of its manufacturing and distribution functions. Long-term, there will be players fully focusing on the manufacturing of financial products, such as balance sheet management, regulatory and risk compliance, as well as maintaining the underlying core banking system of financial products like bank accounts, cards, payments or lending. All of these services are wrapped under APIs, which players fully focusing on the distribution side plug into their customer-facing products to integrate them as a product extension.

Schematic of embedded finance providers. Source: RR

Given the current integrated business model where all financial services are offered by one provider, this shift will take time to fully materialise. One key learning that RR made during client projects is that especially the brands that integrate financial services need a strong support system to first understand potential product and business opportunities, and later to implement them effectively.

While the provider side of banking-as-a-service has matured over the last five years, most brands still need more than just a good API documentation and a few consultative sales calls. Launching an embedded finance feature requires to understand how to weave a financial service into an existing offering, while adhering to complex regulatory and technical requirements. Despite the existence of Banking-as-a-Service providers who promise fast out-of-the-box implementation, embedded finance projects can easily take a year until production launch.

This insight led Claudio to found a new embedded finance startup, Paydora, to provide a dedicated support layer on top of existing Banking-as-a-Service providers. Focusing on explaining the business opportunity and providing technical infrastructure to launch an embedded finance use case within weeks or a few months, his team closed deals with large enterprise clients such as Metro or Booking.com. Paydora publicly launched this year in May, using German Dock Financial as is key Banking-as-a-Service partner. Just six months later, the company now announced that it will merge fully with Dock Financial given the strong synergies of both companies.

In the podcast, we talk about:

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Thank you for joining the Ross Republic podcast. In our thirty-seventh episode, your host Adrian Klee is joined by RR partner Maso Arai and Olli Anteroinen, Head of SME Digital, Business Banking at Nordea, to talk about Nordea’s impressive journey in delivering innovative, digital financial services for small business clients.

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Most of the innovation efforts in fintech have focused on retail clients in the past, such as new retail investment and savings offerings, digital neobanks or buy-now-pay-later services. However, undoubtedly the biggest market and innovation opportunity lies in serving business clients: global online and offline sales in B2C are around 24 trillion dollars, whereas the B2B sales make up around 120 trillion (Statista – B2B eCommerce – In-depth Market Insights & Data Analysis). Beyond that, small and medium-sized businesses (SMBs) make up the large majority of the business population in most EU countries. That’s why there’s an increasing focus on creating new, innovative financial services for SMBs.

One financial institution that has built up an impressive product offering for SMBs is Nordea, a leading Nordic universal bank. In this episode, RR partners Maso Arai and Adrian Klee sat down with Nordea’s Olli Anteroinen, who is the Head of SME Digital, Business Banking. Together, we discuss the current state of SME banking and how large traditional banks can serve them better through creating new digital banking offerings.

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The post Exploring Nordea’s digital SME banking journey appeared first on Ross Republic - A strategy consultancy.