NatWest, Vodeno to Create New Banking as a Service or BaaS Business

NatWest Group plc has entered into a partnership with the Vodeno Group (comprising of Vodeno Limited and its subsidiaries) which will see the creation of a Banking-as-a-Service (BaaS) business in the UK.

This strategic partnership will “enable businesses to embed financial services products such as payments, deposits, point-of-sale credit and merchant cash advances directly in their ecosystem by leveraging the Vodeno Group’s BaaS technology, and NatWest Group’s banking technology and UK banking licenses.”

Vodeno Group is a European BaaS provider which combines the Poland-based Vodeno Sp. z.o.o, a software company providing its API-based technology platform and the Belgium-based Aion Bank, which “has a banking license covering a range of banking products, including loans, deposits and access to EEA payment systems. Vodeno Group is majority owned by Warburg Pincus.”

Under the terms of the agreements, a new UK based entity will “combine the Vodeno Group’s technological and operational capabilities and its cloud platform with NatWest Group’s banking technology and expertise, building on NatWest Group’s position as a leading supporter of UK business.”

Through its business banking app Mettle, NatWest Group has “built a standalone core banking and payments capability, Vodeno Group’s platform will provide a channel for delivering these capabilities to BaaS clients in the UK.”

The new UK entity “will be 82% majority owned and consolidated by NatWest Bank Plc, with Vodeno TechCo holding the remaining minority interest.” NatWest Group “will additionally take a minority interest (initially a 9.9% holding, increasing to 18% subject to certain conditions and approvals being met) in Vodeno Limited, which owns 100% of Vodeno TechCo and Aion Bank.”

NatWest Group Chief Executive Alison Rose said:

“As a leading supporter of UK business, we are committed to investing in digital transformation to provide a simpler and better banking experience for our customers. By entering into this strategic partnership with Vodeno Group we will be able to meet the evolving needs of our business customers as they look to embed financial products in their own propositions and journeys.”

Alison also mentioned:

“This strategic partnership presents a strong potential source of fee income in a growing market, and an opportunity to deliver sustainable growth by building deeper relationships with our corporate customers. It also complements our existing investment in the development of business banking technology within our Mettle business.”

Wojciech Sobieraj, CEO of Vodeno Sp. z.o.o added:

“Consumers require high quality and accessible banking products that are end-to-end digital, and Banking-as-a-Service is making this possible. Our fully API-based platform offers a comprehensive suite of BaaS products that enable brands to ‘embed’ financial services directly into their ecosystems to create seamless customer journeys. We are excited to combine our technology with NatWest Group to offer the next generation of financial services.”

Completion of the arrangements is “subject to satisfying various conditions, including licensing, servicing and other documentation, and obtaining regulatory approvals (including the UK Financial Conduct Authority and National Bank of Belgium / European Central Bank).”

NatWest is “committed to make in total i) a capped commitment of c.£120m, to enable the establishment of the new UK entity; and ii) a €58m investment in Vodeno Group to acquire an 18% minority stake, investment in each case subject to certain conditions and approvals being met.”

As explained in the announcement, banking-as-a-service “provides corporates and financial institutions with complete end-to-end banking solutions, allowing them to embed and sell white labelled financial products underpinned by a bank’s secure and regulated infrastructure combined with a modern API-driven platform.”

As noted in the update, Vodeno Sp. z.o.o and Aion Bank have “combined a modern cloud-native ‘360’ platform ecosystem, an EU banking license and a team of banking experts to offer comprehensive embedded financial services for banks, lenders and merchants across multiple sectors.”

From ‘smart contract enabled’ core banking to accounts, onboarding, payments, cards, investment and lending solutions, Vodeno Sp. z.o.o and Aion Bank “aim to offer the ability to meet the demands of regulation while enabling innovation at speed.”

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