METRO AG used Banking-as-a-Service (BaaS) to help their small business customers grow

Small and medium enterprises (SMEs) make up the overwhelming majority (99%) of all businesses in the EU. For a company like METRO, a wholesaler for customers in the hotel, restaurants and catering (HoReCa) industry, as well as independent merchants, small business owners are at the heart of their company.
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METRO AG

Small and medium enterprises (SMEs) make up the overwhelming majority (99%) of all businesses in the EU.

For a company like METRO, a wholesaler for customers in the hotel, restaurants and catering (HoReCa) industry, as well as independent merchants, small business owners are at the heart of their company.

As a supplier to more than 17 million customers, METRO has a clear understanding of the financial challenges SMEs in the HoReCa sector face.

With this in mind, we partnered with METRO Financial Services, METRO’s financial arm, to create a suite of banking products tailored to the needs of their customers.

Historic B2B financial products have been static and inflexible, rarely catering to the specific needs of small businesses in different sectors.

BaaS meeting customer need

Michael Zyber, CEO of METRO Financial Services, explained in a recent LendIt Fintech webinar how BaaS integration enabled them to upgrade their offering to customers.

“In the hospitality sector, our main customer group, the use case is, for example: ‘I need to buy ten boxes of wine, I will want to pay for them when I’ve sold them.’ It’s something that our customers demand.”

Historic B2B financial products to meet this demand already existed, but they didn’t do enough to satisfy the requirements of different SMEs.

With METRO’s knowledge of the specific needs of their customers, they partnered with Vodeno and Aion Bank to create banking products tailored to their customers’ business.

One of the key products launched is a decoupled debit card with flexible lending options and up to 1% cashback. The debit card is linked to the user’s primary bank account, so there is no need to top-up funds or manage an additional account.

METRO customers can use the card anywhere and the cashback offers a nice incentive. 

Another challenge METRO customers face is cash flow. The hospitality sector relies on upfront payment for goods and services, with payback from the end clients happening months later.

Powered by BaaS, METRO customers are offered a credit line when they are onboarded to METRO Financial Services.

This enables a Buy Now Pay Later (“BNPL”) product integrated into the debit card, and post-purchase customers can opt for different payment options up to 60 days or pay in up to 48 monthly instalments.

Zyber added: “(Our) payment card with BNPL integration allows our customers to use it not only at METRO but everywhere they shop.” 

Delivering value through BaaS

BaaS enabled METRO Financial Services with the technology and access to the necessary licence, removing the need to build anything itself or try to obtain its own banking licence.

Through ECB-licenced Aion Bank, all products are fully compliant.

On the technology side, our could-native, fully API-based platform uses PSD2 Open Banking standards and enables the METRO Financial Services bank app to check a customer’s bank balance in their existing bank four times per day to ensure funds are available for purchases.

Then via SEPA, direct debits are taken automatically from the bank, so customers do not have to worry about repayments.

Our research found that 62% of Europe’s SMEs cited delayed and unpredictable cash flow as the biggest challenge their business currently faces.

68% of European SMEs to implement real-time payment next year.

Being able to complete purchases with flexible payment options, gives METRO customers the ability to operate their finances in line with their business turnover. 

For METRO, however, the value of these BaaS-enabled products goes far beyond the revenues that they will generate.

Zyber added: “ [embedded banking helps] more indirectly, by enabling people to purchase more with us and create more loyalty and, in the end, provide a better offer – meaning it drives our business.”

The future of SMEs

Our partnership with METRO Financial Services is a great example of how integrating BaaS-enabled solutions can help to tailor financial solutions to the specific needs of a brand’s customers and, ultimately, help drive their business forward.

METRO used its deep knowledge of their customers to develop products and services that add real value to them. For METRO, embedded banking gives it an opportunity to build a deeper relationship with their customers, and BaaS makes this possible in a way that is easy to implement and cost effective. 

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