‘These services will eventually lead to a more inclusive sector’

The launch of ChatGPT clearly shows that digitization, data and artificial intelligence are moving to a higher plane. That also applies to the financial services sector. At Rabobank, we are adapting to these developments by integrating banking products and services into other parties’ platforms, such as bookkeeping packages or webshops in an e-commerce platform. That allows you as an entrepreneur to arrange your finances in the place that is most relevant to you right now, without having to go to the online or brick-and-mortar banking environment. That comes in handy, of course. But I’m also convinced that it has another important benefit: we can use data to make our services more easily accessible, and also more inclusive.

But how does that work? Take applying for a loan, for example. Since more high-quality data are easily available, such as transaction data, it makes it easier to apply for a loan too. You don’t have to fill in paperwork to provide insight into your cash flow as an entrepreneur, because algorithms can calculate and predict that much faster. That means you as an entrepreneur can apply for a loan quicker, but also based on reliable data, without the need for input from a customer relations manager or bookkeeper. And the money is deposited into your account sooner.

I also expect that entrepreneurs just starting out will find it easier to get financing in the future. It’s often hard for them to find financing right now, because they can’t share any past business results. I believe that we as a sector will be able to provide new entrepreneurs with financing much easier, based on other data points that enable us to make realistic predictions, thanks in part to the combination of data provided by us and our partners. My hope is that smart combinations of data will also facilitate forecasts for other niche groups as well. A more complete picture and better insight into the risks will help increase their likelihood of getting financing, and lower the costs for the entrepreneur. That will require some major steps in efficiently accessing and combining relevant sources of data, however.

By combining data and running them through smart models, we can make financial services more inclusive in the future. We’re already taking the first steps in that direction with Rabo Embedded Services, by combining our data with those provided by our partners. They are organizations that integrate our (financial) products and services into their platforms and customer journeys. These partnerships also stimulate us to better organize our own customer journeys. For example, we’ve already submitted the ‘consent flow’ — the journey where customers can grant permission to upload their transaction data to a partner platform — to our users, and improved it. By doing that, we not only ensure that users can maintain control of which data they share with others; it also contributes to increasing conversion.

Increasing reliance on data-driven processes demands a degree of caution. Recent events have shown that the use of imperfect data models can also exclude certain people. The last thing we want is to unjustly exclude entrepreneurs from financial services based on data. Understanding the potential dangers is an important step towards the careful implementation of this process. Keeping a sharp eye on the input and output of data models is important, especially during the transition period, when we need to improve the reliability of new data models. Fortunately, we as a bank have a lot of experience with data models and assessing risks

I believe that we can help you as an entrepreneur get ahead in less time via embedded banking. Since entrepreneurs have almost instant access to financing opportunities, there is a greater chance that they can start a successful business or make their business grow. And although we still have a lot to learn, this will especially apply to the entrepreneurs for whom that has always been a difficult challenge.

This is the first of three blogs dealing with the future opportunities presented by Rabo Embedded Services.