Analysis of the deal: SEB's investment in Tink

By Alex Hammond | 8 November 2017

Late last month Swedish fintech Tink announced that secured an additional €14m in funding to scale up its financial aggregator operation and move into new markets.

The major investor in the tech company, and one its early adopters, is Nordic bank SEB. bobsguide sat down with Rasmus Järborg, Chief Strategy Officer, SEB, and Daniel Kjellén, co-founder and CEO of Tink, to examine the deal from both sides of the table and ask where the financial services/fintech partnership will move forward in 2018.

Rasmus Järborg, Chief Strategy Officer, SEB

Talk us through the process of forming the partnership from SEB’s perspective.

SEB began its cooperation with Tink back in May 2016 by signing a licensing agreement to use Tink’s categorisation engine in SEB’s own mobile app for private individuals. SEB also bought shares in the company.

We are always curious about meeting founders with bright ideas and novel technologies, looking for companies with technologies ranging from AI, machine learning and automation to novel business models like peer-to-peer lending and neobanking.

How does the partnership with Tink move forward from here?

SEB´s cooperation with Tink has evolved very successfully and together we want to continue to be a force shaping the future banking market. Tink is now broadening its shareholder base, while SEB is investing additional funds to remain the largest strategic investor along with the company’s founders and some non-strategic investors.

Do you have a set of principles or priorities you measure against when deciding whether to partner with a fintech?

SEB invests in innovative companies with exceptional growth potential.

Our main priorities are emerging companies within technology and fintech – in particular with origins in Sweden, Denmark, Norway and Finland as well as Estonia, Latvia and Lithuania.

The investments typically range from SEK 10-30 million initially to SEK 80-100 million in total over a holding period, giving us a solid minority holding in the company with an ownership stake of 15–40 percent.

A deciding factor for us when considering an investment is a skilled, committed management team that is, or wants to become, co-owners of the company. To us, partnership is always important. A requirement for any investment is the formulation of an ownership plan, which describes consensus between us and the other shareholders regarding the company's long-term goals.

What is preventing you developing your own technology in this area? Or do you see investing in Tink as being the same as in-house development?

We believe that entrepreneurship and small businesses are challenging us as a large bank, so Tink and other fintech investments give us new and interesting perspectives on our business concepts and models.

Do you view your fintech collaboration strategy as a competitive advantage for SEB, or are you simply collaborating to keep pace with the market?

We have a leading position within the Nordic banking community and a strong commitment to support our clients with state of the art technology; therefore we will continue to invest in fintech.

Daniel Kjellén, co-founder and CEO, Tink

What was the motivation behind Tink’s latest funding round? Will the funding help Tink move into new markets?

Everything we do is geared towards our ultimate goal of helping as many people as possible to understand their finances, empowering them to make smarter choices and ultimately bringing them financial happiness. Our partnerships with banks and new investments will help us to continue to innovate and give more consumers access to our ground-breaking PFM technology.

Our technology allows consumers to manage all their finances across any bank in one place in our consumer app - which delivers insights and actionable advice based on the consumer’s economic behaviour. Our insights and personalised product recommendation engine allow us to nudge customers in their day-to-day choices and advise them on where they can find the best possible deal to meet their needs.

The additional funding will also allow us to increase our European footprint, and further develop and scale our enterprise offer Tink Technology to help banks to keep pace with the expectations of their customers.

Was it a difficult decision to relinquish equity to a bank? Will this affect your agility as a fintech?

Not at all. We will continue to operate autonomously to open up the market and deliver a better experience for consumers.

In fact, we see this partnership as evidence of a new, more collaborative dynamic between banks and fintech. The relationship is perfectly symbiotic. Tink Technology licenses its platform to banks and by providing funding to Tink, banks invest in the power to innovate – now and in the future.

At the same time, in SEB’s case, the bank’s products and services can be offered to a wider group of consumers via Tink’s consumer app.

How did you screen potential partners?

We want to work with partners who share our goal of creating a world where managing money is effortless and rewarding.

That means partnering with forward thinking banks who are embracing innovation and technology as a way to transform customer experience and offer money on autopilot.

What attracted you to a partnership with SEB?

We were attracted by SEB’s great banking products and wanted to make these available to our consumers. SEB also understood the opportunities to be unlocked when banks and fintech collaborate – particularly if they make the move before the rest of the industry.  This is a mentality that we were attracted to.

What does SEB provide to Tink as an investor outside of finance?

By working together, we see ourselves as paving the way for a new era of banking – enhancing the relationship between consumers and their money, revolutionising the customer experience and unlocking the market so people can find the best deal for them.

Are there more partnership deals on the horizon?

We are currently in discussion with a number of potential partners in the Nordics and rest of Europe.

With these new and existing partnerships, we are on course to be live in ten European markets by the beginning of next year.

What are the principle challenges and opportunities for Tink moving forward?

Technology and legislation are opening up the market, creating a more competitive environment where customers can find the best deal. We see a huge opportunity to grow our footprint and build new partnerships with banks as customers exert their rights to access their financial information and take control of their money.

We can’t wait for PSD2 to come into force in January, ushering in an exciting new era of open banking.  It’s in the interests of the consumer and will transform access to better financial services products and services.

At Tink, we’ve been trailblazing the spirit of PSD2 for years, helping customers make smarter choices by accessing their data through banks’ APIs. Our experience proves the consumer benefit is there to be unlocked.

Our goal with Tink Technology is to help banks to embrace the opportunities that open banking offers. First mover advantage is huge. We believe that early adopters can be the heroes and reap the commercial and reputational benefits of delivering a better service to their customers. We see Tink as the catalyst that helps them achieve this transformation.