A European Banking Giant Rises to the Fintech Challenge

Intesa Sanpaolo Group is one of Europe’s largest banks and the leader in Italy across the retail, corporate, and wealth management sectors. With more than 3,600 branches in its home country, and nearly 1,000 more throughout the world (predominantly in Central and Eastern Europe, the Middle East, and North Africa), the bank has a nearly indomitable position in its core markets.

But the rapid rise of fintechs has presented strong competition in business banking. “They are fast, convenient, and agile,” says Giuseppe Ferraro, head of the bank’s Corporate & SME department. “To remain a leader in business banking we had to take action.”

Intesa saw a golden opportunity in the small and midsize enterprise (SME) lending market, specifically focused on supply chain finance. Fintechs had established a strong presence there, claiming approximately 50% of new digital transactions, but Intesa believed the market promised “a rare sweet spot for growth,” Ferraro says.

What would it take to make that happen? “A digital breakthrough,” explains Ferraro. “The speed of trade in worldwide markets is so fast, clients can’t wait days or weeks to get approved. They need financing that can be arranged almost instantly.”

A bold platform strategy

So, Intesa set out to create a new digital platform, International Confirming, that would provide a quick, frictionless way for its SME clients to apply for and secure supply chain funding. The platform spans the entire value chain, enabling suppliers to get funds directly by leveraging a newly created interlink between buyers and the bank.

Although the platform initially launched only in Italy, the goal of extending it internationally was swiftly realized. Intesa created a hub in Hungary that could serve surrounding countries where the bank has a strong presence, a feat that not only required the right technology infrastructure and connectivity but also a deep knowledge of how to adapt the legal and credit accounting requirements within each country.

To extend its platform globally, Intesa struck up partnerships with its regional banks, using a smart cooperation scheme to boost product growth.

We worked with Intesa on key facets of its International Confirming platform, including the development of a smart credit approval process powered by an AI digital engine that assesses clients’ creditworthiness and enables fast, frictionless transactions. As a result, digital and AI are now at the core of Intesa’s supply chain finance processes.

We also helped the bank design a seamless customer experience for buyers and suppliers, and build the digital web-based infrastructure required to rapidly scale innovation across the entire organization. Our broad expertise in corporate and SME banking also helped Intesa develop a solution to address the complexities of a multicountry, multibank product that could quickly scale.

“Bain’s powerful combination of digital design and implementation capabilities and advanced analytics, together with our corporate and SME banking expertise, enabled us to provide Intesa everything they needed to drive their vision forward,” says Bain Partner Luigi Esposito.

Transformative impact

The results have “exceeded our expectations,” Ferraro says. “International Confirming is now one of the biggest confirming platforms in the world.” The platform also extends Intesa’s reach well beyond its already sizable branch network to thousands of potential customers around the world, providing a low-cost financial service to SMEs and the suppliers they depend on. 

In less than two years, Intesa essentially created a fintech within an incumbent bank, one that would quickly capture 90% of the market in Italy for this product category and serve a growing roster of clients around the world.

“This was history in the making,” says Esposito, “because Intesa launched a brand-new cross-border product, fully digital, in the traditional bank. It won an award as the most innovative solution for the Italian market.”

More to the point, it proved that a bank with vision can pioneer new digital solutions that not only maintain its competitiveness but provide a leadership advantage.