Financial services as a service – where entities like neobanks, retailers and others can create and sell their own financial products using a few lines of code and APIs – has been one of the biggest trends in the fintech world in recent years. years, with integrated finance on its way to becoming a $ 7.2 trillion market by 2030, according to provide by Bain Capital. Now, one of the companies that create and deliver these APIs is announcing growth funding to expand.
Railsbank, which creates APIs for banking services, payment cards and credit products for use by fintechs but also a wide range of other types of businesses, has raised $ 70 million in new funding, money that the London-based startup plans to use to continue its international growth and to add more functionality to its product set.
“Our mission is to reinvent, unbundle and democratize access to the complex, opaque and Byzantine credit card market of 70 years, which is worth $ 4 trillion in the United States alone,” said Nigel Verdon, CEO and co-founder of Railsbank. TechCrunch in an interview last year. Verdon is a regular entrepreneur, one of his previous companies being Currency Cloud.
Rails not disclosing its rating, but according to pitchbook data, the company was valued at just under $ 200 million in its last round at the end of last year (we covered that here). This would imply that it is now valued at $ 270 million. We check with the company and will update if we learn more.
This latest round is led by Anthos Capital, a former backer of the company, along with Central Capital, Cohen and Company, and Chris Adelsbach’s Outrun Ventures fund, along with other unidentified earlier backers. Central Capital is a strategic investor: it is the VC branch of Indonesia’s largest private bank, while Cohen and Company is the founder of Bancorp. These funders indicate where Railsbank targets its services and who is interested in working with it.
Banking as a service and other financial products as a service have become one of the most important building blocks not only in the world of fintech, but in all of financial services. As with Twilio or Sinch in communications, or Stripe in payments, the idea here is that financial specialists have built the complex infrastructure and partnerships that underpin a product like a credit card or a bank account.
This is then packaged into a service that can be integrated with another through an API, and the small amount of code needed to add it to another platform. In turn, this API can be used not only by another consumer or business oriented financial services company, but by any type of business that considers offering a financial product as part of a service. broader customer base and loyalty. This could mean a retailer offering their own credit card, but also a ‘neobank’ that builds a sleek front-end with great customer service and personalization, without needing to build the now commoditized banking infrastructure underneath for it. execute.
Railsbank is far from the only company to have identified and built around this concept. Other big players include Rapyd, which raised a big round to a valuation of $ 2.5 billion earlier this year; Unit, which also obtained funding and expanded; FintechOS, which really does what its name says; and the 10x startup was even designed so that historical players also have access to a lighter fintech-as-a-service.
Railsbank believes that it sets itself apart from many of its potential competitors in part because it has built much of its own infrastructure from scratch (hence the “rails” in its name), “bypassing” them. legacy players, unlike others that are built as software that still runs on top of the stacks (and inefficiencies) of those older vendors. It also means that it is regulated as a financial institution.
Railsbank is also making acquisitions in order to grow its business, for example acquiring the UK business of German fintech Wirecard when it collapsed due to financial embezzlement. And he’s not building everything from scratch: earlier this year he also in partnership with Plaid to integrate some of its services with those of Railsbank.
Railsbank does not disclose a full list of client names, but has case studies of a number of small clients that show how widespread financial services are today. They include GoSolo, Kyshi, and SimpledCard.
âThe market has moved so rapidly since we founded the world’s first BaaS company, Bancorp,â said Betsy Cohen, president of Fintech Masala and founder of Bancorp, in a statement. âAs we enter the integrated $ 7 trillion financial market, it has been great watching Railsbank’s growth story. With this investment, it’s a privilege to continue to be part of the journey with a global leader like Railsbank.