Open banking – a disruptive technology that seeks to bypass the dominance of card networks and other traditional financial rails by allowing banks to open their systems directly to developers (and new services) through APIs – continues to flourish. gain ground in the world of financial services. To mark this pull, a startup playing a central role in open banking apps is announcing a big funding round with a milestone review.
TrueLayer, which provides technology to developers to enable a range of open banking services, raised $ 130 million in a funding round that values the London-based startup at over $ 1 billion.
Tiger Global Management is leading the way, and most notably, payments juggernaut Stripe is also taking part.
Open Banking is a relatively new field in the fintech world – the UK was one of the first to adopt in 2018, Europe then signed on, and it looks like we are now seeing more moves than the United States may soon join the party – and TrueLayer is considered a pioneer in space.
The vast majority of transactions in the world today are still done using card rails or more archaic banking infrastructure, but the opportunity with open banking is to build a whole new infrastructure that works better. efficiently and which could lead to lower (or zero) costs for those who use it, with the long-lasting promise of the API: all in a few lines of code.
“We had a vision that finance should be open, and we are actively working to eliminate the friction that exists between intermediaries,” said CEO Francesco Simoneschi, who co-founded the company with Luca Martinetti (who is now the CTO), in an interview. “We want a financial system that works for everyone, but that hasn’t been the case so far. The opportunity arose five years ago, when open banking came into effect in the UK and then elsewhere, to tackle the most impressive oligopoly: the card networks and all that surrounded. Now we can easily say that open banking is becoming a viable alternative to this. “
It seems that the world of finance and commerce is growing slowly, and therefore funding comes on the heels of strong business growth.
The services that TrueLayer currently includes payments, payments, user account information, and user verification; while end users range from neobanks, crypto startups and wealth management applications to e-commerce companies, marketplaces and gaming platforms.
And the startup says it now has “millions” of consumers conducting open banking transactions using TrueLayer technology, and some 10,000 developers are building services based on open banking standards. So far this year, TrueLayer has doubled its customer base, grabbing some key customers like Cazoo to enable open bank payments for cars; and it processed “billions” of dollars in payments, with payment volume increasing by 400% and payments by 800%.
The plan is to use the funding to invest in the development of this business – in particular to expand its payment network to more regions (and more banks fitting into that network), as well as to attract more customers using open banking services for more regular and recurring transactions.
“The shift to alternative payment methods is accelerating with the global growth of e-commerce, and we believe TrueLayer will play a central role in making these payment methods more accessible,” said Alex Cook, Partner of Tiger Global, in a press release. “We are excited to partner with Francesco, Luca and the TrueLayer team as they help customers increase conversion and continue to grow the network. “
Notably, Stripe is not a strategic investor in TrueLayer at this time, just a financial investor. That is, it has not yet integrated open banking into its own payment infrastructure.
But you can imagine how interested it would be as part of the wider range of options for its clients, and potentially also to build its own self-sustaining financial rails that do indeed rival those provided by card networks ( who are such a close part of what Stripe does is that its early web design was based on the physical card, and even its name refers to the stripe on the back of those.
There are other open banking connectivity providers on the market today – Plaid outside the US is a notable name – but Simoneschi believes Stripe and TrueLayer are on the same page as businesses.
“We share the deep belief that progress comes through the eyes of developers, so it’s about providing the tools they need to use,” he said. “We are in a very complementary space.