Francesco Simoneschi, CEO and co-founder of U.Okay. fintech start-up TrueLayer.
TrueLayer
LONDON — British monetary expertise start-up TrueLayer says it is raised $70 million in contemporary funding, highlighting continued urge for food from buyers for fast-growing fintech corporations.
TrueLayer lets fintech apps like Revolut and Freetrade join with prospects’ financial institution accounts utilizing expertise often called APIs, or software programming interfaces. This implies customers of these apps can then make funds from their financial institution or view balances and transactions from completely different accounts.
The corporate mentioned its newest funding spherical was led by Addition, the enterprise capital agency based by former Tiger World companion Lee Fixel. Present buyers Anthemis Group, Join Ventures, Mouro Capital, Northzone and Singapore’s Temasek additionally invested.
Francesco Simoneschi, TrueLayer’s CEO and co-founder, mentioned in an interview that the agency determined to lift extra cash on the again of robust development in 2020, helped in no small half by the coronavirus pandemic and a shift from shoppers towards digital technique of managing their funds.
“We have been closing 2020 in an especially constructive approach,” Simoneschi informed CNBC. “We have been going by an unimaginable 12 months of development,” he mentioned, including the corporate noticed its fee volumes spike as a lot as 600 occasions.
TrueLayer declined to share its financials or valuation. The corporate, which additionally counts Chinese language web large Tencent as a shareholder, has now raised $142 million in funding thus far.
TrueLayer mentioned it’s going to use the contemporary money to increase its providers internationally, constructing out its presence in Europe first earlier than focusing on a rollout in Australia. It is also exploring whether or not to launch in Brazil additional down the road.
Open banking
The information comes a day after Silicon Valley agency Plaid — which competes with TrueLayer in Europe — announced it had raised $425 million in a new investment, valuing the company at $13.4 billion. Plaid had initially agreed to be acquired by Visa last year for $5.3 billion, but scrapped the deal after the U.S. government raised antitrust concerns.
Plaid and TrueLayer are part of a new movement in finance called “open banking,” which aims to open up precious banking data and payment services to fintech firms and other approved third parties, provided they’ve got consent from customers. Other players in the space include Sweden’s Tink and Britain’s Bud. They’re taking advantage of tech-friendly new rules in the U.K. and European Union, known as PSD2.
TrueLayer and some other firms are now looking to undercut card networks like Visa and Mastercard, by allowing fintech apps to initiate bank transfers on behalf of their users, at much lower fees. GoCardless, a fintech platform that processes direct debit payments, is also developing open banking technology for transactions.
“Open banking can be a real contender to the traditional card networks,” Simoneschi said. “The question is, can the card companies embrace this change, or will they resist?”
It’s worth noting Visa is still an investor in Plaid, as well as TrueLayer, meaning it could benefit long term from the rise of open banking services. Meanwhile, Mastercard last year bought Finicity, another player in the space.
Competition
Plaid plans to more than double its European workforce from 40 to 100 employees by the end of 2021.
“I think competition is good and benefits the ecosystem,” Keith Grose, Plaid’s head of international, told CNBC. He added the firm has “good competitors” but that its rivals don’t offer the “transatlantic bridge” it’s built with operations in both the U.S. and Europe.
TrueLayer has plans of its own to boost its team. The company currently employs 200 people and plans to increase its headcount by another 50 employees this year, Simoneschi said.
Fintech has attracted billions of dollars in venture capital as investors aim to capitalize on wild growth in the sector. Globally, venture capitalists pumped over $17 billion into fintechs in the first quarter of 2021, according to data from PitchBook, up 44% from the same period a year earlier and the highest quarterly amount since the second quarter of 2018. Meanwhile, tech firms like PayPal and Square have seen their market values surpass that of Wall Street titans like Goldman Sachs.
Still, the sector’s meteoric growth has rattled some leaders in the banking world. JPMorgan CEO Jamie Dimon recently said banks should be “scared s—less” of fintechs, and accused Plaid of “unfair competition” and “improperly” using banking data. Plaid, which counts JPMorgan as a client, said that “data privacy and security are core to everything we do, including the data exchange agreements we have with JPMorgan Chase among many other banks.”
