Financial services-as-a-service – where entities such as Neobanks, retailers and others can create and sell their own financial products through a few lines of code and APIs – have been one of the big trends in the fintech world recently. is. year, with embedded finance on track to be a $7.2 trillion market by 2030, according to this kind of experience Now from Bain Capital, one of the companies that makes and provides those APIs is announcing some growth funding for expansion.
railsbank, which builds APIs for banking, payment card and credit products for use by fintechs but a wide range of other types of businesses, has raised $70 million in new equity funding, money that the London startup will grow internationally. Stay and add more features to its product set.
“Our mission is to reimagine, open up and democratize access to the complex, opaque and byzantine 70-year-old credit card market, which is worth $4 trillion in the US alone,” said Nigel Verdon, CEO and co-founder of Railsbank. Nerdshala in an interview last year. Verdon is a repeat entrepreneur, with one of his previous companies being Currency Cloud.
Railsbank is not disclosing its valuation, but Verdon has indicated it is in the high hundreds of millions and around $1 billion.
“As a policy, we rarely talk about valuations because we like to talk about customers,” he told Nerdshala today. “Evaluation is a very internalized and self-centered metric. Having said that, Unicorns would best describe us today.”
as a point of comparison data from pitchbook Noted that the company was valued at just under $200 million in its final round at the end of last year (we reported this here).
This latest round is being led by Anthos Capital, the company’s previous backer, with Central Capital, Cohen & Co., and Chris Adelsbach’s fund Outrun Ventures participating, as well as other undisclosed previous backers. Central Capital is a strategic investor: it is the VC arm of the largest privately held bank in Indonesia, while Cohen & Co. is the founder of Bancorp. Those backers speak to where RailsBank is targeting its services and who are potentially 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 financial services as a whole. With Twilio or Cinch in communications, or Stripe in payments, the idea here is that financial experts build the complex infrastructure and partnerships that underpin a product like a credit card, or banking account.
It is then packaged into a service that can be integrated into another via an API, and the small amount of code needed to connect it to the other platform. In turn, that API can be used not only by any other financial services company that is a consumer- or business-facing, but by any type of company that does as part of a larger customer service and loyalty game. Looks at a financial product offering. That could mean a retailer offering its own brand of credit cards, but there’s also a “Neobank” that’s building a sleek front end with great customer service and personalization, to drive it. Without the need to build down the now-commoditized banking infrastructure.
Railsbank is not the only company that has recognized and created this concept. Other big players include Rapid, which raised a major round earlier this year at a valuation of $2.5 billion; unit, which is also raising funding and growing; FinTechOS, which does exactly what its name says; And Startup 10x was also built for existing players to have access to lighter fintech-as-a-service.
Railsbank believes it is different from many of its competitors because it has built its own infrastructure from the ground up (hence the “rails” in its name), “bypassing” legacy players unlike others. Built as software that still eventually runs on top of the stack (and inefficiencies) of those older providers. This also means that it is regulated as a financial institution.
Railsbank is also in the business of making some acquisitions to grow its business, for example acquiring the UK business of German fintech Wirecard when it crashed due to financial misconduct. And it doesn’t build everything from scratch: even earlier this year partnered with plaid To embed some of its services within Railsbank.
Railsbank does not disclose a full list of customer names, but does case studies on several smaller customers that speak to the wide spread of financial services today. they include go solohandjob Kishio, and simple card.
“Ever since we founded the world’s first BAS business, Bancorp, the market has evolved so rapidly,” Betsy Cohen, president of Fintech Masala and founder of Bancorp, said in a statement. “It has been great to see the growth story of Railsbank as we enter the $7 trillion embedded finance market. With this investment, it is my privilege to continue to be a part of the journey with a global leader like Railsbank. “