‘Spotify of financial services’ raises £50m
Posted on July 15, 2021 by Jonathan Symcox
Embedded finance platform Railsbank has raised £50 million in its latest funding round.
The Railsbank platform is used by FinTechs, telcos, supermarkets and consumer brands to innovate fast and radically improve the way millions of consumers and SMEs access, use and manage their money.
The latest fundraise was led by Anthos Capital and attracted a range of investors including Central Capital (VC arm of Indonesia’s largest privately held bank), Cohen and Company (the founder of Bancorp), and Chris Adelsbach’s new fund Outrun Ventures.
Existing investors also participated.
Railsbank will use the funds to further expand its Banking-as-a-Service, Cards-as-a-Service and Credit-as-a-Service products across Europe, Asia Pacific and North America.
The company says it is unique for having rails directly connected into the financial system, thus bypassing the industry legacy infrastructure; and being both a regulated financial institution and principle card-issuing member of Visa and Mastercard.
It maintains that many of the embedded finance and BaaS providers in the market today are just software layers sitting on top of legacy financial institutions.
This means that although customers benefit from improved APIs, they still have to endure the underlying industry legacy infrastructure, operations, risk policies and ways of working.
“Think of Railsbank as being the financial services layer of the internet,” said Nigel Verdon, CEO and co-founder of Railsbank. “We are transforming the finance industry in the same way that Apple did to the music industry when they created iTunes.
“Too much of the current global financial services system is made up of aging legacy technology and operational processes, making it unnecessarily complicated, highly expensive and nearly impossible for innovators to create the ‘Spotify of financial services’.
“We are changing that at Railsbank by combining our ‘zero legacy’ platform with deconstructing financial services into individual digital components.
“Because we have created these individual financial components, our customers can easily embed financial products directly into their own customer experiences at exactly the point where consumers and SMEs need financial services, not at the point when traditional providers forced them to.
“This will finally make financial services customer centric and inclusive, rather than the situation today which is institution centric and exclusive.”
Betsy Cohen, Chairman of Fintech Masala and founder of Bancorp, added: “The market has evolved so rapidly since we founded the world’s first BaaS business, the Bancorp.
“As we move into the $7 trillion embedded finance 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.”