British fintech start-up TrueLayer raises $ 70 million

LONDON – British financial technology start-up TrueLayer says it has raised $ 70 million in new funding, underscoring investors’ continued appetite for fast-growing fintech companies.

TrueLayer allows fintech applications such as Revolut and Freetrade to connect to customers’ bank accounts using technology known as APIs or application programming interfaces. This means that users of these applications can then make payments from their bank or view balances and transactions from different accounts.

The company said its latest round of investment was led by Addition, the venture capital firm founded by former Tiger Global partner Lee Fixel. Existing investors Anthemis Group, Connect Ventures, Mouro Capital, Northzone and Singapore, Temasek also invested.

Francesco Simoneschi, CEO and co-founder of TrueLayer, said in an interview that the company has decided to raise more money amid strong growth in 2020, largely helped by the coronavirus pandemic and the shift from consumers to digital media their finances.

“We were closing 2020 in an extremely positive way,” Simoneschi told CNBC. “We were going through an incredible year of growth,” he said, adding that the company has seen its payment volumes increase 600 times.

TrueLayer declined to share financial or evaluation data. The company, which also sees Chinese internet giant Tencent as a shareholder, has so far raised $ 142 million in funding.

TrueLayer said it will use the new money to expand its services internationally, first consolidating its presence in Europe before aiming for a launch in Australia. It is also exploring whether it will be released in Brazil below.

The news comes a day after the Silicon Valley company Plaid – which competes with TrueLayer in Europe – announced that it has raised 425 million dollars in a new investment, valuing the company at 13.4 billion dollars. Plaid had initially agreed to be acquired by Visa last year for $ 5.3 billion, but canceled the deal after the US government raised antitrust concerns.

Plaid and TrueLayer are part of a new finance movement called “open banking” that aims to open up valuable banking data and payment services to fintech companies and other approved third parties, provided they receive customer consent. Other players in space include Sweden’s Tink and Britain’s Bud. Take advantage of the new technological rules in the UK and the European Union, known as PSD2.

TrueLayer and other companies are now looking to reduce card networks such as Visa and Mastercard, allowing fintech applications 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.

“The open bank can be a real competitor to traditional card networks,” Simoneschi said. “The question is, can card companies accept this change or will they resist?”

It is worth noting that Visa is still an investor in Plaid as well as in TrueLayer, which means that it could benefit in the long run from the growth of open banking services. Meanwhile, Mastercard bought Finicity, another space player, last year.

Plaid intends to double its European workforce from 40 to 100 employees by the end of 2021.

“I think the competition is good and it benefits the ecosystem,” Keith Grose, Plaid’s international chief, told CNBC. He added that the company has “good competitors”, but that its rivals do not offer the “transatlantic bridge” built with operations in both the US and Europe.

TrueLayer has its own plans to enhance its team. The company currently has 200 employees and plans to increase its workforce by another 50 employees this year, Simoneschi said.

Fintech has attracted billions of dollars in venture capital as investors aim to capitalize on the wild growth in the sector. Globally, venture capitalists pumped in more than $ 17 billion in fintechs in the first quarter of 2021, according to PitchBook data, up 44% from the same period last year and the highest quarterly amount in second quarter of 2018. Meanwhile, tech companies like PayPal and Square have seen their market values ​​outperform those of Wall Street titans like Goldman Sachs.

However, the meteoric growth of the sector has shaken some leaders in the banking world. JPMorgan CEO Jamie Dimon recently said banks should be “scared” of fintechs and accused Plaid of “unfair competition” and “misuse” of bank data. Plaid, who views JPMorgan as a customer, said that “privacy and data security are essential to everything we do, including the data exchange agreements we have with JPMorgan Chase among many other banks.”