British fintech start-up TrueLayer raises $ 70 million

LONDON – UK financial technology start-up TrueLayer says it has raised $ 70 million in new funding, underlining continued investor interest in high-growth fintech companies.

TrueLayer allows fintech apps such as Revolut and Freetrade to connect to clients’ bank accounts using technology known as APIs or application programming interfaces. This means that users of those apps 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 Temasek of Singapore also invested.

Francesco Simoneschi, CEO and co-founder of TrueLayer, said in an interview that the company decided to raise more money thanks to strong growth in 2020, helped not least by the coronavirus pandemic and a shift from consumers to digital ways. to manage. their finances.

“We ended 2020 in an extremely positive way,” Simoneschi told CNBC. “We had an incredible year of growth,” he said, adding that the company saw its payment volumes increase as much as 600 times.

TrueLayer declined to share its financial details or valuation. The company, which also considers Chinese internet giant Tencent as a shareholder, has raised $ 142 million in funding to date.

TrueLayer said it will use the fresh money to expand its services internationally, expanding its presence in Europe first before targeting a rollout in Australia. It is also examining whether it will be launched later in Brazil.

The news comes a day after Silicon Valley firm Plaid – which competes with TrueLayer in Europe – announced it had raised $ 425 million in 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 US government raised antitrust concerns.

Plaid and TrueLayer are part of a new financial movement called “open banking,” which aims to open up precious banking information and payment services to fintech companies and other approved third parties, provided they have client consent. Other players in the space include Tink from Sweden and Bud from Great Britain. They take advantage of technology-friendly new rules in the UK and the European Union known as PSD2.

TrueLayer and some other companies are now trying to undermine card networks such as Visa and Mastercard by allowing fintech apps to make bank transfers on behalf of their users, at a much lower cost. GoCardless, a fintech platform that processes direct debit payments, is also developing open banking technology for transactions.

“Open banking can be a real competitor to traditional card networks,” said Simoneschi. “The question is, can the card companies embrace this change or will they resist?”

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

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

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

TrueLayer has its own plans to boost its team. The company currently employs 200 people and plans to increase its workforce by an additional 50 employees this year, Simoneschi said.

Fintech has attracted billions of dollars in venture capital as investors seek to capitalize on the wild growth in the industry. Globally, venture capitalists pumped more than $ 17 billion into fintechs in the first quarter of 2021, according to data from PitchBook, a 44% increase from the same period a year earlier and the highest quarterly amount since the second quarter of 2018. Meanwhile, technology companies are holding. PayPal and Square have seen their market values ​​surpass Wall Street titans like Goldman Sachs.

Still, the industry’s rapid growth has upset a number of leaders in the banking world. JPMorgan CEO Jamie Dimon recently said banks should “be less afraid” of fintechs, accusing Plaid of “unfair competition” and “improper” use of bank data. Plaid, who considers JPMorgan as a client, said that “data privacy and security is at the heart of everything we do, including the data exchange agreements we have with JPMorgan Chase and many other banks.”