The concept of banking-as-a-Service (BaaS) is on the rise and research conducted by IBM shows that 79% of bank executives believe that BaaS will provide a competitive edge, increase profitability, and help expansion into new markets. Railsbank is the leading BaaS platform that offers a complete financial services backend – platform, connectivity, operations, scheme memberships (e.g. Visa), regulation, and compliance. Railsbanks’ APIs provide the building blocks for businesses to innovate to address any financial use case, including the launching of a full banking system. Developing for the financial services industry is complex due to the numerous moving parts but Railsbank streamlines the process.
London TechWatch caught up with CEO and Cofounder Nigel Verdon to learn more about Railsbank, its global expansion plans, and recent capital raise, which brings the total funding raised to $51.4M.
Who were your investors and how much did you raise?
Railsbank raised $37M as part of continued equity funding to support its global growth and product expansion. MiddleGame Ventures and Ventura Capital, both existing investors in Railsbank, co-led the round, with Anthos Capital, Global Brain, Clocktower Technology Ventures, Moneta VC, Mitsui Fudosan, and Firestartr also participating.
We do not use the term round. The Railsbank mindset, the team’s DNA, is more public markets, where capital raises are just that, “capital raises” and not “rounds”. So, we prefer to call it the “next or latest”.
Tell us about the product or service Railsbank offers.
Railsbank is the leading global Banking-as-a-Service (BaaS) platform. It enables banks, businesses, and brands to define the future of consumer and SME finance.
Marketers, product managers, developers, CEOs, and founders are able to take their financial product vision and rapidly prototype, launch and scale using Railsbank’s open finance platform which consists of operations, regulatory licensing, and a rich set of APIs.
What inspired the start of Railsbank?
My cofounder Clive Mitchell and I are fintech entrepreneurs who set out in 2016 to create a company that could help shape the future of the global financial services industry over the coming decades and create greater financial inclusivity. We believe that financial services are a human right and not a privilege.
How is Railsbank different?
Railsbank is the only truly global digital native Banking-as-a-Service platform. And it has made the crucial journey from Open Banking to Embedded Finance which offers so much more: open banking together with, for example, issuing cards and accounts, currency conversion, multiple payment schemes, and collecting money.
What market are you targeting and how big is it?
Marketers, product managers, developers, CEOs, and founders, based anywhere, who have a financial product vision and wish to take it to market.
What’s your business model?
A subscription business based on Annual Recurring Revenue (ARR).
How has COVID-19 impacted the business?
Starting from scratch in 2016, we have had very clear plans about our growth trajectory over the last four years, and we are fortunate that the pandemic has not affected those plans to any great extent. We have continued to build our finance platform, create a strong customer base, hire top talent, and attract external investors that are supportive, and look long term.
What was the funding process like?
We are fortunate to have very supportive investors who have known the core team for many years and the process was as always professional and engaging.
What are the biggest challenges that you faced while raising capital?
One of the biggest factors in raising capital is external forces. You may have a consistent proposition, but the surrounding economic environment is a constant state of flux and something that you cannot control. This means you have to focus on what you offer an investor, the benefits to them, and ensure that they fully understand your business.
What factors about your business led your investors to write the check?
They are fans of our business model, our core finance platform, our customer base, our team, and our approach and vision of the future. Our investors have a deep understanding of the business and therefore are comfortable with supporting it on an active basis.
What are the milestones you plan to achieve in the next six months?
To implement that ambition that lay behind the funding. For example, to enable Railsbank to continue to expand its global footprint, further strengthen its core product proposition, launch key new products and help increase its lead in embedded finance as the world’s pre-eminent BaaS platform, enabling start-ups and established brands to prototype, launch and scale financial products within their own customer experience.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Stay focused and disciplined, and don’t be afraid of any tough decisions you may have to make. Also, talk to those who know the team and the company well, such as your existing investors. Let them help you get a fresh perspective on where you are going and how you are going to get there. And don’t get in a rut – being agile at this current time is a great benefit.
Talk to those who know the team and the company well, such as your existing investors. Let them help you get a fresh perspective on where you are going and how you are going to get there. And don’t get in a rut – being agile at this current time is a great benefit.
What’s your favorite outdoor activity in London?
Walking and exercise – I often walk 10-20km on a Sunday morning along the Thames Path. With the company also being based in Singapore (where I am based) and the US, it means that I’m not always in London. So whenever I get back, I make time to reacquaint myself again with the beauties of the city and discover new things and places in London.
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