UK-based payment fintech Banked has announced the closure of a $15 million Series A extension round, which, with their oversubscribed original Series A round, brings their total investment to over $50 million to date.
The round was led by New York-based, 27-year-old, global software investment firm Insight Partners (which backed Bay Area startup Canary Technologies recently). At the same time, financial institutions like Citi and National Australia Bank Ventures joined, along with Banked’s new commercial partner, the payments firm Rapyd.
The round highlights strong support for Banked’s pay-by-bank model. It will be used to grow the fintech’s team and further their US expansion — they announced a partnership with Bank of America in the initial Series A — as they seek to transform the global payments market.
Banked co-founder and CEO Brad Goodall, who has moved to Palo Alto currently to expand the business in the US, joined TFN to share a little about his background and the inspirations behind Banked, as well as their plans.
A beginning in ‘boring’ banking
Goodall started his career in his native Australia, working in financial services. “It was very boring,” he recalls, “back-office stuff, doing things like platform and data migrations: the very unsexy end.” Goodall’s entrepreneurial spark meant he was soon running his own business, a consultancy working within the same sector. But, in 2014 he left Australia searching for new opportunities.
“The VC industry back in 2014 in Australia wasn’t really a thing, fintech was incumbent-based, and we didn’t have a huge startup culture,” Goodall said. He moved to London, a move largely motivated as much by the availability of visas and his wife’s European roots, but which he sees as a great stroke of luck. “It was the start of a really big build-out of fintech, and some amazing founders were starting businesses.”
Goodall, with his co-founder Antony Jenkins, founded 10x Banking in 2016. With the aim of making banking ten times better, the company focused on the core banking platform, offering Goodall a rapid-learning experience. Realising that banks, generally, had a poor business model when it came to customer satisfaction, he saw the emergence of Open Banking as an opportunity for third-party providers to really partner with the banking sector.
It provided inspiration for Banked. “You were seeing these other businesses build amazing consumer experiences, it wasn’t lost on me that that was happening outside the banks.” However, Goodall recognised the opportunity. “Open banking was a moment in time where banks were going to heavily invest in things like API’s and security that was going to allow them to actually work closely with businesses that had technology stacks of their own.”
Creating a new payments model
The model for payments has changed relatively little, operating through providers like Visa or Mastercard. While these offer convenience for the customer, they are costly for everyone else, with retailers and banks paying fees for the services. Open banking made it possible, for the first time, for direct bank payments to take place as easily and securely as card payments.
The model has attracted significant attention, fuelling Banked’s expansion and new partners. Insight Partners, who previously invested in Tink, which was acquired by Visa last year, add to the confidence being shown in Banked at a time that many in the fintech and wider financial sectors are being forced to consolidate. With nearly 100 staff, Goodall has relocated to Palo Alto to lead its US expansion.
Part of the attraction for many is the savings the Banked service offers through lower fees and reduced risks of fraud. Byron Lichtenstein from Insight Partners, highlighted the attraction, “users do not need to create an account or pass any login information to Banked – they simply choose their existing bank at checkout and are securely connected to their mobile banking app to biometrically authenticate the purchase. Total checkout time for a first-time user is under 30 seconds.” By using the bank’s own APIs, it keeps fees lower, and because of the security, the overheads from fraud are reduced. The pay-by-bank market is expected to be worth $43 billion in Europe by 2026.
Growing diverse in a difficult economy
Goodall is still expanding his team. Describing Banked’s recruitment as location agnostic, their staff largely operate remotely, a factor that Goodall believes helps through the increased diversity it brings. “We’re in 16 countries now, and one of the things about being in 16 countries is there’s a lot of cultural diversity,” Goodall told us. “Traditionally, technology was 80% to 90% white males, and moving away from that gives us a really strong remote culture. You’re not just building a remote workforce, you’re getting many different viewpoints, which we’re really proud of.”
Goodall, however, notes that the economic climate is hard, but he believes Banked, rather than taking advantage, can be a force for good in that climate. “One of the things I think that you just have to be mindful that there’s a lot of people losing their jobs at the moment. And that, for me, isn’t a time to take advantage,” he says. At a time that people and businesses need to make savings, Goodall believes positive fintech like Banked can thrive, “the opportunities are where you can build a great infrastructure business? Can you build a business that’s going to help B2B? Can you be in those spaces?”
Of the new investors, Goodall says, “Insight Partners is an amazing global firm with such strength in the payments and fintech space. To increase our share price in this current market with overwhelming demand from investors, I couldn’t be happier to have Insight onboard to build what is a multibillion-dollar opportunity. I am also excited that Citi, NAB and Rapyd are joining as it shows that Banked has real strength in working with the biggest and best banks and payment firms in the world.”
“Banked has a huge ambition and we believe they have built the team and product to tackle such an exciting opportunity in payments. There are many ways to approach the problem, and Banked;s unique strategy in partnering with commercial banks and payment service providers, as well as their product capabilities, stood out to us,” said Byron Lichtenstein, Managing Director, Insight Partners.