Since 2015, we have seen an increasing interest in financial infrastructure space. With the rise of open banking over the past 3–4 years, APIs (in general) and financial infrastructure APIs have garnered much interest. APIs have saved FinTech companies and even larger companies from the trouble of building entire stacks by themselves. With the help of APIs, smaller companies can compete with larger establishments by resolving the challenges that were ignored or put off due to incapacity.
Here are some companies that provide financial infrastructure APIs:
Alpha Vantage: Alpha Vantage provides free APIs for real-time and historical data on stocks, forex (FX), and digital/cryptocurrencies.
Finicity: The Finicity platform and APIs enable software developers to integrate customer financial data into their apps securely and easily. With RESTful-based Finicity aggregation API, developers can deliver an exceptional UX by leveraging key API features.
TrueLayer: TrueLayer provides a universal API through its data API to enable data access from a user’s bank account and cards. The company provides a payment API that enables users to initiate a payment transaction directly from their bank account through an API.
Setu: Setu is an application programming interface (API) infrastructure startup that offers APIs across bill payments, savings, credit, and payments.
Tink: Tink provides four basic functionalities through various APIs: account aggregation, payment initiation, personal finance management, and data enrichment. Third parties can use these to roll out their standalone apps or integrate them into existing banking apps. The company recently raised €90 million at a post-money valuation of €415 million from Dawn Capital, HMI Capital, Insight Partners, and Poste Italiane, along with previous investors such as Heartcore Capital, ABN AMRO Ventures, and BNP Paribas’ venture arm—Opera Tech Ventures.
Railsbank: Railsbank offers a banking and compliance platform that allows users to connect their companies with its partner network, including banks, financial services, and compliance providers, enabling them to integrate their business or mobile app with global banking services. The open banking & compliance platform helps companies, including FinTechs, which have global banking requirements that can only be accessed programmatically via an API.
YAP: YAP, a Payments-as-a-Service platform, enables companies to develop and roll out their payment solutions rapidly. Users can plug-and-play from an à la carte of payment methods such as plastic, virtual, tokenized, and in-app. The company was formed jointly by DCB Bank and M2P Solutions.
Zeta: Zeta provides a full-stack, cloud-native, API neo banking platform that includes a digital core and a payment engine for issuance of credit, debit, and prepaid products that enable legacy banks and new-age FinTech institutions to launch modern retail and corporate FinTech products.
Bud: Bud provides a complete set of APIs for organizations to build financial tools. The company provides APIs that facilitate aggregation, intelligence gathering, taking actions, and making payments. HSBC, Sabadell, ANZ, and Goldman Sachs are a few clients of Bud.
Solarisbank: Solarisbank is the first Banking-as-a-Service platform with a full banking license, which enables companies to offer their financial products. Through APIs, partners gain access to Solarisbank’s modular services such as payments, e-money, lending, and digital banking, as well as services provided by integrated third-party providers. Through these, Solarisbank creates a highly developed technological banking ecosystem for FinTechs, established digital companies, banks, and corporates.
In terms of funding, financial infrastructure companies received $435.28 million in 2020 through 28 major deals. Europe is the leading region with 85.5% ($372.6 million) of the total funding for financial infrastructure companies.
Here are a few of the major deals in Europe:
The Americas came in second with 8.7% of funding in this space. Here are a few of the leading financial infrastructure companies that received funding in 2020:
Asia came in third with 5.6% of the funding, and the top deals were from India. Setu raised $15 million in a Series A funding round in April 2020. YAP raised $6 million in a Series A funding round in April 2020.
The future of financial services would be based on the API economy, but there seems to be a challenge. APIs are being held back by old-school financial infrastructure that can’t keep up with the speed we expect as modern consumers. In the world of instant transactions, many API-enabled applications and servers can take up to three days for data to come through. With the increasing prominence of a global approach to financial and data management, we will see an increased demand for real-time information sharing between platforms and services in different countries. Recently, we spoke to Nikhil Kumar, the co-founder of Setu, regarding financial infrastructure APIs and discussed the challenges in operating with the ecosystem. Among other things, we discussed why he thinks that the only way for FinTechs (large and small) to succeed is a distinct value accrual in the value chain.
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