Productfy Inc., a banking-as-a-service (BaaS) platform that goals to construct “DeFi for conventional finance,” has raised $16 million in a Sequence A spherical of funding led by CM Ventures.
Present backers Point72 Ventures, 500 Startups and Envestnet | Yodlee additionally participated within the financing, which brings its whole raised since its 2018 inception to almost $19 million.
There are a rising variety of BaaS corporations, which all basically have the identical finish purpose — to make it sooner and simpler for fintechs and different corporations to launch monetary companies and merchandise.
Productfy goals to face out with its mission to construct DeFi for conventional finance, in response to founder and CEO Duy Vo. From a product structure standpoint, Productfy has been constructed “from the bottom up,” he mentioned, to function with a number of banking companions.
“This isn’t one thing our opponents are constructed for,” Vo mentioned. “Conventional banks won’t final if they will’t decentralize.” (Extra on this subject later.)
Put extra merely, Productfy needs to be the “Shopify of embedded finance.” The corporate claims that with its platform, builders can “configure in hours, combine in days, and go from concept to full stack deployment in as little as three weeks.”
However Productfy, not like many different BaaS corporations, isn’t just centered on builders. Its group is constructing past the API layer to provide extra white label person interfaces. So whereas the corporate, after all, needs to be sturdy for builders, Vo says it’s much more centered on manufacturers that lack technical sources or area experience. Since July, the startup has seen 119% month over month income progress. It at the moment has eight purchasers, together with HatchCard.
CM Ventures evaluated a lot of BaaS and embedded finance corporations and had discussions with round “30 totally different gamers” earlier than deciding to position its wager on Productfy, in response to Vagan Khranyan, managing companion of lead investor CM Ventures.
“We concluded that Productfy has the one market-ready resolution to be offered to prospects,” Khranyan advised FiratNews. “We see huge parallels in what Productfy is constructing and bigger actions in distributed and decentralized finance throughout the trade.”
The corporate, he mentioned, is working to simplify an in any other case sophisticated course of with a number of financial institution companions, information and card distributors.
For instance, Productify’s companions embody Equifax, card issuing platform Marqeta, card achievement companion Arroweye and monetary information supplier Envestnet | Yodlee. The startup has additionally teamed up with Stearns Financial institution Nationwide Affiliation as it really works on creating “expanded entry” to cash motion, digital banking and card issuance merchandise “by way of simply embeddable APIs, widgets and pre-approved buyer interfaces.”
“The Productfy platform is not like any we’ve seen out there,” mentioned Josh Hofer, chief danger and knowledge safety officer of Stearns Financial institution. “Aligning our expertise roadmap with the Productfy platform allows each corporations to succeed by making banking merchandise extra accessible and scalable for the whole ecosystem.”
Particularly, the startup says that its partnership with Stearns Financial institution offers fintech entrepreneurs and non-fintech companies a method to launch cash motion and card packages with stacked workflows and unified due diligence, “eliminating months of growth, compliance hurdles, and third get together integrations.”
“We’ve been constructing our primary infrastructure and compliance and expertise,” Vo advised FiratNews. “Once we launched these packages, we realized a ton. Now, we’re taking these learnings to construct the following iteration of our product, which is able to basically be a white label ‘fintech in a field’ resolution, which is able to permit any group to launch a monetary product or retail banking expertise inside days.”
Vo says he was motivated to begin Productfy as a result of he believed that the monetary companies trade has “largely failed probably the most susceptible folks in our society.”
“We’re all the time asking ourselves how can we create a monetary ecosystem that’s kinder, extra compassionate and extra socially simply,” Vo mentioned. “The best way that we consider that we will remedy this downside is to create a decentralized monetary infrastructure.”
He emphasizes that whereas DeFi has historically been related to cryptocurrency, his startup has “nothing to do with cryptocurrency.”
“What we’re doing is we’re making a DeFi for conventional banking,” Vo advised FiratNews.”As a result of banks are the origin servers, and if AWS can dynamically route visitors based mostly on utilization, that takes energy away from customers and spreads it round to small banks and the organizations that work with finish customers.”
Vo’s purpose is that if this may be nailed down within the U.S., Productfy might add a node in nations resembling Uganda and Libya and create the “first true distributed monetary infrastructure” that will permit for close to immediate funds transfers, for instance, “simply, securely and at lower than a penny globally.”
Wanting forward, the startup will use its new inflow of capital to additional scale its choices and compliance-as-a-service capabilities and proceed bettering its core information and card issuance providing, with a deal with constructing new integrations and partnerships and launching its first cohort of consumers.
Within the fourth quarter, Productfy plans to launch a brand new Card-Issuance-as-a-Service resolution, dubbed “Latinum,” geared toward serving to manufacturers enhance their buyer expertise and construct higher loyalty. The concept across the branded debit card is to provide say, members of a church congregation, the flexibility to make use of a card the place the interchange charges can be used to lend cash to fellow congregation members.
Presently, Productfy’s goal is to permit manufacturers to go reside in as little as three weeks. Right this moment, they nonetheless should have an engineering group to try this. However by the fourth quarter, Vo says, they received’t want engineering or compliance groups as a result of its white-label resolution can be obtainable. And the method will solely take days, the corporate claims.
“We’re shifting the flexibility to supply retail banking companies to the sting,” Vo mentioned. In order that non secular organizations, faculties, gaming corporations, e-commerce manufacturers or any group with “a robust following” can launch a debit card program with deposits, cash motion, KYC (Know Your Buyer), compliance and servicing inbuilt.
Different BaaS corporations which have raised capital this yr embody Unit, which in June raked in $51 million in a Sequence B spherical to additional its purpose of constructing it potential for corporations and fintechs alike to construct banking merchandise “in minutes.” In July, Solarisbank, a Berlin startup that gives a spread of economic companies by means of some 180 APIs that others use to construct end-user-facing merchandise, raised $224 million at a $1.65 billion valuation.