Productfy Inc., a bank as a service (BaaS) platform that aims to create “DeFi for Traditional Finance,” raised $ 16 million in a Series A funding round led by CM Ventures.
Existing donors Point72 Ventures, 500 Startups and Envestnet | Yodlee also participated in the fundraising, bringing its total raised since its inception in 2018 to nearly $ 19 million.
There are a growing number of BaaS companies, all of which have essentially the same end goal: to enable fintechs and other businesses to launch financial products and services faster and easier.
Productfy aims to stand out with its mission of building DeFi for traditional finance, according to founder and CEO Duy Vo. From a product architecture perspective, Productfy was designed “from scratch,” he said, to work with multiple banking partners.
“It’s not something our competition is built for,” Vo said. “Traditional banks will not last if they cannot decentralize. (More on this topic later.)
In simpler terms, Productfy wants to be the “Shopify of integrated finance”. The company says that with its platform, developers can “configure in hours, integrate in days, and go from idea to full deployment in just three weeks.”
But Productfy, unlike many other BaaS companies, doesn’t just focus on developers. His team goes beyond the API layer to produce more white label user interfaces. So while the company, of course, wants to be robust for developers, Vo says it’s even more focused on brands that lack technical resources or expertise in the field. Since July, the startup has seen 119% month-over-month revenue growth. It currently has eight clients, including HatchCard.
CM Ventures evaluated a number of BaaS and integrated finance companies and spoke to around 30 different players before deciding to bet on Productfy, according to Vagan Khranyan, Managing Partner of Principal Investor CM Ventures.
“We have concluded that Productfy has the only solution ready to be sold to customers,” Khranyan told TechCrunch. “We see massive parallels in what Productfy is building and larger movements in distributed and decentralized finance across the industry.”
The company, he said, is working to streamline an otherwise complicated process with multiple banking partners, data and card providers.
For example, Productify partners include Equifax, Marqeta card issuance platform, card processing partner Arroweye, and financial data provider Envestnet | Yodel. The startup has also partnered with the Stearns Bank National Association as part of its work on developing “extended access” to money movement, digital banking and card issuance products “via APIs. , easily integrable pre-approved widgets and client interfaces “.
“The Productfy platform is unlike any we’ve seen in the market,” said Josh Hofer, head of risk and information security at Stearns Bank. “Aligning our technology roadmap with the Productfy platform enables both companies to be successful in making banking products more accessible and scalable for the entire ecosystem. “
Specifically, the startup says its partnership with Stearns Bank gives fintech entrepreneurs and non-fintech companies a way to launch cash and card movement programs with stacked workflows and unified due diligence, “eliminating months of development, compliance hurdles, and third-party integrations. “
“We’ve built our core infrastructure, our compliance, and our technology,” Vo told TechCrunch. “When we started these programs, we learned a lot. Now, we are using this learnings to build the next iteration of our product, which will essentially be a white label fintech in a box solution that will allow any organization to launch a financial product or retail banking experience in days. “
Vo says he was motivated to start Productfy because he believed the financial services industry had “largely failed the most vulnerable in our society.”
“We always wonder how to create a kinder, more compassionate and more socially just financial ecosystem,” Vo said. “The way we think we can solve this problem is to create a decentralized financial infrastructure.”
He points out that while DeFi is traditionally associated with cryptocurrency, his startup has “nothing to do with cryptocurrency”.
“What we’re doing is creating a DeFi for traditional banking,” Vo told TechCrunch. Because banks are the origin servers, and if AWS can dynamically route traffic based on usage, it takes power away from users and distributes it among smaller banks and organizations that work with end users.
Vo’s goal is that if this can be solved in the United States, Productfy could add a node in countries such as Uganda and Libya and create the “first true distributed financial infrastructure” that would allow near fund transfers. snapshots, for example, “easily, securely and for less than a dime in the world.
Going forward, the startup will use its new inflow of capital to further develop its offerings and compliance-as-a-service capabilities and continue to improve its database and card issuance offering, with a focus on the creation of new integrations and partnerships and the launch of its first cohort of customers.
In the fourth quarter, Productfy plans to launch a new Card-Issuance-as-a-Service solution, dubbed “Latinum”, aimed at helping brands improve their customer experience and increase loyalty. The idea around the branded debit card is to give, for example, members of a church congregation the option of using a card where the interchange fee would be used to lend money to individuals. other members of the congregation.
Currently, Productfy’s goal is to get brands up and running in as little as three weeks. Today, they still have to have a team of engineers to do it. But by Q4, Vo says, they won’t need any more engineering or compliance teams as its white-label solution will be available. And the process will only take days, the company says.
“We are moving the ability to offer retail banking to the periphery,” Vo said. So that religious organizations, schools, gaming companies, e-commerce brands, or any organization with “a large audience” can launch a Debit Card Program with Deposits, Money Flow, KYC (Know Your Customer) , compliance and integrated service.
Other BaaS companies that have raised capital this year include Unit, which in June raked in $ 51 million in a Series B round to pursue its goal of enabling businesses and fintechs to build banking products “in just a few clicks. minutes”. In July, Solarisbank, a Berlin-based startup that provides a range of financial services through some 180 APIs that others use to create products for end users, raised $ 224 million at a valuation of $ 1.65 billion.