A financial services start-up called SynapseFI has announced a $17 million Series A funding round. Although this is not uncommon, the company’s products are already making a significant impact in their chosen niche.
The core of the company’s offering is a platform that is essentially a virtual bank in its own right – except without customers and products. The company allows financial institutions to create virtual and physical banking products, without needing to build their own cumbersome, hard to upgrade infrastructure. Financial institutions can issue white label debit cards, offer loan products and even payment options. All this, while maintaining their security and compliance obligations through SynapseFI.
Interestingly, rather than positioning themselves as highly expensive consultants, the company has chosen a pricing model more common amongst product based suppliers. Products can be created, using the SynapseFI system for as little as $8000 a month, or an entire bespoke product offering – likened to an entire bank – can be created for a set price.
Businesses similar to SynapseFI are not uncommon, and it is expected that more will arise as banks move from being physical entities to online, application based, and product-centric organisations. It gives financial institutions of all sizes the opportunity to put their “toe in the water,” with more traditional banking products, and to manage the scaling of their operations, relatively risk-free. Perhaps most importantly, with so much of the technical responsibility being taken on by SynapseFI, employee costs are significantly lower, as well as the cost of physical systems.
It will be fascinating to see if products like this will mean the democratisation of the banking industry and impact on the major banking institutions. There is a significant chance that the only impact will be felt at the middle level, by smaller banking societies and organisations that choose to fight for the crumbs from the larger organisations tables. But, at least with operations like SynapseFI, there is a chance for increased competition which could mean improved products and significant customer benefit.