10x, a fintech company based in the United Kingdom, raises $187 million to develop new services for old banks
10x raises $187 million to develop new services for old banks
As so-called neobanks continue to gain market share with their more modern approaches to banking and other financial services, a startup developing technology to help incumbent players compete more effectively has announced a significant round of funding.
10x Future Technologies, a London-based fintech that assists larger, established banks in developing both next-generation services and tools to improve the efficiency of their existing services, has raised $187 million. According to sources close to the company, 10x is valued at around $700 million in this round.
10x will use the funds to expand into new geographies such as North America, as well as to continue building out its flagship platform's technology. The platform, dubbed SuperCore, is an all-in-one system built from the ground up to run a broad range of banking services, including payments, core banking, mortgages, analytics, security, and marketing, which 10x's bank customers can integrate into their existing technology via APIs or use to build new services from scratch.
This Series C round is stacked with heavy hitters, demonstrating 10x's growing credibility over the course of its five years in the market.
BlackRock and Canada Pension Plan Investment Board (CPP Investments) are co-leading the transaction, which also includes existing investors JPMorgan Chase, Nationwide, Ping An, and Australia's Westpac.
Among the latter four are strategic supporters: Antony Jenkins, the founder and CEO of 10x, who previously worked at large banks (his most recent role was as CEO of Barclays, and while he left under fire, his prominence and track record likely contribute to the company's clout), tells us that 10x is currently developing services for Westpac and Nationwide.
10x has two additional banks as customers that it is not disclosing yet, which will likely result in additional customers soon, Jenkins added, as the industry is currently "in a transitional phase." Some of 10x's engagements are already live, with "massive volume flowing through the platform," he explained. Others have not yet begun.
The opportunity that 10x is pursuing is substantial, but also enigmatic.
Neobanks and other next-generation fintech providers
Neobanks and other next-generation fintech providers are gradually eroding incumbent banks' hegemony in consumer and business banking. They typically accomplish this by combining suites of traditional and more modern banking services via APIs from other fintechs; machine learning algorithms to personalize services for customers; and modern interfaces to make the overall experience more user-friendly than what you might get from a traditional bank.
While incumbent banks wish to compete against these newcomers with their own rival products, they frequently are unable to do so due to their infrastructure being too old and, in many cases, their company culture being even older.
This is where 10x comes in, by providing the tools and guidance necessary to help them launch new services.
Jenkins notes that a majority of the engagements 10x is seeing at the moment involve banks bolting on entirely new services rather than building services to replace existing offerings. One appropriate analogy is that it's similar to adding a modern extension to an extremely old house, rather than remodeling and modernizing the entire structure from the ground up.
However, five years into 10x's existence as a business, it appears that banks are beginning to explore how to migrate their core data to more modern systems in order to make it more extensible and usable in a broader range of new services, and 10x believes it can be a partner in that back-end transformation as well.
“The legacy systems are the source of banks' problems, as they are all designed around products, not customers,” he explained. “However, we believe that the industry is now prepared to consider the process of migration.” The company is not currently engaged in any such projects, he added, but anticipates doing so within the next 12 months.
And even though other fintech startups, such as FintechOS, are also developing services to assist incumbent banks in becoming more modern, this expectation creates an opportunity for investors.
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