London-based open banking fintech Yapily has recently secured $51 million in Series B funding to expand its open finance infrastructure across Europe. The funding round was led by Sapphire Ventures, but also included additional funding from existing investors Lakestar, HV Capital and Latitude, whose initial investment fuelled Yapily’s growth to becoming a leading banking infrastructure provider.
Open Banking and Open Finance are, perhaps, relatively unknown outside the Fintech sector. While challenger banks have grabbed headlines, the work that has gone into open banking and finance is, arguably, far more transformational. By creating an infrastructure that allows a customer to securely liberate their financial data from the silo of their institution there is almost unlimited potential for innovation by other institutions and third-party developers.
The glue of financial innovation
European institutions have led the way in the adoption of open finance. This has allowed the development of a range of apps and products that take advantage, simplifying and speeding up processes for the end customer, whether they are a business or consumer. Open finance links have to be approved by each customer, following an authentication process hosted by their financial institution. This creates trust, users can remove access from their usual banking app, but means third parties can act as proxies. This might be as simple as creating a unified interface for multiple accounts, to managing a complex investment and pension portfolio in a single app. Yapily provides the infrastructure that allows the necessary secure connections to be made.
The full potential is, however, yet to be realised. “Open banking has seen significant growth, with more than 3 million adults using open banking-powered products in the UK alone,” says Stefano Vaccino, the CEO and Founder of Yapily tells UKTN. “As adoption continues to increase, use cases are ever-evolving with credit, pensions, and insurance industries prime for innovation. This is just the beginning as we begin to pave the way for open finance.”
Like many in the tech sector, the pandemic has actually proven beneficial to Yapily. With the increased growth in e-commerce, along with the growth of fintech as a contactless service, Yapily has seen customer numbers grow three-and-a-half times compared to pre-pandemic levels. Indeed, many people will have already used Yapily, without even realising. Their infrastructure is already used by brands like Intuit Quickbooks, American Express and Moneyfarm, among others, to securely support transactions.
Yapily’s infrastructure already covers a significant proportion of the European customers, around nine-in-ten in major European countries. And that growth is set to continue, especially in European countries that are becoming increasingly cashless. Bank transfers already account for 8% of e-commerce payments globally. And as Yapily, and open finance more generally, expand, it’s likely that trend will continue as people increasingly use digital options for their finances.
With nearly 100 staff, Yapily has already started growing beyond its initial bases in the UK and Lithuania. They have recently set up teams in Italy and Germany, and are planning on adding France and Spain to their locations. Increasing their staffing will also be a priority. Currently employing nearly 100 staff, they will be expanding their product and customer service teams. Most important, given the need for secure and reliable infrastructure, will be their plans to double the size of their engineering team.
“Yapily is an infrastructure and API-first player first and foremost,” Vaccino told UKTN. “This requires investment in our people — particularly the engineering team — and our market-leading infrastructure to ultimately pave the way for open finance.”
The company plans to retain its European focus, building on its existing presence and expanding elsewhere in the continent over the course of the year. “We will expand into new markets including France and Spain, while continuing to invest in existing markets — the UK, Italy and Germany — where we have already established a strong presence with a rapidly increasing customer base,” Vaccino explains. “The funding will be used to extend Yapily’s open banking coverage to 95% of the continent by the end of the year.”
The team are also considering other markets. However, with Europe’s lead in open finance, Yapily is forced into a waiting game while other regions catch up. “With more frameworks coming into effect around the globe, we plan to monitor and enter regulatory-led markets next year,” Vaccino told us.
However, Yapily is well-placed for global expansion when this happens. Their position as market leaders within Europe has given them in-depth experience. “We have the broadest set of open banking features and the first to offer a complete payment feature set including bulk, scheduled and recurring payments,” says Vaccino. “As adoption begins to take off, we can expect more and more features to be released under open banking, and we are at the cutting edge to catalyse change and innovation.”