The Rise of FintechOS: Empowering Incumbent Financial Institutions

Financial institutions in the banking and insurance sectors are facing disruption from agile “challenger” startups. These newer companies have gained traction by offering more user-friendly, personalized, and competitively priced tools and services compared to traditional providers.

FintechOS Secures €51 Million in Series B Funding

FintechOS, a Romanian startup focused on assisting established banks and insurance companies, has recently announced a substantial funding round. The company secured €51 million ($61.5 million, current exchange rate; $60 million at deal closure) in a Series B investment.

Addressing the Incumbent Challenge

FintechOS’s core mission is to provide a low-code platform that enables larger, older financial institutions to develop new services and analytics. This is achieved by building upon and integrating with their existing infrastructure. Many incumbents have struggled to compete with nimble newcomers like Lemonade and various challenger banks – Revolut, N26, Monzo, among others – largely due to outdated and complex systems.

The shift to digital interactions accelerated by the pandemic has further highlighted this challenge. Adapting large organizations is a complex undertaking, and FintechOS aims to simplify this process.

A Vision for Digital Transformation

“We recognized early on that conventional digital transformation solutions would fall short of delivering substantial results,” stated Teodor Blidarus, co-founder and CEO of FintechOS. “Our unique methodology has spurred a significant shift in how financial institutions approach digitization and customer engagement.”

He continued, “Recent events have intensified the pressure on our industry to evolve, leading to increased demand for our robust platform. This latest funding will enable us to scale our operations and deliver improved outcomes for financial institutions and their customers globally.”

Competition in the Fintech Landscape

FintechOS is not alone in this space. Several European companies are developing tools to modernize incumbent banks, including 10x, Thought Machine, Temenos, and Mambu.

Investment Details and Growth Trajectory

Draper Esprit led the Series B funding round, with participation from Earlybird, Gapminder Ventures, Launchub, and OTB Ventures – all of whom invested in the Series A round in December 2019. Additional investors remain undisclosed. FintechOS has raised nearly $80 million in total funding to date and does not currently disclose its valuation.

Expanding Market Reach and Customer Base

Currently operating in the U.K. and Europe, FintechOS has experienced a 200% CAGR. Its services impact “millions” of users, with key clients including Societe Generale, IdeaBank, and Howden. The company plans to continue investing in these markets and pursue international expansion.

Expanding Service Offerings

The FintechOS platform currently supports the launch of new retail services for consumers and small to medium-sized businesses. It also facilitates the development of innovative health, life, and general insurance products. The convergence of insurance and financial services makes this a natural extension for the company.

Capabilities and Integrations

FintechOS empowers banks to implement new digital onboarding processes, credit cards, loan products, savings accounts, and mortgage solutions. For insurance companies, it streamlines quote generation, customer management, and claims automation. This may lead to collaboration with RPA leader UiPath, a successful startup originating from the same country.

The platform integrates data from existing bank systems with modern tooling, facilitating efficient data processing. It often requires collaboration with third-party integrators and global service providers like Microsoft, Deloitte, CapGemini, and KPMG.

Key Trends Driving FintechOS’s Success

FintechOS is capitalizing on two significant trends within the financial and insurance industries.

Firstly, core financial services – such as credit, loans, and deposits – have become increasingly commoditized. Packaging these services as APIs allows for easier integration and access, reducing the need for extensive development. This enables companies to focus on customer experience and building customized tools around these core offerings.

Secondly, the growing adoption of no-code and low-code tools empowers individuals within organizations to identify and address inefficiencies, building workflows to improve processes. This also facilitates rapid prototyping and testing of new products, a departure from traditional practices in the financial and insurance sectors.

A Focus on Financial Inclusion

“Our technology not only helps financial institutions become more customer-centric but also enables them to serve a wider range of individuals and businesses,” said Sergiu Negut, co-founder and CFO/COO of FintechOS. “By tailoring offerings to individual needs, we can promote financial inclusion and uphold our belief that access to financial services is essential.”

Strategic Investment by Draper Esprit

Draper Esprit, also an investor in Thought Machine, recognizes the potential of FintechOS. While Thought Machine utilizes smart contracts, FintechOS employs a low-code approach. The VC firm views these investments as complementary, given the vast market opportunity.

“We were immediately impressed by Teo and Sergiu’s vision: a data-driven, end-to-end platform facilitated by a low-code/no-code infrastructure,” stated Vinoth Jayakumar, partner at Draper Esprit. “Incumbent financial services firms face high cost-to-income ratios, creating a significant need for infrastructure software that enables rapid, easy, and cost-effective digitization. Draper Esprit prioritizes long-term partnerships, and we are confident that FintechOS will revolutionize financial services experiences worldwide.”