Personetics Raises $85M to Enhance Bank Personalization

The Pressure to Modernize Banking Services

Large financial institutions are facing increasing pressure to update their services. Consumers now expect features like mobile applications with location and identity verification as standard offerings. Simultaneously, these consumers are increasingly turning to neobanks for superior financial management tools.

Personetics Secures $85 Million in Funding

Today, Personetics, a startup focused on assisting established banks with modernization, announced a new funding round. This investment reflects significant demand for its services, which aim to bridge the gap between traditional banking and evolving consumer expectations.

Personetics has developed AI-powered technology that enables banks to personalize customer experiences. This includes analyzing spending patterns and leveraging broader datasets to provide tailored savings advice. The recently secured $85 million will be used to expand the company’s offerings and user base.

An Impressive Client Base and Growth

The company already boasts an impressive roster of 80 banking clients, including prominent global financial institutions. These include Metro Bank, Santander, U.S. Bank, Huntington Bank, UOB, Hyundai Card and MUFG. Personetics’ technology currently serves approximately 120 million users across 30 countries.

Since the beginning of 2021, Personetics has raised a total of $160 million in funding. This latest round was led by Thoma Bravo, with participation from existing investors such as Viola Ventures, Lightspeed Ventures, Sequoia Capital, Nyca Partners, and Warburg Pincus. The company has not disclosed its valuation.

On-Premises vs. Cloud Deployment

Despite the current trend towards cloud migration, Personetics exemplifies a different approach within the enterprise sector. CEO and co-founder David Sosna explained that while a SaaS version of their personalization technology is available, “many” clients – including Santander – prefer to deploy Personetics on-premises.

He stated that banks are cautious about sending financial data externally, and a full migration to the cloud is not imminent. Financial data is considered particularly sensitive and is likely to be among the last to move to cloud environments. Personetics often integrates with cloud services like Azure, Google Cloud, or AWS, but the banks retain ownership of the infrastructure.

The Rise of Personalization in Banking

The implementation of these services is driven by several factors. The emergence of challenger banks is creating competitive pressure, forcing incumbents to innovate.

Sosna noted that “they are seeing the impact of the alternatives,” with a gradual shift away from traditional banks. Approximately 25% of customers are now utilizing external lending providers or Buy Now, Pay Later (BNPL) services, a common trend.

Meeting Evolving Consumer Expectations

Secondly, personalization has become a fundamental expectation for consumers – a “table stakes” requirement, as Sosna described it. Banks have limited options but to adapt to these changing demands.

The impact of COVID-19 and broader market trends also play a role. With increasing branch closures, banks are becoming more reliant on digital platforms. This necessitates improved websites and applications to maintain and expand their businesses.

Building vs. Buying Personalization Technology

Considering the overlap between financial services and fintech, it’s surprising that more banks haven’t attempted to develop personalization capabilities in-house.

Sosna acknowledged that some banks have tried, but progress has been slow. Working with a third-party provider like Personetics offers a faster and more flexible way to experiment and implement these technologies. “That’s the case and I don’t think it will change,” he added.

Competing with Challenger Banks

Personetics is part of a growing ecosystem of companies addressing the needs of incumbent banks in the face of competition from neobanks. 10x, founded by former banking executives, is another example of a company providing tools specifically designed for large financial institutions.

The potential for collaboration between Personetics and neobanks remains an area of interest. Neobanks, with their focus on embedded services, could benefit from third-party solutions to enhance personalization.

Strategic Partnerships with Digital Banks

Sosna indicated that Personetics already has some digital banks as clients, often those that have emerged from larger incumbents. “We like that segment because they have more muscle to start with,” he said. He expressed caution about partnering with smaller fintechs due to their often-changing strategies.

Future Expansion into Lending and Automated Savings

Looking ahead, Personetics plans to expand its services to encompass areas like lending. This could involve providing banks with the ability to evaluate loan applications more quickly and using a wider range of data, similar to that utilized by newer fintech companies. Automated money movement is already a core capability, making lending a natural extension.

“When it comes to savings and lending and investing one of the things we like is to provide an automated capability to move money on your behalf,” Sosna explained. This includes automatically transferring surplus funds from current accounts to higher-interest accounts. “We have multiple banks using that now, where you opt in and then automatically moves the money without asking your permission every time.”

Thoma Bravo’s Perspective

“As the range and complexity of financial products continues to grow, Personetics simplifies and personalizes banking for consumers with its industry-leading AI technology,” stated Robert Sayle, a partner at Thoma Bravo. “We are thrilled to partner with Personetics and leverage our operational expertise in software and financial technology to help accelerate the company’s momentum, the introduction of new products and technology, and the platform‘s reach to financial institutions and their customers across the globe.”