Truelayer Secures $130M Funding at $1B+ Valuation | Open Banking

The Rise of Open Banking and TrueLayer's Funding Milestone

Open banking, a groundbreaking technology, is challenging the established dominance of traditional financial networks like card systems. It achieves this by enabling banks to directly connect with developers and new services through Application Programming Interfaces (APIs).

TrueLayer Secures Significant Investment

TrueLayer, a key player in the open banking application landscape, has announced a substantial funding round. The London-based startup has raised $130 million, achieving a valuation exceeding $1 billion.

This funding round was led by Tiger Global Management, with notable participation from the prominent payments company, Stripe.

A Relatively New, Expanding Fintech Area

Open Banking is a recent development within the fintech sector. The U.K. was an early adopter in 2018, followed by Europe. Currently, there are indications that the U.S. may soon embrace this technology as well.

TrueLayer is widely recognized as a pioneer in this evolving space.

The Potential of a New Financial Infrastructure

While the majority of global transactions still rely on card rails or older banking systems, open banking presents an opportunity to construct a more efficient infrastructure. This new system could potentially reduce or eliminate transaction fees.

The core promise of APIs – enabling functionality with just a few lines of code – is central to this vision.

TrueLayer's Vision and Goals

“Our aim is to dismantle the barriers between intermediaries and unlock the full potential of finance,” stated CEO Francesco Simoneschi, who co-founded the company with Luca Martinetti (now the CTO).

“We envision a financial system that serves everyone, which hasn’t been the reality until now. The emergence of open banking, initially in the U.K. and subsequently elsewhere, provided the opportunity to challenge the powerful hold of card networks and related systems.”

Strong Growth Fuels Investment

The recent funding arrives amidst a period of significant growth for TrueLayer, reflecting increasing industry recognition.

Services and User Base

TrueLayer’s services encompass payments, payouts, user account information, and user verification. Its clientele includes neobanks, cryptocurrency startups, wealth management applications, e-commerce businesses, marketplaces, and gaming platforms.

The company reports that “millions” of consumers are now utilizing open banking transactions facilitated by TrueLayer’s technology. Furthermore, approximately 10,000 developers are actively building services based on open banking standards.

This year alone, TrueLayer has doubled its customer base, adding key clients like Cazoo for open-banking-based car payments. It has also processed “billions” of dollars in payments, experiencing a 400% increase in payment volume and an 800% rise in transaction numbers.

Future Plans and Expansion

The newly acquired funding will be allocated to further develop the business. Specifically, TrueLayer intends to expand its payments network to additional regions and integrate more banks.

The company also aims to attract more customers utilizing open banking services for recurring transactions.

Industry Perspective

“The adoption of alternative payment methods is accelerating alongside the growth of online commerce globally,” commented Alex Cook, partner at Tiger Global. “We believe TrueLayer will be instrumental in making these methods more accessible.

“We are pleased to collaborate with Francesco, Luca, and the TrueLayer team as they empower customers to enhance conversion rates and continue expanding the network.”

Stripe's Role and Potential Integration

Currently, Stripe’s investment in TrueLayer is purely financial, not strategic. The company has not yet integrated open banking into its own payment infrastructure.

However, integrating this technology would align with Stripe’s broader strategy of offering diverse payment options to its customers and potentially developing independent financial rails to compete with existing card networks.

Competition and Collaboration

While other open banking connectivity providers exist, such as Plaid in the U.S., Simoneschi believes TrueLayer and Stripe share a common vision.

“We both strongly believe that progress is driven by the needs of developers, and our focus is on providing them with the necessary tools,” he explained. “We operate in a highly complementary space.”