Synctera gets $15 million to help companies in Canada launch banking products with embedded chips

A banking-as-a-service startup called Synctera has raised an extra $15 million to help it grow into Canada.

The corporate venture arm of National Bank of Canada, NAventures, led the financing. This brings the total amount of money Synctera has raised to $60 million since it started in June 2020. The Banc Funds, a private equity firm, and sponsor banks Veritex Community Bank, Midland States Bank, and Emigrant Bank were also part of the round.

In June 2021, Fin VC led a Series A round of funding for Synctera that brought in $33 million.

As part of its latest funding announcement, Synctera also said it will work with the National Bank of Canada to help companies in Canada launch fintech apps and banking products with embedded technology.

In short, Synctera has made a platform that fintech companies and sponsor banks can use to work together.

Peter Hazlehurst, co-founder and CEO of Synctera, said, “Our goal is to do it in a way that makes it easy, fast, and flexible to scale features and engagement on the fintech side, while also being very intentional, automated where it makes sense, and most importantly, dialed in on compliance and risk in a way that makes banks feel comfortable working with us and fintechs of all sizes.”

The company has only been in business in the U.S. But after “a number” of U.S. and Canadian fintech companies asked how they could use Synctera’s service in other markets, the company decided to offer more.

“Many of our Canadian team members would see the solutions we helped launch in the US and ask if there were similar options in Canada,” said co-founder and CTO Kris Hansen. But there weren’t any. “A few larger brands also asked us about the possibility of a solution in Canada, and a few customers like the idea that one API surface area can serve two markets. All of these things helped us decide to expand into Canada.”

The executives wouldn’t say how much they thought Synctera was worth or give hard revenue numbers, but Hazlehurst told TechCrunch that the company’s fourth-quarter revenue was 20 times higher than the same time last year and that all of its usage metrics and revenue “continue to grow 30% month on month in areas like payment volume.”

Right now, Synctera is working with 14 fintechs, such as Wayapay and Float. Hazlehurst says that it has another 20 or more projects in the works that will be launched in March and April.

Players Health, TipHaus, and Solvent, a fintech that is building affordable financial services to help people who have been in prison get back on their feet, are all examples of companies that have built banking into their products.

Synctera makes money by charging setup and access fees to the fintechs it works with and taking a cut of transaction fees, interest earned, and exchanges with the banks in its marketplace.

Synctera plans to add support for new credit, lending, and other banking use cases in 2023. They also want to grow into new locations and client groups. Hansen said that the remote-first company has 110 employees, 50 of whom are in Canada, and is looking to hire more Canadians to help it grow.

“We’re focused on putting this money to work,” Hazlehurst said. “For example, our playbook in the U.S. is to set up operations and work through all of the regulatory and compliance frameworks.”

Joshuah Lebacq, the principal of venture capital at National Bank of Canada’s NAventures, said that the growing interest in collaboration between banks and fintech companies has led to a strong demand for technology solutions that make it easier for banks and distributors to work together.

He said, “Synctera’s Banking-as-a-Service platform does this while letting each party focus on what they do best.” “We think the multi-bank structure will be the winner in banking-as-a-service because it solves many of the problems that already exist with BaaS and takes care of new regulatory concerns.”

Lebacq said that another thing that made Synctera appealing was that it didn’t need a core banking integration. He also said that “the full transparency its platform provides enables near real-time audibility and compliance monitoring.”

“Synctera’s expansion into multiple countries is also important,” he told TechCrunch. “I can imagine a future in which global brands use Synctera’s platform to launch banking products in multiple markets at the same time with multiple partner banks, all through a single API. This would completely change the way digital financial services are provided.”