Synctera, which aims to serve as a matchmaker for community banks and fintechs, came out of stealth Tuesday morning with $12.4 million in seed funding.
The San Francisco-based startup has developed a platform designed to help facilitate partnership banking. It was founded on the premise that some community banks and credit unions are actually turning down deals with young fintechs because the relationships can be too complicated or time-consuming to manage. Synctera’s goal is to connect community banks and fintechs to streamline the process.
This deal caught our eye for a number of reasons. For one, $12.4 million is a large seed round– a sum more typical of a Series A financing. Also, the investor base is an impressive one. Lightspeed led the round and other backers include a high-profile bunch including Plaid CEO Zach Perret; Max Levchin, PayPal co-founder, Affirm CEO and investor at SciFi VC; Carta CEO Henry Ward; Aaron Schildkrout, former head of growth at Uber; Alexa Von Tobel, founder of LearnVest; and others.
Last but not least, Synctera’s co-founder and CEO, Peter Hazlehurst, has a solid fintech background having most recently served as former head of Uber Money. He previously also led development of Google Wallet and products related to its payments system. Prior to Google, Hazlehurst served as chief product officer of Yodlee (now Envestnet|Yodlee), a provider of online banking tools.
“There’s an imbalance in the market – with way too many fintechs and not enough banks. Banks have historically created delays for fintechs to go to market,” Hazlehurst told FinLedger. “Our goal is to help banks already in the fintech game to be more effective and efficient so they can onboard fintechs more efficiently and bring more community banks into the landscape to create more of a balance.”
What it does
Put simply, Synctera wants to make it easier for community banks and fintechs to partner with each other. It examines banks’ needs and then sets them up with a fintech that is best suited to meet those needs. It claims to “do the work for both parties,” managing the partnership from its back-end platform, while dealing with issues like regulatory compliance, which can be a deterrent for some companies. The process of managing, reconciling and billing banks can result in “a lot of operational overhead and complexity,” Synctera said.
The company says it’s built a “diverse” marketplace of banks and fintech companies so that it can apply a “personalized touch to each match” and make sure that the parties “align on geography, brand ethos, and desired business goals.”
By using Synctera’s platform, the startup claims, banks can more freely allow their fintech counterparts to offer FDIC-insured mobile checking, debit cards, savings accounts or innovations in payments to their prospective customers, the company claims. They can also make more money doing so, Hazlehurst said, by bringing in more revenue beyond interchange fees.
“Like most small businesses, community banks have been hit hard by COVID-19,” he added. “We hope to further diversify community banks’ revenue streams, enabling them to do what they do best — support their local towns and cities, while allowing them to grow at scale.”
They can also more easily manage multiple relationships with various fintechs as the companies agree to adopt Synctera’s tech stack.
“We build a single dashboard for a bank, so there’s a consolidated position across all fintechs,” Hazlehurst told FinLedger. “It’s all about visibility for the bank.”
So far, Synctera has already paired Coastal Community Bank – a local bank serving the greater Puget Sound community – with One, a new digital banking platform.
“When we originally started working with fintechs, we were not set up to handle the amount of backend work needed to manage our relationships,” said Eric Sprink, president and CEO of Coastal Community Bank, in a written statement. “Synctera has allowed us to focus our energy on serving our core market by helping us with partner management. By launching with Synctera, we’re expecting to be able to double the number of fintech companies we take on. ”
Ansaf Kareem, lead investor at Lightspeed and Synctera board member, believes Synctera’s offering comes at a crucial time.
He said Synctera can solve the problem of an increasing number of regional and community banks wanting to go more digital but lacking the software and tools to easily build and scale with emerging startups.
“Peter’s unrivaled and deep experience at Yodlee, Google Wallet, and Uber Money gives him the unique advantage of knowing what is needed, how to build it, and where existing solutions fall short,” he said. “We are at a critical crossroads in the ecosystem where banks and fintechs are eager to partner with each other, and Synctera is providing that bridge.”