Atomic FI, a Salt Lake City-based fintech startup that specializes in payroll APIs, is deriving atomic-level energy from a new $22 million round of funding.
Core Innovation Capital led the Series A funding round, with participation from existing investors Portag3 Ventures and Greylock Capital Management. Since its founding in 2019, Atomic has raised more than $38.6 million.
A recent report from CB Insights puts the spotlight on how API-fueled transmission of consumer data is reinventing the financial services sector.
“What began as a niche movement has grown into a global phenomenon, with APIs being leveraged to build products and services that give users greater control over their financial lives,” CB Insights says. “Open banking tech has especially gained momentum in the wake of the global COVID-19 pandemic, which drove up demand for digital financial services.”
Atomic’s payroll APIs cover 65% to 75% of the U.S. workforce with a combined reach of 100 million workers. Atomic aims to extend that reach to more than 120 million by the end of this year.
The startup’s APIs benefit underserved consumers in particular.
“Today’s broken financial services infrastructure hurts everyday Americans, especially those living paycheck to paycheck. Atomic is at the forefront of creating a faster, safer and more inclusive financial infrastructure and shares Core’s mission of financial empowerment,” Arjan Schütte, founder and managing partner of fintech-focused VC firm Core Innovation Capital, said in an Oct. 5 news release.
Atomic’s payroll APIs enable consumers to:
- Connect their payroll accounts to an app in order to set up or switch direct deposit payments.
- Share financial data for income and employment verification.
- Transfers a credit card or loan account balance to a new account.
More than 40 financial institutions use Atomic’s APIs, including 11 consumer finance apps. Clients include Bond, Klover, Propel and Unfimoney.
In an interview with FinLedger, Lindsay Davis, head of markets at Atomic and former senior fintech intelligence analyst at CB Insights, said her company envisions being “the infrastructure provider to enable the next generation of fintech apps.” Atomic makes money through a subscription model for APIs and a fixed-fee model for direct deposits.
To capture the broad capabilities of APIs, Davis prefers to refer to payroll API as “payroll connectivity.”
“APIs are just a means to an end. What we’re ultimately trying to unlock is the ability for consumers to harness the power of their paycheck,” she says.
Atomic is the latest in a string of API-oriented fintechs to receive funding or be acquired. They include:
- In June, Visa agreed to buy Swedish API banking platform Tink for $2.2 billion.
- Plaid, whose API platform allows consumers to connect their financial data to apps and services, raised $425 million in a Series D round in April.
- TrueLayer, whose API platform lets developers connect to bank data, received a $70 million Series D round in April.
A July executive order from President Biden could give a big boost to the concept of payroll connectivity. Among other things, the order urges the Consumer Financial Protection Bureau (CFPB) to adopt rules that would, with their permission, make consumers’ financial data more accessible. This move could pave the way for open banking regulations similar to those in the European Union.
Davis says Atomic submitted a letter to the CFPB in support of a shift toward open banking in the U.S. In October 2020, the bureau began a process that eventually could lead to creation of open banking regulations. To promote open banking in the U.S., “financial data” must be clearly defined and consumers must be educated about how sharing their financial data can empower them, Davis says.
In striving to carve out its place in API-based connectivity, by the end of this year, Atomic plans to bring aboard about 20 new employees to supplement its current team of about 50 people, Davis says. The entire team will continue working with existing clients as well as with two scaled neobanks whose addition to the Atomic customer base will be announced soon, according to Davis.
“Reducing the friction to get our technology in the hands of the people that need it most is really what we’re focused on,” she says.