Fintech Narmi, which builds digital banking solutions, has closed a $20.4 million Series A funding round led by venture capital firm New Enterprise Associates, with participation from investors including executives from Plaid, Brex and Expanse.
Narmi works with financial institutions and builds enterprise solutions that span consumer digital banking, business banking and digital account opening. Narmi Co-Founder Nikhil Lakhanpal said in an interview with FinLedger that the company plans to use the funds to “take the platform to the next level.”
“A big part of this investment is to double down on this concept of openness,” he said. “How do we allow banks and credit unions to further extend the Narmi platform, so that they can actually achieve their business needs? How do you enable them to do it in a cost effective way, in a scalable way, in a repeatable way?”
Additionally, the company plans to use the funds to double their headcount, although Lakhanpal wouldn’t comment on how many employees Narmi has. According to LinkedIn, the company currently has 22 employees primarily based in the New York City area.
Narmi’s co-founders built the company after they saw that many financial institutions, such as regional/community banks and credit unions, had technology that “for lack of a better word, sucks,” Lakhanpal said.
“It doesn’t move the needle for their customers,” he said. “It’s clunky. It’s antiquated, the user experiences old, it struggles to attract and retain millennials or at least that next generation of banking, it doesn’t generate ROI. Everything that you would want as a bank or credit union, it doesn’t do. I’m definitely being a little hyperbolic, there are definitely some platforms that do this. But, I would say 95% of financial institutions fall into this category.”
The New York-based based company’s open framework allows financial institutions to build their own features onto the base platform. Narmi’s platform provides openness through its Application Framework, and AppXchange.
Since launching more than four years ago, Narmi has experienced over 100% revenue growth every year and launched four enterprise-grade platforms, according to the company. Narmi has also seen a 70% increase in digital activity and transactions across its customer base over the course of the COVID-19 pandemic, Lakhanpal said.
Throughout the pandemic, the company has also more than doubled its team, has seen growth with existing customers and continues to sign on new customers, Lakhanpal said.
NEA Principal Jai Sajnani said Narmi has built a comprehensive product suite that serves a variety of critical functions for financial institutions. Sajnani also serves as a board observer at smart money platform Divvy, banktech Zero and rewards startup Drop. He is also involved in NEA’s investments in Plaid and Robinhood, among others.
“It’s not just account opening, but it’s also digital banking, and they also give you a great admin back end,” he said. “There’s this amazing combination of factors to see this powerful upstart player coming in and serving powerful technology to large scale institutions.”
In an interview with FinLedger in December, Sajnani shared perspectives on the current landscape of enterprise bank tech. “The U.S. has a really interesting landscape where there’s 11,000 or so financial institutions ranging from credit unions and community banks to larger, scaled banks. And these are institutions that have been surviving for many years on the legacy technology built by a trifecta of providers – such as FIS, FISERV, and Jack Henry,” says Sajnani. “With the pandemic, they’re severely hamstrung in their ability to keep growing as this tech was designed for onboarding and servicing customers in-person.”