Open banking fintech Yapily raises $5.4m to help enterprises connect directly to banks

London fintech Yapily has raised $5.4m in seed funding from HV Holtzbrinck Ventures and LocalGlobe to help develop its API platform, which provides a turnkey solution for fintechs and enterprises that want to connect seamlessly to banks.

Yapily was born out of the opportunity created by the Open Banking revolution and is a technology enabler that helps enterprises of all sizes connect with retail banks. Yapily offers service providers an easy way to retrieve financial data and initiate payments by providing one single secure API to connect to all retail banks’ open API. Customers include accountancy firms, companies in the payment space, crypto currency providers, digital wealth applications and e-commerce companies.

Open Banking regulations require all banks to permit their customers to share their own transaction data with third parties if they wish to do so, which is made possible through application programming interfaces or APIs. These APIs allow machines to communicate with each other allowing for real time information sharing and processing. The same APIs could also be used to initiate cheap and fast payments. Using Yapily, a company can access all the banks offering open banking services via a single API rather than having to build and maintain hundreds of APIs of their own.

Yapily founder Stefano Vaccino likens it to the revolution in the telecom industry when companies like Skype allowed Voice over IP to displace telecommunication providers introducing a new way of communicating.

Stefano Vaccino, founder and CEO of Yapily, said: “I was inspired to build Yapily when I realised how revolutionary open banking would be and its social impact. Yapily offers a frictionless journey that lowers the open banking technical barrier without interfering with a company’s relationship with their consumer.”

“I believe that we can democratise finance by making it possible for consumers to share their information in seconds through APIs. This can speed up loan approvals for small businesses, or even reduce the cost of all e-commerce transactions by 1 – 2%, a saving which can be passed on to the consumer. There is also a great opportunity here to help people overcome financial exclusion by giving consumers full visibility of their incomings and outgoings, and even warning them if they are embarking on financially risk behaviour.”

Remus Brett, investor at LocalGlobe and Barbod Namini, HV Holtzbrinck Ventures partner, said: “We are on the brink of open banking and this is creating a huge opportunity to innovate finance, around the world. We are incredibly excited about the scale of what Yapily offers and think that its focus on API technology can deliver a game-changing solution for enterprises and ultimately for the end consumer.”

Carlos Gonzalez-Cadenas, GoCardless’s COO, said: “We’ve worked closely with Yapily and are really impressed by the developer tools that they provide us with. Our goal is to fix a broken payment landscape offering a frictionless service for our end customers and with Yapily we have been able to get closer to that quickly.”

Yapily is currently connected via API to 35 of the biggest banks in Europe, both for data retrieval and payments initiation. This equates to 250m bank accounts. By year end, Yapily expects to have connected to 536 banks. The funds raised in this round will help the company to expand its tech team, build a sales team and respond to the overwhelming demand from potential customers who want to work with Yapily.

The UK’s Financial Conduct Authority has said the use of secure APIs provides significant benefits for consumer protection and market integrity. Using an API also reduces the potential harm from cyber-attacks because there is no need for Third Party Providers to use or retain customers’ credentials.

The UK is ahead of many other European countries on open banking but September will see the deadline for banks across Europe to have an API in place, when the PSD2 (revised payment service directive) becomes available. By mid-september, 5000 banks across Europe will need to have an API in place. Governments in Australia, Japan, Canada, Singapore, South Korea, Mexico and several other countries are also committed to delivering open banking.