As some of you know, we raised our Series A end of last year. We never really got around to announcing it, so I am doing it now.
Before I say anything else, I would like to thank our customers. You build awesome products on top of us and pay our bills. We would not be here without you, so thank you.
For those who do not know what we do:
We provide payment, deposit, lending and investment products as APIs to FinTech companies. We have processed over $10B+ in transactions and bank over 1.5M end users through the over 100 FinTech companies that have built and launched their financial innovations on top of our banking infrastructure.
We want to ensure that everyone around the world has access to best-in-class financial products. Regardless of their net worth.
Why This Problem
Rich or poor, banking and finance is not working for people. Unlike phones, internet, and cars; even for high net worth individuals banking still requires effort to operate. For lower SES individuals, even access to banking is questionable.
We strongly believe that just like how Google gives everyone access to information, rich or poor. Banking needs to be democratized the same way.
For this to become a reality two things need to change:
- Business model: Currently all revenue is either generated by lending, payments or charging people fees for “bad” behavior. Business models need to evolve so that it’s sustainable to bank everyone regardless of how much money they have in their bank account.
- Infrastructure upgrade: Banking is not intelligent. All banking systems are built on top of decades old technology. That makes banking expensive to maintain and hard to innovate on top of.
Our Super Secret Plan
Our super secret plan is to build a better operating system for banking that is less expensive to maintain and easy to innovate on top of. Then to change banking from a lending or transactions business to a SaaS business.
At a high level, we are doing these three things to make this happen:
1. Back office automation
Financial products are expensive ($30–$150 per customer, per month) because it requires a lot of people to operate them. With our automated back office, machines do the jobs that traditionally humans have done (verifying documents, filling forms, etc.). This has brought our incremental cost of operating financial products down to zero. This is big for our customers and us since we no longer have the same costs associated with operating financial products as banks do.
Following blog post provides a good example of what we can accomplish with back office automation:
Improving Financial Access with AI
Automating the back office of banks is essential to improving financial access. However, just automating what humans do…
2. Vertical Integration of all financial products
With an automated back office, our next goal is vertical integration. This is enabling companies building on top of Synapse to be able to offer all the products and services that large banks provide.
On top of that, vertical integration is enabling us to iterate through the full financial stack at a much higher speed since we are not bottlenecked by suppliers and vendors for various functionalities.
The following post provides a good overview regarding how aggressively we are pursuing vertical integration:
Product Roadmap for 2018
Last year was really productive for us, and we plan to continue our product expansion this year. Here’s what we plan to…
3. Behavioral Economic Research
Existing financial products are hard to understand, not easy to use, can be intimidating and usually do not incent the right behavior¹. We need to change this and make them fun, intuitive, and transparent². Vertical integration will ensure faster implementation of insights that we gain from our research in this area.
To accomplish this, we have put together a team of Behavioral Scientists, UX Designers, and UI Engineers. You can read more about that in our following blog post:
None of this is easy. I am really grateful to our partners and customers for their continued support. We put our 100% into this every day and your support motivates us to keep pushing the limits of what is possible in financial services.
I am beyond excited for what lies ahead. The capital infusion is not just a testament to the team executing well; it is also a testament to the need for democratized financial access for all people — regardless if they hold ten dollars in their bank account, or ten million.
 For example, overdraft fees do not reduce the likelihood of the next overdraft and late fees on loans do not act as a deterrent to loan defaults.
 We also need to change some incentive structures, I talk a little about this with David from Propel Ventures here.