Democratizing Banking, One API at a Time

Arjan Schutte
Sep 5, 2018 · 4 min read

Why Core Invested In SynapseFI

By Arjan Schütte & Colleen Poynton

‘Financial infrastructure’ is not what gets most people out of bed in the morning. Thankfully, there are some wonderful misfits who get out of bed every day to reimagine the arcana of banking. These ‘enablers’ are unlocking incredible creativity and innovation in Fintech. Plaid, Stripe, and Ripple are just a few examples, each integrating with existing financial systems including banks, processors, card networks, and exchanges, making it easy for modern software companies to efficiently interact with legacy infrastructure. They offer well-documented (and well-RESTed) APIs that enable companies to consume financial account data (e.g. Plaid, Quovo), to accept payments (e.g. Stripe, Braintree), and to move money (e.g. Ripple, Dwolla).

Suppose you want to build a shiny new fintech innovation on top of basic financial functionality such as opening depository accounts for your customers. Chances are you’d spend six months or more banging your head against the wall in due diligence and contract negotiations with one (or several) banking partners, before even having started the painful and thankless process of integration. For new companies seeking to incorporate these financial capabilities, a huge amount of time and resources are required just to get to the point of testing an MVP. And, once live, your ability to iterate and innovate at the product level is highly constrained, given your partners’ legacy systems. Can you even remember the world before AWS?

Well, this is exactly why Core backed SynapseFI. Their visionary team of misfits offer smart financial plumbing to over 100 companies trying to democratize financial services.

Banking as a Service

SynapseFI is unbundling wholesale banking services, replacing lengthy negotiations and onboarding with simple API calls. Their expanding APIs allow companies to custody funds, move money, open and fund FDIC depository accounts (or subaccounts), issue checks, authenticate accounts, verify identity, run KYC checks, and aggregate transactional data. Soon, the company will add card issuance, lending as a service, and some exciting behavioral products to the mix, all at an extremely low cost. In the background, the company has invested in redundant banking partnerships and a robust compliance program.

SynapseFI acts as responsive, agile middleware between software companies and its partner banks’ core infrastructure. By abstracting away the complexity of legacy systems, SynapseFI makes rolling out a new financial product or feature simple. The company even offers out-of-thebox interface (UIaaS) to accelerate time go-live (and make sure clients are compliant in the process).

Why Core Cares

It benefits everyday people. Core is obsessed with helping all Americans move up. We believe SynapseFI enables innovation, creativity and deflationary pricing in financial services, and will save Americans billions of dollars in the years to come. Bank of America recently announced it will charge checking account customers $12 per month unless their minimum daily balance stays above $1,500. Low income consumers have the option of choosing an even more basic account (no checks, no overdraft protection), for a mere $4.95 per month. Via SynapseFI, Fintech companies can enable their users to open and fund FDIC insured accounts digitally, issue checks, and make payments, among other features. For an average size SynapseFI client, the marginal cost of providing these services on a per user, per month basis is just pennies.

Enabling a SaaS-ified world. And “Fintech” is just the tip of the iceberg. Software as a Service is now nearly ubiquitous, with penetration growing as companies transition evermore business processes to the cloud. SynapseFI, and its peers, enable diverse software providers to embed financial products into their customers’ workflow. So, just as easily as any company, small or large, can integrate Salesforce’s CRM, now it can also integrate basic financial functions — without the manual labor of yesterday. We believe this will power a renaissance of financial innovation well beyond the confines of ‘Fintech’ as we know it today. A Starbucks bank account, anyone?

Core is reimagining how to create economic upward mobility. Our friends at SynapseFI are reimagining the most basic puzzle pieces of banking (which turns out to be a $580 billion industry). Let’s all internalize this for a second: Wholesale banking is a $580B industry that sits at the core of our economy. Driving modernization here will make financial services more efficient, unlock innovation, reduce compliance and transaction costs, and boost customer satisfaction. We believe SynapseFI is leading this charge, and we’re excited to be along for the journey.

A special shoutout to Colleen Poynton for seeing this opportunity and supporting us on this investment.

Core Innovation Capital is a fintech venture capital firm investing in companies committed to empowering small businesses and everyday Americans. Our portfolio companies deliver more efficient, well-designed solutions that save people time and money, create upward mobility, and scale broadly — driving both profit margins and consumer value.

Working Your Core

Core Innovation Capital is a fintech venture capital firm investing in companies committed to empowering small businesses and everyday Americans. Learn more about us at corevc.com.

Arjan Schutte

Written by

I'm founding partner at Core Innovation Capital. We're early stage investors in financial empowerment for everyday Americans. My personal opinions.

Working Your Core

Core Innovation Capital is a fintech venture capital firm investing in companies committed to empowering small businesses and everyday Americans. Learn more about us at corevc.com.

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