Backbase raises its first funding, $128 million at a valuation of $2.6 billion, for tools that help banks engage – Vidak For Congress

Bigger banks and other financial services companies are getting a lot more serious when it comes to competition with new entrants disrupting their business with fresher approaches and newer technologies. Today, one of the companies helping those bigger banks with that task is announcing a major round of funding to double that opportunity.

Backbase — an Amsterdam-based startup that provides a platform that banks and others can use to better structure and leverage the data they have, and then use that to leverage more personalization and other new features in those banks’ customer-facing services. to build — has raised €120 million ($128 million at current rates), money it will use to continue investing in its technology, and to expand its teams into more geographic areas. The money, coming from a single investor, Motive Partners, values ​​Backbase at €2.5 billion ($2.6 billion).

Backbase has been around for a decade. It has amassed 150 major banking clients, has grown from €20 million in revenue to €200 million, and is profitable, all without raising money – in fact, it was only a few days ago that they were the subject of a profile on the virtues of bootstrap…oops.

It chose to stray from that path for the same reason many others have started up: they want to strike while the iron is hot and invest to grow at a time when its services are in high demand.

We want to double our go-to-market strategy and increase our market share,” said Jouk Pleiter, the founder and CEO of Backbase, in an interview. It operates on every continent in the world, but has specific plans to deploy teams in the Middle East and Africa and Latin America to have a “stronger position in local markets. We want to be closer to the larger digital transformation programs of companies.”

The problem Basebase is tackling is an endemic problem for the financial services industry: existing major banks and others have been building digital services for 40 years now. But most are working on a patchwork of databases and in many cases have useful resources but no way to tap into them, let alone orchestrate them with each other. Some will try to rebuild from the ground up, but in many cases, when they have added or taken away services, they build new infrastructure, but in many cases, those individual services are still working, so institutions can’t stand to move away. to throw what is not broken.

Backbase provides a platform that essentially works with that: at its core is middleware designed to pull in data from various sources and then use that information to build out “on-the-glass” services – targeting customer engagement – such as customer onboarding, digital banking and other assistants, and other engagement tools.

It wasn’t an easy tool to build, and there’s one reason it won’t use the funding for acquisitions: integrating is just a lot more painful than building from the ground up in an integrated way (perhaps a lesson its banking customers could have learned forty). year ago).

“We’ve had a crazy time over the past 10 years,” Pleiter said of the process of building the platform. “There are many point solutions. But we built our tool on a bigger vision. At first it felt impossible, but we knew it would be good, one platform for every customer journey, loyalty, onboarding, and so on. We now have 10 years and the critical mass, a single end-to-end customer engagement platform for that entire lifecycle.”

There are a number of other companies that have identified the same issues faced by incumbent financial services operators. They include Mambu, Thought Machine, 10x and Bud Financial, which announced its own funding this week and also partners with very big names in the banking industry.

In addition to being profitable, working with 150 clients, Backbase also stands out for its unique focus on client engagement challenges, as well as for how it works with the banks’ own data, potentially allowing clients to contribute other data as well. want that.

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