Synctera raises $15 million to help companies launch embedded banking products in Canada

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Synctera, a banking-as-a-service startup, has raised an additional $15 million as it expands into Canada.

NAventures, the corporate venture arm of National Bank of Canada, led the financing, bringing Synctera’s total raised to $60 million since inception in June 2020. Private equity firm The Banc Funds and sponsor bank partners Veritex Community Bank, Midland States Bank and Emigrant Bank participated also in the round.

In June 2021, Synctera raised 33 million dollars in one Series A funding round led by Fin VC.

As part of the latest funding announcement, Synctera is also announcing that it is partnering with the National Bank of Canada to help companies launch fintech apps and embedded banking products in the country.

In a nutshell, Synctera has built a platform designed to bring together fintech companies and sponsoring banks.

“Our goal is to do it in a way that makes it easy, fast and flexible to scale features and engagement on the fintech side, while being very intentional, automated where it makes sense and most importantly dialed in on compliance and risk on a way that allows banks to feel confident working with us and fintechs of all sizes,” Peter Hazlehurst, Synctera’s co-founder and CEO.

Until now, the company has only operated in the US, but after a number of US and Canadian fintechs got in touch to ask how they could use the service in other markets, Synctera decided to expand its offering.

“Many of our Canadian team members would see the solutions we helped launch in the US and would ask about similar offerings in Canada – which didn’t exist,” said co-founder and CTO Kris Hansen. “A few larger brands also contacted us to inquire about the potential for a solution in Canada, and there are a few customers who see the appeal of one API surface area being able to address two markets – all of these factors helped us in our decision to expand into Canada.”

Executives declined to comment on Synctera’s valuation or provide hard revenue numbers, but Hazelhurst told TechCrunch that the company’s revenue grew 20x year-over-year in the fourth quarter, and that all-in-use and revenue “continue to grow 30% month-over-month in areas that payment volume.”

Synctera is currently working with 14 fintechs right now, including Wayapay and Float. It has another 20+ in implementation planned for launch in March and April, according to Hazelhurst.

Examples of companies that have banking services built into their product are Players Health, TipHaus, and Solvent, a fintech that works to build affordable financial services to empower formerly incarcerated individuals.

Synctera makes money by charging the fintechs it works with setup and access fees, as well as taking a cut of transaction fees, interest earned and interchange with its marketplace of banks.

In 2023, Synctera plans to add support for new credit, lending and other banking use cases – and expand into new geographies and customer segments. Currently, the remote company has 110 employees — with 50 in Canada — and is looking to hire more people to help it grow in Canada, Hansen noted.

“We’re focused on putting that capital to work by setting up operations and working through all the regulatory and compliance frameworks, for example, which is our playbook in the US,” Hazelhurst said.

Joshuah Lebacq, Head of Venture Capital at NAventures, National Bank of Canada, noted that the growing appetite for bank-fintech collaboration has created a strong demand for technology solutions that make it easier for banks and distributors to work together.

“Synctera’s Banking-as-a-Service platform achieves this while allowing each party to focus on what they do best,” he said. “We believe the multi-bank structure will emerge as the category winner in banking-as-a-service, as it solves many existing BaaS pain points and addresses new regulatory concerns.”

The fact that Synctera doesn’t require a core bank integration was also appealing, Lebacq added, along with what he described as “the full transparency the platform provides, enabling near-real-time visibility and monitoring of compliance.”

“Additionally, Synctera’s multi-country expansion is also significant,” he told TechCrunch. “I can envision a future where global brands leverage Synctera’s platform to simultaneously launch banking products across multiple markets with multiple partner banks, all through a single API – such an achievement would completely transform digital financial services.”