Productfy raises $16M to build the ‘Shopify of embedded finance’

Productfy raises $16M to build the ‘Shopify of embedded finance

Productfy Inc., a banking-as-a-service (BaaS) platform that hopes to create “DeFi for traditional finance,” has received $16 million from an A round of financing that was led by CM Ventures.

Existing investors Point72 Ventures, 500 Startups and Envestnet | Yodlee took part in the funding that brings the total of funds raised since its beginning to more than $19 million.

There is a rising number of BaaS businesses, all of which have the same objective: to make it quicker and more simple for fintechs and other businesses to introduce products and services in the field of finance.

Productfy is determined to make a mark with its efforts to develop DeFi for traditional financial services according to its the founder as well as CEO Duy Vo. From a design perspective, Productfy has been built “from the ground up,” Duy Vo said, and will work with multiple banks.

“This is not something our competitors are built for,” Vo stated. “Traditional banks won’t survive if they don’t decentralize

Simply put, Productfy wants to be the “Shopify of embedded finance.” Productfy states that, with the platform it offers, users are able to “configure in hours, integrate in days, and go from idea to full stack deployment in as little as three weeks.”

However, Productfy unlike other BaaS firms, isn’t solely dedicated to developers. Its team is developing over the API layer to create more white-label user interfaces. The company naturally, wants to provide developers with a robust interface, Vo says it is especially focused on brands with no technological resources or expertise in their field. In the month of July, this company has experienced 119% month-to-month revenue growth. The company currently has eight customers which include HatchCard.

CM Ventures evaluated a number of embedded and BaaS firms and had conversations with about “30 different players” before making the decision to put its money on Productfy as per Vagan Khranyan the managing partner of the lead Investor CM Ventures.

“We concluded that Productfy has the only market-ready solution to be sold to customers,” Khranyan said to TechCrunch. “We see massive parallels in what Productfy is building and larger movements in distributed and decentralized finance across the industry.”

The company, according to him is working to streamline an otherwise complicated process that involves numerous bank partners, data providers and card companies.

The partners of Productify include Equifax as well as the platform for card issuing Marqeta as well as card fulfillment partners Arroweye as well as financial information company Envestnet | Yodlee. The company has also teamed together with Stearns Bank National Association as it develops “expanded access” to money movement as well as digital banking and cards issuance services “via easily embeddable APIs, widgets and pre-approved customer interfaces.”

“The Productfy platform is unlike any we’ve seen in the market,” said Josh Hofer, chief risk and information security officer at Stearns Bank. “Aligning our technology roadmap with the Productfy platform enables both companies to succeed by making banking products more accessible and scalable for the entire ecosystem.”

In particular, the company claims it’s partnership in partnership with Stearns Bank gives fintech entrepreneurs as well as non-fintech companies a chance to start credit and debit card programs that have stacked workflows and unifying due diligence “eliminating months of development, compliance hurdles, and third-party integrations.”

“We’ve been building our basic infrastructure and compliance and technology,” Vo said to TechCrunch. “When we first launched these programs, we’ve learnt many things. We’re now using these lessons to create the next version of our solution that will be an white-label ‘fintech in box’ solution which allows any company to launch a financial service as well as a retail bank experience in a matter of days.”

Vo claims he was driven to launch Productfy because he believed finance “largely failed the most vulnerable people in our society.”

“We’re always asking ourselves how can we create a financial ecosystem that is kinder, more compassionate and more socially just,” Vo stated. “The way that we believe that we can solve this problem is to create a decentralized financial infrastructure.”

He stresses that although DeFi is traditionally connected to crypto, his company is “nothing to do with cryptocurrency.”

“What we’re doing is we’re creating a DeFi for traditional banking,” Vo said to TechCrunch.” Because banks are the origin servers, and if AWS can dynamically route traffic based on usage, that takes power away from users and spreads it around to small banks and the organizations that work with end users.”

Vo’s aim is that, if this could be achieved to the U.S., Productfy could include a node in countries like Uganda or Libya and build an “first true distributed financial infrastructure” which would permit instant transfer of funds, for instance, “easily, securely and at less than a penny globally.”

Looking ahead, the startup will use its new influx of capital to further scale its offerings and compliance-as-a-service capabilities and continue improving its core data and card issuance offering, with a focus on building new integrations and partnerships and launching its first cohort of customers.

In the fourth quarter, Productfy plans to launch a new Card-Issuance-as-a-Service solution, dubbed “Latinum,” aimed at helping brands improve their customer experience and build greater loyalty. The idea behind the debit card with a branded logo is to provide, for instance members of the church the opportunity to use the card, which will allow the interchange fee to be used to loan money to members of the congregation.

At present, the goal of Productfy is to let brands launch within three weeks. Today, they need an engineering team in order to accomplish this. However, by in the 4th quarter of this year, Vo states that they will no longer require compliance or engineering teams as its white-label product will be in place. The process is expected to take a few days according to the company’s says.

“We’re moving the ability to offer retail banking services to the edge,” Vo added. In order to allow religious organizations as well as schools, gaming firms and e-commerce companies or any other entity with “a strong following” can create a debit card programme with money movement, deposits, KYC (Know Your Customer) as well as compliance and service included.

Other BaaS companies which have raised capital in the past period include Unit, that in June raised $51 million from an investment round in Series B to help further its mission of making it feasible for firms and fintechs alike to create banking-related services “in minutes.” In July, Solarisbank, a Berlin startup that offers a variety of financial services through the use of a variety of APIs that other companies use to create end-user-facing products and services, raised $224 million for the $1.65 billion value.

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