FinTech Swan Raises $39 Million to Expand Embedded Banking in Europe

Embedded banking platform Swan has raised $39 million in a Series B funding round.

“I’m not obsessed with fundraising, but this news is big,” Nicolas Benady, the French company’s founder and CEO, wrote on the Swan blog Wednesday (Sept. 13).

“It’s big for reinforcing the quality and scale of our product, and it’s also big for our customers. With Swan, it’s truly easy for European companies to embed banking into their own product and reap the benefits,” Benady said. 

A report by CNBC notes the round was led by European venture capital firm Lakestar, an early supporter of Revolut.

According to the company blog, Swan registered in 2019 and spent a year in stealth, “laser-focused on technical development and getting a solid regulatory framework in place.” 

From there, Swan began talking to companies that wanted to debut banking products but didn’t want to have to create banking operation and compliance departments. 

“Fast forward three more years, and our original vision of a truly easy Banking-as-a-Service platform has become a reality,” Benady wrote, adding that Swan provides services to 100 companies in Europe.

PYMNTS wrote in March that traditional financial institutions (FIs) have an opportunity to improve customer retention by turning to embedded banking.

“Consumers worldwide quickly embraced the industry’s seismic shift toward digitization, which was hastened by the pandemic,” that report said. “Many FIs that had hesitated to invest in their digital offerings found themselves left behind as their customers sought banking capabilities that had evolved to now fit with their increasingly connected habits.”

Online banking has now become the norm, with consumers saying they are increasingly willing to try new things when banking. PYMNTS’ data from early 2022 found that 76% of consumers had opened new accounts in the 12 months before being surveyed.

Swan’s Series B follows reports from earlier this summer that some European startups were rethinking their roadmaps due to a dearth of venture capital (VC) funding.

The amount of VC funds invested in Europe fell by 61% in the first half of 2023, a bigger drop than what American startups have dealt with. 

The situation has left the European Union’s development bank and five EU countries coming up with a plan to close the funding deficit, promising 3.75 billion euros (about $4.1 billion) to help support Europe’s tech sector.