Weavr CEO: Banking as a Service Solutions Create Complexity, Cost for Online Businesses

Banking application programming interfaces (APIs) are becoming more and more common on the market as more and more banks look to APIs to help digitize their services and collaborate with FinTech firms.

But according to Alex Mifsud, co-founder and CEO of London-based embedded finance startup Weavr, between those APIs and the elements end customers would like to see, a lot has to happen to create the right user experience, taking into account Know-Your-Customer (KYC) checks and compliance as well as risk management and understanding the activity that’s running over those APIs.

Embedded finance, he said, can enable businesses to integrate these financial services into third-party applications seamlessly and efficiently, bypassing the complex back-end technology used by most banking-as-a-service (BaaS) offerings.

“That gap between the banking APIs and what those companies need to do to be able to create this completely integrated experience and to do it in a way that is legitimate, [is] the problem that Weavr is solving. That’s where we sit in the tech stack,” Mifsud told PYMNTS in an interview.

Since launching in 2020, the London-headquartered FinTech provider has experienced rapid adoption of its payment and banking solutions across a range of businesses and industries, including health, education, logistics, real estate and human resource management.

Related news: London FinTech Startup Weavr Nets $40M Funding Round

And in the last 18 months, the business-to-business (B2B) firm has raised over $55 million, including a $40 million in a Series A round announced last month, to pursue its goal of disrupting the current BaaS model.

According to Mifsud, their primary customers — referred to as “digital innovators” — are online businesses that are integrating financial services into all kinds of digital applications and are overwhelmed with the responsibility of handling data security, getting customers signed up and delivering services in a secure way.

Weavr solves those problems, which are “typically complex to build and expensive to run,” Mifsud said, allowing businesses to go to market much faster, get started with much less capital, and ultimately run these services within their applications in a way that doesn’t involve a lot of expertise and financial services.

Plug-and-Play Finance

When integrating applications, a digital innovator’s job is not only to find banks and financial institutions that are willing to provide the services. There is an additional workload of contracting multiple technology vendors to take care of different elements of the process, which can come with a high price tag.

“If you just take one thing, like the verification of identities, to be able to take on a customer, you will need to find vendors that allow you to capture data like passport details and proof of address, and then integrate that with your user experience,” Mifsud explained.

And once a business has contracted with all the different companies and vendors to process transactions and manage fraud and risk monitoring, they then have to integrate it all, which is a huge, time-consuming task, he added.

It’s the reason why Weavr’s Plug-and-Play Finance solutions are helping to eliminate the cost and burden of these multiple vendor relationships by preconfiguring APIs into embedded finance solutions, so that with a single contract and solution, businesses can easily specify what needs to be done and accomplish tasks at a much faster rate.

“Basically, you’ve saved hundreds of thousands of dollars of capital before you get to your first transaction, and you’ve also saved months of development time and engineering resources and ultimately time to market,” he noted.

U.K.’s Superior Regulatory Prowess

Following Weavr’s rapid expansion across European markets, including the U.K., Germany, Spain and Portugal, Mifsud said they are now looking to expand their business internationally, starting in the United States.

Another goal is to collaborate with developers, customers and innovators to refine the concept of Plug-and-Play Finance. Mifsud wants to make it the best experience for their online business clients in terms of how quickly they can integrate them, and make them safer and more responsive.

Overall, he said they’re “lucky” to have launched operations in the U.K., which has “one of the most sophisticated and advanced regimes” both in Europe and worldwide, that provides a clear rulebook on how to be compliant and how financial services can be done electronically.

That clarity when it comes to the regulatory framework, Mifsud said, means that there is a wealth of tools and expertise in the U.K. market that make their job easier. “And that’s an amazing springboard for a business like ours to be able to build on top of and ultimately [help create] platforms that work [well].”