German challenger bank Penta has closed a €2.2m Seed financing round, just a month after it launched in Germany.
The funding round was led by UK-based VC firm Inception Capital and comes hot on the heels of the implementation of PSD2. Penta, which is a challenger bank for startups and businesses, has also ended its waitlist, which means companies can now open a business bank account instantly.
With the newly implemented Payment Services Directive 2 regulation, banks and FinTechs have been developing and implementing solutions to ensure compliance with new rules. Penta believes that these changes will play a big part in the future of banking and the formation of many more partnerships between banks and FinTechs.
Ivicevic said “We’re convinced that third party approach of partnering with FinTechs is the only way to go about providing financial services in this next century.”
With the changing of regulation it can cause a lot of issues, to ensure an institution remains fully compliant, but Penta sees PSD2 ‘as much of as a philosophy and mission statement as it is a directive.’ One side of the regulation leads some to open their APIs to boost competition and innovation, while for others it inspires them to innovate by their own.
He said, “Banks like SolarisBank and FinTechs like RailsBank are the latter as they are inspired by the philosophy and mission of PSD2 because they know that’s the future. They know that banking is broken, and they want to be the enablers of a whole new generation of businesses that’ll fix it and ultimately help millions of people.”
Berlin-based Penta claims to help make banking easier, by offering businesses a free account and a platform to handle admin tasks such as accounting or expense management. The bank doesn’t charge monthly fees and provides the company with a MasterCard. Each month the company also receives 10 free transactions, and after that, they each cost €0.10.
Penta co-founder Luka Ivicevic said: “The biggest challenges that challenger banks in Germany are facing is to help people understand that “banking doesn’t have to suck” and that they don’t have to use legacy banks. Instead, there’s a new wave of banks coming that make their lives easier, and that help them save money.”
The fresh round of capital will be used to hire more talent to help support the rising customer base, and furthering the development of its product. Funds will also be used for integrating FinTech products like low-cost FX, automated accounting and offering multiple MasterCards with limits and permissions to businesses, he said.
Ivicevic said, “Finding the right FinTech partners to partner with is always a problem. So we’re more than happy to chat with any FinTechs who have great technology and solutions for SMEs.”
Penta CEO and co-founder Lav Odorovic added, “Startup founders and business owners waste so much time and money dealing with annoying admin tasks. That’s why we’re offering the tools that can help you get business banking done in a fraction of the time.”
There have been a number of banks and FinTechs launching new solutions in order to combat the PSD2 changes. Last month Bank of America Merrill Lynch launched an API gateway, to facilitate connectivity into existing treasury management, enterprise resource planning (ERP) and other third-party services for its corporate clients.
Last month also saw Kobil Systems, a Germany-headquartered IT security company, unveil a new security solution that complies with the new PSD2 changes to security requirements.
“With or without PSD2, FinTechs like us will be there and open their APIs (or help others open their APIs) so that they can help proliferate this inevitable innovation. In short, we see no dispute. PSD2 clearly works in the favour of FinTechs and a few modern Banks. Everyone else will just passively see their market shares eroding.
“The philosophy of PSD2 will happen under the PSD2 name or in the notion of the movement. It’s up to the legacy banks to realize that this is the future and not just a directive,” Ivicevic added.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
