Jens Warnez, Head of Product at Januar (L) and Ove Kreison, Co-founder & CTO at Tuum (R).
Bridging the divide between crypto and traditional finance
How Tuum is helping Januar offer crypto companies access vital business payment accounts.
Whether you think crypto is going to transform the world, are a complete sceptic, or just somewhere in between, you can’t argue that it’s not here to stay. In the last decade, crypto has moved from a niche known among a select few to an increasingly widespread digital asset class.
While the new digital economy is already taking shape, traditional banks remain hyper-cautious and to date, have been staying at arm’s length.
As a result, web3 cryptocurrency businesses like exchanges have either had fragile or non-existent relationships with banks. And, without access to one of the most fundamental assets a business operation needs – an account to receive regular money – crypto businesses have been left vulnerable to sudden closures and without the stable foundation a bank account provides to keep innovating and realise their full potential.
Januar was established to help connect the crypto industry with traditional financial services – it establishes a regulatorily protected, safe intermediary for crypto companies to open accounts and allow payments in and out. To create its cutting-edge account and treasury solutions, it needed to have its own core banking and payment system, which is where Tuum was able to help.
Januar and its crypto challenge
Januar provides financial infrastructure for EU crypto businesses to bridge the gap between the traditional centralised financial system and new decentralised financial systems. In short, it offers a compliant gateway for crypto companies and financial institutions to exchange funds and digital assets freely.
It solves this problem by offering local Danish, German and Luxembourg IBAN business accounts with Danish Crowns and Euros as supported currencies and related FX swaps. Founded in January 2021 by ex-Chainanalysis compliance-AML experts, crypto entrepreneurs and fintech veterans, Januar is now ramping up to meet demand across Europe after it secured a 6-million-Euro seed fund in May 2022 – the largest ever seed round in Danish history.
Januar’s product is live in Denmark after being granted a first-of-its-kind Payment Service Provider (PSP) licence from the Danish Financial Supervisory Authority (FSA) for the purpose of serving crypto companies. The company also has a pending application for a Payment Institute licence so it can soon offer a compliant, secure local EU IBAN payment accounts for the continent’s crypto companies.
Januar’s mission was very clear, as was the size of the market opportunity – Europe’s incumbent banks and financial institutions lack the desire, and knowledge to support new digital asset organisations, something especially true in its local market; the Nordics.
“A crypto company calls up a bank asking for an account and the conversation usually goes like this: ‘Hmm, you are a crypto company. Our bank doesn’t know much about this. Sounds risky. Not going to happen. Sorry, bye.’ And that’s that. But the implications of that are huge – for the entrepreneurs at the cutting edge of this space, they’re left totally vulnerable – no account means no payments, no payments means no business. We want to change that.”
Jens Warnez, Head of Product at Januar
When Januar achieved its PSP licence from the Danish FSA, followed by Banking Circle joining as its first supporting bank early in 2021, it finally had all the legal and regulatory requirements in place to make the vision a reality. But when it came to building the product and the channels to manage the customer journey, Januar hit a roadblock.
At the time, Januar was ambitious but still very new in its inception. With just a couple of developers in-house and before its first major funding round, budgets and resources were slim, and while the founding team were rich in crypto experience, the banking and payments world proved to be a very different beast.
To build the foundations it needed, Januar required a core banking platform that could support both its short and long-term goals.
Tuum’s core banking solution
Januar quickly realised it needed to partner with a core banking provider to efficiently process banking transactions and monitor all incoming and outgoing financials. It set about an extensive investigation and RFP process, speaking with providers big and small and defining a criteria list of more than 100 questions that it used to assess bidding vendors.
“I have a rule of thumb that a company should not try and build something in-house from scratch if someone else is already doing it better. It’s vital for companies to understand where they fit into the value chain and thus what type of company they are. Building a core banking platform tech stack from scratch in a handful of months was not our core competency, being the compliant gateway and handling payments is! We knew we needed to join forces with the experts already out there,” commented Jens Warnez.
Tuum fended off its competitors and passed the 100+ question assessment. Its accounts and payment modules served as a powerful platform for Januar to achieve its objectives. Additionally, to support its pan-European ambitions, Januar is leveraging Tuum’s connector with Banking Circle, giving it the ability to make and receive payments in multiple currencies including EUR and DKK today with more to follow in 2024.
“Payment date handling is a perfect example of how head-scratching the payments world can be if you have little traditional fiat payments experience – there are a dozen different dates related to a single payment, how do you decide which is best to show in your frontend? Ask the experts! Tuum was invaluable in building our MVP,” added Jens Warnez.
Tuum stood out from its competitors for three key reasons.
Quality Product, Competitive Pricing
Tuum was able to meet Januar’s complex technical requirements and offer the ‘Goldilocks’ solution. Its platform offered both better quality and functionality than the smaller providers, while being considerably more cost effective than the bigger players in the market. It also stood out for its existing platform integrations and partnerships with Banking Circle, for payments, and HAWK:AI, for AML Transaction Monitoring. This meant Januar was able to quickly ‘switch on’ these connections.
Agility and speed
Tuum is the embodiment of a startup when it comes to agility, and was highly flexible to meet changing needs, timelines, and requests from Januar. This extended from the start of enquiries, through to product testing and post-launch bug fixes. In just five months, a working product was live that could receive and send money – for a comparable solution built in-house or with one of the larger providers, implementations would take at least a year, if not longer!
While Tuum’s technology speaks for itself, it was also their speedy, professional, and clear communication that Januar felt really set it apart from other providers in the market. During the RFP process, Tuum far outpaced competitors in the lengthy evaluation process in responding to follow up questions and tasks. During solution development, Tuum was also responding to requests in minutes and hours, not days, with clear and expert answers. All communication was as seamless as possible, even integrating into Januar’s Slack so Tuum could be more interactive and responsive, creating a partnership that felt like a ‘one team’ collaboration, rather than a vendor to customer relationship lost on endless formal email chains.
Together, Januar and Tuum have achieved:
A truly innovative payment solution
First-mover advantage – giving Januar the edge in the fast-paced crypto world
Optimal conditions for scaling, both geographically and in product functionality
Januar and Tuum continue to collaborate and following the success of the product launch in Denmark, the company now has its eyes on further European expansion.
“To have our product live and working within less than half a year is phenomenal. Without Tuum, we simply wouldn’t have a working product today,” Jens adds.
For more insights into the benefits of modern core banking technology, and how to get the procurement process right, download Tuum’s latest whitepaper.