Challenger consultancy enters banking-as-a-service market

By Ryan Weeks on 15th October 2018

Challenger Banks

11:FS has launched a new solution for banks seeking to digitise.

Challenger consultancy enters banking-as-a-service market
Image source: https://goo.gl/MQTJvs

11:FS does a bit of everything.

Describing itself as a ‘challenger consultancy’ – one specifically targeting banks looking to modernise – the firm also has a venture arm, runs a suite of popular fintech podcasts, hosts events and operates well-followed forums.

Now the company is moving into the red-hot banking-as-a-service market. This morning, it launches 11:FS Foundry, a flexible core banking architecture aimed at financial services firms with legacy tech troubles.

As part of the launch, DNB, Norway’s largest financial services firm, has become customer number one in tandem to investing £3m in the project. The investment gives DNB a 5 per cent stake in 11:FS Foundry. The Norwegian bank intends to use the new product to optimise its unsecured credit offering.

Rasmus Figenschou, group executive vice president for new business at DNB, said in a statement: “We enter into a partnership with 11:FS, one of the leading companies on financial technology in the world, to explore the possibilities of developing the value chains of today’s banking one step further. The first task for this partnership will be to see if we can optimize the value chain for unsecured credit at DNB.”

Banking-as-a-service is something of a hotspot at present, as the venture money shows. Challenger bank OakNorth vaulted to a valuation of over $2bn in September, buoyed by its ACORN machine, an underwriting system it sells to banks in other markets. The bank topped the $2bn mark after raising another $100m from EBDI Singapore, NIBC Bank and existing investors. NIBC Bank promptly became ACORN’s first client in the Netherlands.

In August, digital challenger Starling Bank struck its first banking-as-a-service partnership with deposit marketplace Raisin UK. Raisin now uses the app-bank’s API to open Starling accounts for its customers, collecting deposits and distributing them via its many savings product partners.

11:FS’ new solution is what it calls ‘modular’, meaning customers can choose from a full banking stack or select services. Its strengths include a high level of IT security based on a zero trust security model, which is fully encrypted and GDPR compliant.

The company says that banks can also use Foundry to launch standalone products – ‘flanker brands’, in banking-speak. Such entities are becoming increasingly prevalent within the UK. See, for example, NatWest’s lending platform Esme, ING’s Yolt and HSBC’s Connect Money.

On 11:FS’ website, it claims to have delivered key projects for a wide range of banks, including Barclays, Lloyds Bank, RBS, BNP Paribas, Bank of America and Monzo, among others. That track record should provide a solid platform for cross-selling the new Foundry product.

David Brear, CEO of 11:FS, said of the launch: “We have established a world-leading team for 11:FS Foundry and wanted a partner to match our aspirations, who was looking to build the next generation of banking services. 11:FS and DNB are perfectly culturally aligned in our belief that digital banking is just 1 per cent finished and we are going to put in the work to improve this. We could not have found a better launch bank and initial investor for 11:FS Foundry than DNB. We have a shared vision of how to make banking better, with the passion, skill and determination to remain the forefront of delivering innovative financial services.”

 

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