4 Open Banking Startups Making Waves in Fintech

There’s been a quiet revolution in how we can manage our money. Over the past several years, with very little fanfare, fundamental changes to the finance system have allowed customers to give authorised companies direct access to their bank account details. This is known as open banking, and it’s one of the booming subsectors within fintech.

Indeed, Hampleton’s newest fintech report (which you can download now here) singles out the precipitous popularity of open banking, with usage in 2024 expected to be five times that of 2020. The mass take-up of such tools is understandable, since open banking brings unprecedented convenience for consumers. 

Thanks to open banking, we’re all able to make use of, say, money management apps. These seamlessly sync with multiple bank/credit card accounts to provide a one-stop overview of your finances and help you track spending, diligently reduce your debts and bolster savings. Against the backdrop of turbulent economic times and the cost of living crisis, these kinds of solutions can provide support for anyone looking to keep a close eye on their finances.

But the open banking ecosystem encompasses far more than everyday budgeting apps. This brave new era of transparency has set the stage for a plethora of startups that provide an eclectic array of solutions. And, according to a new report by Grand View Research, the increasing implementation of open banking legislation, along with continuing innovation by tech firms, will allow the global open banking market to reach $135 billion by 2030.

Let’s take a look at some of the startups that have already been making waves in this soaring subsector. 

Like many startups, Currensea was born out of frustration felt by its founders. In this case, high foreign exchange fees incurred when they used their bank accounts while on holiday. Alternatives like challenger banks and prepaid cards lacked convenience, since they required them to manage their holiday money in advance. As co-founder James Lynn put it in an interview, ‘I had to keep track of a separate balance, keep topping up and then I’d inevitably fail to remember how much was on the card and then have that red-face moment when I wanted to pay for a hotel or dinner only for the card to be declined.’

The solution: a direct debit travel card, which is linked to your existing bank account and allows you to spend abroad as you would at home, but with charges reduced by at least 85%. Thanks to open banking, there’s no need to set up a new bank account or load up a prepaid card. 

Despite an initial setback – namely, launching just weeks before the Covid-19 pandemic brought travel to a juddering halt – the UK startup is now thriving. In September 2022, it enjoyed a £2.4 million VC funding round, which came hot on the heels of the £2 million raised from crowdfunding platform Seedrs. 

Forward-thinking entrepreneurs can leverage open banking for the most niche sectors imaginable. Take Salt, a platform dedicated to making it easier to buy boats. It was founded by Joe Dalton, a former finance services executive at NatWest and a dedicated yachtsman. While on an epic sailing trip in 2020, Dalton developed the idea of blending his two passions. The result is Salt, a digital boat finance solution.

‘Your dream boat is closer than your think’ is the platform’s aspirational tagline. It utilises open banking to provide accurate quotes for customers who are potentially looking to take out loans to purchase boats. Open banking also allows Salt to assess customers’ credit and almost instantly approve many applications without having to request any supporting documents. 

The platform has yet to go live, though it closed a pre-seed funding round earlier this year. Its founder envisages it becoming a purveyor of insurance, warranty and moorings – essentially, an all-in-one app for sailors. 

Open banking has obvious benefits for the property rental market. As Mara Perkuma-Maslakova, of open banking data platform Nordigen, has said, it ‘replaces the need to print out copies of your bank statements… Landlords can verify their tenants digitally by checking their bank statements, transactions and income to see if they’re a reliable tenant, if they’re going to pay the rent and what the risks are associated with that.’

A major startup in this space is Canopy. It lets users create digital ‘RentPassports’ which aggregate information from users’ bank accounts, thereby verifying their incomes, credit histories, and rental histories. The RentPassport can simply be shared with letting agents and landlords to accelerate the approval process.

Canopy CEO Chris Hutchinson has said that one of the aims of the platform is to make life easier for renters, so that agents and landlords can pick up ‘gig economy workers, students, self employed with ease rather than relying on streams of paperwork.’ With the rental market more competitive and challenging to navigate than ever, it’s certainly an appropriate app for our times.

Another open banking startup that streamlines the gathering of essential information for businesses is Armalytix. Raising $1 million in September this year, following on from previous successful funding rounds, the company aims to provide services for, in the words of CEO Richard McCall, ‘mortgage advisors, gambling and gaming, and wealth management platforms’ among other verticals.

The platform seeks to make data collection a super-speedy, form-free process for clients. For example, accountants can utilise Armalytix to access clients’ financial information in just a few clicks, while companies dealing with crypto payments can use the platform to undertake source of funds checks and other compliance procedures. 

Ultimately, the startup says it’s there to ‘make your day more productive’ – a sentiment that underpins all open banking tools, across all verticals. It’s why this promises to be an increasingly exciting space that will attract large volumes of M&A activity going forwards.