New finance needed as Banked expands in US and Australia

Banked, one of a number of well-funded open banking start-ups, is yet to generate meaningful revenues, according to financial statements deposited at UK Companies House.

For the 13 months to December 2022, Banked booked just £45K revenues as sales from a series of high profile partnerships had yet to materialise. The company recorded an operating loss of £14.8m taking its accumulated deficit to £22.5m at year end and says it will need to raise new money this year.

Banked was founded by Brad Goodall and Neil Ambler who worked together at 10x, a London based core banking provider. The duo have proved astute fundraisers. Banked is well financed, having received £36.4m in capital from a set of high-profile investors including three leading banks – Bank of America, Citi and NAB – as well as Rapyd, the acquirer/PSP. 

This is a crowded market. Banked competes with a large field including Truelayer, Tink, Token, Trustly, Volt and Yapily.  These firms simplify the process for merchants to incorporate open banking as a payment option on their checkout pages by aggregating connections to thousands of banks. 

Merchants want open banking acceptance to be bundled with the payment service they buy today from their bank, acquirer or PSP. They don’t want to buy a separate product which they have to integrate themselves. Consequently, open banking specialists, like Banked, tend to focus on a white label distribution model. Banked’s strategy of taking investment from potential partners could be a smart move.

Bank of America has already incorporated Banked’s product into the eCommerce checkout offered by its merchant services division. NAB is expected to use Banked technology to offer its merchants PayTo, an Australian equivalent of open banking. Banked also has partnerships with payment orchestrators including Primer, Gr4vy and Apexx which will further extend its reach.

Simply getting Banked’s “pay by bank” button on checkout pages won’t guarantee commercial success. Banked needs shoppers to choose its button in preference to paying with cards, Paypal or any other method they use today. Changing consumer payment behaviour is a formidable challenge and Banked will be reliant on its partners, notably the banks, to educate and incentivise shoppers to start using open banking payments.

To support its expansion plans, Banked has established subsidiaries in Lithuania, Australia and the USA. Goodall has relocated to California to lead Banked’s foray into the US market.

The Lithuanian subsidiary, Pay by B, is a payment institution giving passported access to merchants across the EEA. Pay by B lost £0.287m in 2022 leading management to recognise an impairment loss  of £0.47m.

Management reports investment continuing into 2023 although “additional equity funding is being sought… to further support growth.” Management says it hopes to close this new fundraising in Q3.