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Existing investors, including Live Oak Ventures, First Data
Corp, Woodforest National Bank and T.N. Incorporation Ltd of
Thailand also participated in the round, the companies said.
Finxact plans to use the funding to develop its technology and
grow its operations, Frank Sanchez, the company's chief
executive and founder, said in an interview.
The investment comes as banks of all sizes grapple with old
technology infrastructure as they seek to offer more digital
services to their customers. Many of these systems were built
decades ago and are ill-equipped to handle services customers
have come to expect in the internet age such instant
peer-to-peer payments or real-time account balance updates.
Smaller banks often cite this issue as one of the biggest
hurdles they face in competing with younger financial services
providers or larger banks that can fund costly back-end
replacements.
"I have heard from bankers across the country who wish they had
more nimble and agile core processing platforms that allowed
them to keep pace with customer demands," ABA President and CEO
Rob Nichols said via email. "We understand that a bank's ability
to innovate is highly dependent on its core processing
platform."
This is the second significant technology investment since
Nichols' took over as the ABA's chief executive in 2015.
Florida-based Finxact says its more modern cloud-based platform
is built to enable banks to offer better digital services to
their customers and is less expensive to run than older systems.
"It is substantially more efficient to operate," Sanchez said.
The company targets regional and community banks but also works
with neo banks, or large banks who plan to migrate their old
systems, Sanchez said.
(Reporting by Anna Irrera; Editing by Cynthia Osterman)
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