By Anna Irrera
NEWYORK (Reuters) – Accenture Plc, SunTrust Banks Inc and the American Bankers Association, a trade group for U.S. banks, said on Friday that they had joined a $30 million (23 million pounds) investment round in Finxact, a startup that develops the back-end technology used by banks to process some transactions.
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)