Rize, a fintech-as-a-service provider that offers services to other businesses, announced an $11.4 million Series A funding round this morning. Alpha Edison and Morpheus Ventures led the investment round. A few of the startup’s previous supporters took part in the round as well.
Rize is an intriguing firm in a competitive sector; the market for developing financial technology tools for user use is crowded. Rize aims to differentiate itself by allowing customers to use a single API for several account types, reducing their service to a single developer hook.
More importantly, Rize has created what it refers to as “fake accounts.” This may sound alarming to those of us who last heard the term “synthetic” used in a financial setting in conjunction with the term “CDO.” It’s not the case. Synthetic accounts, on the other hand, allow Rize to provide its banking customers a method to build a unified account for end users who aren’t tied to a particular custodial account type. Synthetic accounts enable Rize to provide end users (its customers’ customers) with the opportunity to integrate multiple custodial accounts (checking, brokerage) into a single experience.
According to a white paper from Rize, customers can create a more coherent and programmable financial experience for end-users by offering a single “synthetic account core.” As Rize’s feature set increases, the synthetic account system will allow customers to add more services to their financial technology offerings.
In a statement to TechCrunch, Morpheus Ventures’ Howard Ko mentioned the company’s synthetic account work, saying that it was that aspect of the service that “attracted” his firm to the startup because it “basically abstracts all the plumbing required to develop a broad spectrum of fintech products and services that developers are looking to build into a simplified singular API connection.” Rize told TechCrunch in an interview that it has embedded a compliance management system into its product, comparing compliance work to logistics in the e-commerce business – something necessary that is both hard and not a duty that people enjoy.
Rize wants to relieve some of that burden, perhaps making it easier for businesses to choose its service over those of competitors in the banking-as-a-service space. Rize has finished the key banking features of its product — the company we see today is the consequence of a B2B shift from its B2C roots — and brokerage support is on the way. The company should be able to extend its product mix with the help of new finance.