Montreal-based FinTech Flinks has raised a $1.75 million in a seed round as it looks to expand its product platform.
The funding was led by Luge Capital and National Bank, with participation from Innostart Capital, Panache Ventures, iNovia Capital and Conconi Growth Partners.
It’s the first investment for Luge, which launched with $75 million to invest in financial services startups in early June.
Flinks last raised a $500,000 pre-seed in July 2017. The goal since its launch has been to power FinTech companies, who can use Flinks’ integration to validate account ownership, verify account balances, or access transaction histories of customers.
Flinks has since moved to working with financial institutions like Transferwise, for whom it’s facilitating instant account verification and acting as the link between Transferwise and Canadian banks. Other clients include ATB Financial and Merchant Advance Capital.
“In today’s world of accelerated digital transformation, National Bank strives to be at the forefront by offering its clients innovative solutions that are convenient, simple and efficient,” said David Furlong, senior vice president of artificial intelligence, venture capital and blockchain at National Bank. “It is very important for us to support environments that stimulate innovation and have a positive impact on customer experience. That is why we are pleased to join forces with Montreal-based Flinks.”
“We like to say that we go further than the bureau.” – Yves-Gabriel Leboeuf, CEO of Flinks
Flinks is using the funding to expand beyond being an API provider, and is currently developing Flinks Score, which can predict the creditworthiness of customers. Targeted to lenders varying from retail to mortgage, the platform would tie a customer’s loan payments to their cash flow situation, predicting the best method for paying back that loan and by how much.
“In the last few months, Flinks has been working on a risk score that predicts consumer default with more accuracy than any existing scores. We are bridging that gap by accessing consumer financial data that is currently not comprised in traditional credit scores,” said Yves-Gabriel Leboeuf, CEO of Flinks. “For example, it’s not because you have a late payment on your cell phone that you are at risk, in a case where you earn $150,000 of yearly income, and possess a RRSP account of $50,000. We like to say that we go further than the bureau.”
Flinks said that it’s solving a problem for both financial incumbents and FinTechs: larger enterprises like banks often don’t have the ability to go to market quickly, while FinTechs lack the data to build out sophisticated AI processes, even if they have the vision and the agility. Because Flinks easily plugs into the back end of FinTech companies and relationships with financial institutions, they have insight into working on both sides.
“How you open up a bank account, how you apply for credit, how you apply for insurance; a lot of these tasks are very manual in nature,” said Karim Gillani, general partner at Luge, about why the firm invested in the startup. “By allowing access to your specific cash flow situation, by understanding your financial history behaviour, the service providers that offer you financial services can give you a very personalized experience.”
The funding will go towards hiring talent and scaling its platform in new markets like Australia and Europe. Recently European Union lawmakers introduced the Payment to Services Directive, forcing banks operating in the region to open up their data to third-parties if customers consent. It’s set to help FinTechs compete with banks, which until now have had a monopoly on customer information. “It provides a big opportunity for Flinks to work with financial institutions to externalize their data,” said Gillani.