Embedded finance continues to be the engine driving fintech growth, with a group of companies building central banking, payments and other financial technologies, and a much larger group leveraging this technology through APIs to build customer-facing businesses. Today, one of the biggest players on the core technology side — Global Processing Services — is announcing $100 million in funding, a sign of not only how popular embedded finance remains as a business, but also the traction of GPS in space.
Singapore investor Temasek and american company OG Mission are the only two investors in this tranche of funding, which comes in the form of an extension of a $300 million investment that GPS announced in October 2021, closing the full round at $400 million. international advent and Viking global investors co-led the previous round, which gave them a majority stake in GPS. As with the early part of the round, GPS – which is based in the Isle of Man, England – does not release its assessment today.
The funding will be used to continue to grow GPS’ business – which includes a variety of fintech services such as payments, direct debits and standing orders; virtual cards; mobile wallets; fraud prevention; Expense management; cryptocurrency management; BNPL and more (these are sold under the Apex GPS brand).
Specifically, the company wants to expand further in Europe and Asia-Pacific, as well as more emerging markets in the Middle East and Africa; and wants to bring new products. (Notably, there are no loan products in the mix at the moment, so this could be one area she explores; insurance could be another, as well as solutions tailored to specific verticals.)
The reason for the investment and investor attention is that GPS and the space it is active in has seen a huge increase in activity. On the one hand, neobanking services between consumers and companies are growing in popularity (and credibility); on the other hand, we have seen an increasing range of non-fintech businesses (such as telcos and retailers) that are exploring the concept of embedded finance to add new features and revenue streams on their own platforms.
More generally, consumers and businesses have made a huge shift to carrying out all of their financial activities online as the Covid-19 pandemic has taken hold of the world, and even if that subsides, it looks like they won’t completely revert to their analogue ways. . This has had an indirect effect on risk financing for the entire fintech industry. It was yesterday that another major fintech player, payments startup Checkout, raised $1 billion with a valuation of $40 billion.
GPS itself primarily focuses on those working more directly in fintech, with its customers including Revolut, Starling, Curve, Zilch, and Paidy. The company said its services are now being used in 48 countries and that last year it processed more than 1.3 billion transactions, with 190 million cards issued to date.
“GPS is an innovative technology company and we believe that their unique position at the heart of the global payments ecosystem ideally positions them to drive the next generation of financial services,” said Gene Lockhart, general partner at MissionOG, in a statement. “With the deep network and experience that MissionOG brings to the table, we look forward to being a trusted and valued partner for Joanne and the entire team.” Notably, Lockhart is taking on a role as president of GPS with this investment.
“The increase in this latest investment round is an important step forward for the company and a strong endorsement of our strategy,” added Joanne Dewar, CEO of GPS. “We are a company that has grown rapidly in recent years, driven by our commitment to innovation and the delivery of a single, scalable technology platform. The experience that our new partners bring to GPS will be invaluable as we enter our next phase of geographic expansion and technological innovation.”