Modularbank is a next-generation core banking platform, set up in 2019 by myself, my co-founder Rivo Uibo and also three other colleagues from our previous company Icefire. It is built to help banks, fintechs, and any other business such as a retailer or utility provider to meet the needs and aspirations of their customers by rapidly rolling out digital financial services.
Modularbank’s cloud-agnostic offering works a bit like lego. Firms can plug-in modules for core aspects of banking, such as current accounts, transactions, lending, via APIs. All modules are independent of each other, so firms can mix and match what they want to outsource versus keep in-house.
The company currently has offices in Tallinn and Berlin, and customers include one of the largest financial services groups in Finland, a leading retail group and a Frankfurt stock exchange-listed financial services institution operating in 25 countries. It has also recently partnered with Nets, one of Europe’s largest payment card processors.
How did you come up with the idea for the company?
Several years before we set up Modularbank we clearly saw the direction in which things were moving in the banking industry. The emergence of nimbler, more agile challenger and neobanks, together with consumers’ growing appetite for digital ways of banking, were driving incumbent banks to find ways of creating new value propositions.
These would take the form of products and services that are digital by nature, and be well-tailored to specific sub-sets of customers. They would be presented to the customer just at the moment they need them, via whichever channel they favour; in other words the customer experience would be truly frictionless.
For banks to do this, it was obvious they would need to put even greater emphasis on existing digital transformation agendas and find alternatives to outdated, often manual, legacy systems. We saw an opportunity to offer a more flexible, modular type of core banking technology system than was currently available, knowing that such technology would enable much quicker roll out of digital, more convenient banking services.
Modularbank was set up in 2019 in response to this way in which we could see the industry-changing. Already by 2020, in part due to the pandemic creating an acceleration in the move towards digital, we were already finding that our prediction that banks would see the benefit of taking this more gradual and modular approach to digital transformation was being ushered in even more quickly than we had anticipated.
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What advice would you give to other aspiring female entrepreneurs?
My advice to female entrepreneurs would be to have faith in yourself and to aim high. In my experience women tend to shy away from the top roles in management because they feel they need to ‘know everything’.
But no one can know everything. Women tend to underestimate their capabilities, while men tend to overestimate their capabilities. We are just as capable as men and female entrepreneurs can bring a different perspective to business ideas, especially to sectors that have been traditionally dominated by men such as finance as IT.
What can we hope to see from Modularbank in the future?
Since the company was set up 24 months ago, we have grown incredibly quickly – and we have no plans to slow down! We have been cashflow positive since inception and already have a customer base comprising a number of well-respected, established multinational organisations. At the end of last year, we secured late seed funding of 4 million Euro led by renowned investors Karma Ventures and BlackFin Capital Partners. This extraordinarily powerful combination of investors sets us up very well for our next phase of growth.
There is a huge change going on in the banking industry, driven by technological advancement and evolving consumer expectations. Embedded finance, whereby non-financial companies embed financial services into their own offerings to customers, is really taking off. We’re seeing demand for our platform from both banks and non-financial organisations, as they look to adapt and capitalise on this shift.
To address that demand, we’re growing in all areas. Already last year we went from being a small team of 7 people based in Tallinn to 47 people based across Estonia and Germany. This year we expect further rapid growth – we want to bolster our platform with new functionality and grow our team to include even more top talent from the world of fintech. We also plan to develop much deeper footprints in a number of European markets, especially in the UK.