Estonian fintech startup Tuum kickstarted the new year with great momentum, which includes €15 million Series A funding, partnership announcements, and new clients such as LHV UK. The core banking platform powers an ever-growing list of banks, fintech companies, and non-financial entities from diverse industries. With the new funding, the company aims for global expansion. Already, they have offices in Estonia, Germany, Spain, and the UK.
In September 2021, Tuum launched its new corporate identity, which better reflects its essence and value offerings. The company was previously named Modularbank. Although the initial name reflected the startup’s modular lego blocks-style solution, it also came with some confusion. “We are a core banking technology provider, yet due to the word ‘bank’ in our name, we often received inquiries from people wanting us to open a bank account for them or wanting to use our financial licence fronting service,” says Rivo Uibo, Tuum’s co-founder and chief business officer.
Rivo notes that ‘Tuum’ means ‘core’ in Estonian and aptly describes the very essence of the startup. The new brand identity pays tribute to the company’s native roots as it takes over the global scene. More importantly, excluding the word ‘bank’ clarifies the startup’s offering and for whom – banks, fintechs, and other companies seeking an agile banking infrastructure to launch innovative and customer-centric financial services and products.
Modular by design
Founded in 2019 by Estonian banking and financial technology experts, Tuum is an API-first and modular core banking technology that modifies complex financial operations by molding them into independent modules, enabling the swift roll-out of new financial products or a complete digital transformation of a financial institution. With modularity right at the heart of the platform’s design, clients are offered the buffet opportunity to select specific capabilities they wish to offer their customers: from accounts and payments to loans and cards – Tuum’s platform has got all the retail and business banking functionalities covered. “You can think of Tuum as a set of Lego bricks that allows you to build whatever you wish to build from them. The pieces fit seamlessly, whichever way you assemble them, but work well independently – and that is the true beauty of the platform,” Rivo explains.
The last two decades were characterised by swift digital innovation and transformation. Already, it is evident that the same applies to this new decade. Most consumers will settle for nothing but the most convenient and capable products and services. So, it is now or never for businesses to modernise their tech stack or risk being left behind. “If you look at large incumbent banks, most of them are still running on old monolithic systems that are slow and rigid, making it extremely time-consuming and costly to launch new products or make changes in the existing ones. These systems were not built for real-time operations or data-based decision-making, yet flexibility, speed, and relevance are key to today’s financial services. And that’s where the modern core banking technology steps in” he notes.
The future of banking
The total number of digital banking users globally will exceed 3.6 billion by 2024. According to Juniper Research, this growth will be driven by the rise of digital banks and non-banking financial services providers. Rivo believes the boundaries between traditional banks and solely-digital financial services providers will blur, as they should, as embedded banking and finance assume the forefront of this growth.
“People don’t want to do banking; they want to fulfil their aspirations and do so as conveniently as possible. Think about it; let’s say you want a green home. Would you rather spend time speaking with various counterparts – the solar panel retailer, the energy company, the bank – or would you prefer to get the financing directly at the point of sales when ordering the panels, saving yourself a lot of time and effort? That’s the convenience you can only get with embedded banking,” Rivo explains.
The role of traditional banks is changing at the speed of lightning. To remain relevant, they must rethink their activities and discover new channels to bring their services closer to consumers. That is the future of modern banking. Within the next few years, financial services will be more profoundly and seamlessly integrated with products that customers use every day, enabling convenience like never before and offering service providers more revenue streams. This is a growing trend! Tuum is already garnering the interest of companies from other very distinct industries beyond the banking and finance sector simply because they want similar financial services embedded into their platforms to conveniently meet the needs of their customers.
Strategic partnerships as puzzle pieces
Tuum’s growth speed is not by chance. Among other factors, the startup has a well-defined vision. They know how every piece they work with fits into their jigsaw puzzle, and partnerships are not left out. “For instance, when onboarding a customer, you need to verify the person’s identity. When you want to issue a loan, you have to understand the person’s ability and willingness to pay it back to manage the risk, and so on,” Rivo points out. “For these kinds of supporting functionalities, we either let the customers continue using what they have in-house, or we offer them a pre-integrated à la carte selection of some of the leaders within those spaces,” he adds.
However, the Partnerships and integrations need to fit into the startup’s overall strategy. According to him, startups should only partner with selected entities when they are assured that the combined value offering is more valuable than having both entities as separate pieces. Unsurprisingly, Tuum’s strategic partner list includes Estonian identity verification company, Veriff and German money-laundering detection and investigation company HAWK: AI, which are crucial players in their respective spheres.
“Hawk: AI, and another innovative provider in this sphere, Estonian company Salv, redefine how money laundering detection and investigation is handled. Whenever you execute a payment, you want to ensure that these funds go through the AML detection systems because you as a service provider are responsible for what goes through your platform.” Meanwhile, Veriff handles the company’s identity verification and KYC capabilities.
€15 million towards product innovation and global expansion
Earlier in January, Tuum announced a €15 million Series A round of funding to push their product innovation and international expansion endeavours. On the heels of that came the news of LHV Group’s €1 million investment, and just before that, LHV UK announced the startup as their selected core banking technology provider.
“We have achieved a lot within our three years in the business, we’ve built a great platform and won several clients from incumbent banks to fintech startups, but there is a lot to continue building, which is a never-ending story. Also, even if you have the greatest product in the world, it still has to get to people’s hearts and minds and then into practical use. This can only take place through market expansion,” Rivo points out. He notes that the company has a philosophy of having a “local boots on the ground” presence in key addressable markets where the financial services sector is well-established, and there are active regulators.
Tuum has 80 employees across its offices, and thanks to the received funding, the team is increasing in size. “We have an amazing set of people in our team, different industry backgrounds, around 20 different cultures, all complementing each other. It is high up on our agenda to make sure we engage, encourage and support everyone because success is a team sport! Also, as we are growing fast, we are constantly looking for additional fun, great, talented people to join us,” he expresses.
Another unicorn in the making?
There is a massive opportunity for Tuum to take the dominant share in this hot and in-demand sector of core banking. Despite being a fairly young player in the space, the startup already holds a solid position and directly competes with the largest and most significant players on the market. Road to unicorn status, maybe? Having already clinched some notable clients in the industry, from large banks in the Nordics to agile fintechs in the UK, Tuum is on track to become the absolute best in the core banking world and help power the future of finance. “The moment any company has any kind of use case in mind related to how money is stored moved or lent, in whatever currency, we want Tuum to be the one they turn to,” Rivo states.
Co-author and postgraduate student