Rising Pacific Northwest startups show that financial technology is about more than payments

Subsplash’s app helps churches collect money with a full engagement and donation system. (Subsplash Image)

Key Takeaways

  • Seattle-area startups are building fintech offerings centered around communities like churches, schools and foreign workers
  • Google, Apple are pushing banking into the world of consumer tech
  • Seattle still has a long way to go to become a fintech hub

Amid hopes that the Seattle area could grow into a financial technology hub, notable startups in the region are showing that finance is more than just loans and payments — it’s about community, too.

Three startups — Remitly, Snap! Raise, and Subsplash — have become fixtures on the GeekWire 200, our ranking of top startups in the Pacific Northwest. But in their approach to financial services, they’re betting that the way to compete with the big banking and mobile payment players is to hone in on users’ needs, both financial and otherwise.

Take Subsplash (No. 74 on the list), which makes a platform for churches to engage with their congregations and raise money in the process.

Subsplash CEO Tim Turner said the startup focuses on helping churches and that money was a natural outgrowth of this approach. Initially, Subsplash was a mobile platform that became a way for churches to manage and distribute content, later evolving into a full engagement and donation system.

“I think it’s important to start with thinking about customers and trying to solve their specific needs,” said Turner. Subsplash climbed 29 spots on the GeekWire 200 this month following its acquisition of rival company Custom Church Apps.

Snap! Raise (No. 24) took a similar approach with its fundraising platform for schools, clubs and sports teams. The startup built the financial infrastructure to receive and manage funds, but it also added a suite of administrative tools to the mix, including the ability to engage with donors, create a website, and track participation. The idea is to make it simple to set up and organize campaigns without any special expertise.

RELATED: Related: Can Seattle become a financial technology hub? Why some tech leaders are banking on it

The largest and most prominent fintech startups typically disrupt traditional markets like banking, insurance, wealth management or lending head-on. There’s nothing wrong with this approach: Overall funding for fintech startups continues to be very strong, totaling $24.6 billion for the first three quarters of 2019, according to CB Insights. That would put 2019 on pace for a record, were it not for Chinese startup Ant Financial’s eye-popping $14 billion round last year, the largest fundraising round on record.

For smaller startups, looking for non-obvious financial applications can be a lucrative way forward, said Deanna Oppenheimer, a former Washington Mutual (WaMu) and Barclays executive who founded Seattle-based advisory firm CameoWorks.

“You look for a fragment where a big, broad bank maybe can not do it or will not do it well. And those are huge scale opportunities to be able to nip off and really be the growth of the future,” Oppenheimer said during a panel discussion last week in Seattle at Create33.

That’s what ultimately proved fruitful for Remitly (No. 3), the most prominent fintech company to come out of the Pacific Northwest. Led by CEO Matt Oppenheimer, the nephew of Deanna Oppenheimer, Remitly allows people to send money abroad easily and cheaply.

Remitly raised $135 million earlier this year in a round that valued the company at just under $1 billion. Companies such as Remitly let people send and receive money via smartphone apps, eliminating forms, codes, agents, and other fees typically associated with the international money transfer process.

Remitly, Snap! Raise, and Subsplash don’t exist just to serve a financial role, said Hope Cochran, managing director at Madrona. “Their purpose is to enable something in a person’s life, and that involves moving money,” she said.

The world’s largest tech companies are increasingly seeing financial services as an add-on for consumer technology. Google plans to partner with Citigroup to offer checking accounts, and Apple is linked with Goldman Sachs on its Apple Card offering. By offering financial services through partners, the big tech players stand to gain more revenue and sensitive user data without being regulated as traditional banks.

Hope Cochran, Madrona Venture Group managing director. (Madrona Photo)

“The definition of fintech has changed,” said Cochran. “You’ve got all of these apps and companies that are serving a greater purpose and have some sort of fintech component. They involve modern technology such as AI and machine learning. Their user interfaces are very focused on making the customer feel comfortable.”

Lighter Capital is another Seattle startup that’s an example of thinking outside the traditional fintech box. The company has invested more than $165 million in 350-plus companies across the U.S., using an innovative process that lets early-stage startups raise cash without giving up equity or board seats. It recently partnered with Silicon Valley Bank to give entrepreneurs a way to raise non-dilutive capital and get banking services.

But can Seattle support a fintech startup ecosystem?

The city has a long way to go. Startups in the Seattle region took in less than 2 percent of the total amount raised by fintech companies across the U.S. since 2014.

But there’s also a chance that Seattle’s strength around AI and cloud computing will provide a toehold for local fintech. That’s what attracted JPMorgan Chase to establish a Seattle cloud and cybersecurity engineering center that will reach 200 people by the end of the year, and 400 people by 2022.

That’s an ironic twist, given that it was JPMorgan Chase who bought out the region’s hometown national bank, WaMu, during the financial crisis in 2008.

The region is also the birthplace of travel and expense management giant Concur, coin-counting powerhouse Coinstar, cloud spending management firm Apptio, and tax automation company Avalara, which went public last year. Seattle is home to engineering centers for payment technology companies Stripe, Square and others, in addition to massive digital payments systems operated by Amazon and Starbucks.

Other fintech startups in the Pacific Northwest include Possible Finance, NVoicePay, Globys, Suplari, Strivve, Tesorio, Concreit, Zingo, Copper, and Bumped. The year-old BECU Fintech Incubator alone has supported four startups: Noonum, Routable, Attunely and Fincluziv.

Even without a robust financial ecosystem, Deanna Oppenheimer thinks new companies can find success on the national level much like WaMu did before the tech explosion.

“When we were scaling up, we had no banks. So what we did is we went and said, ‘Who’s the best in what we’re looking for? Oh, customer service? Let’s go talk to the people at Nordstrom. Oh, we want to build a lot of branches? Let’s go talk to Starbucks,’” Oppenheimer said. By collaborating with experts in other industries, the bank was able to create a “differentiated offering,” she added.

Subsplash’s Turner gives the following advice to would-be fintech entrepreneurs: “Spend time focusing on discovering problems and how you can uniquely solve them rather than on becoming a fintech company. You may find that there’s something even better around the corner.”