Mantl raises $40M to help legacy banks transition to digital

Mantl, a New York-based digital account-opening solution for legacy banks and credit unions, today announced that it closed a $40 million series B funding round. The company says it’ll use the capital to hire new talent and expand its product suite, with a particular eye toward developing solutions that improve and digitize the onboarding experience for businesses.

It’s estimated that community banks and credit unions make up 95% of all banking institutions. Currently, they rely on third-party technology providers whose systems sometimes lack the capabilities deployed by larger, established banks. This impedes them when competing online and limits the options available to customers who prefer banking digitally. For example, one study found most millennials prefer to have interactions with financial brands through social media, and millennials make up the highest percentage of mobile banking users.

Founded in 2016, Mantl provides a platform that integrates with core banking systems to enable customers to open accounts through white-labeled web and mobile portals. The system automates application decisioning for over 90% of cases while ostensibly reducing fraud, leading to deposit growth while eliminating the need to build new branches.

“We originally set out to build a challenger bank, but we realized that the bigger opportunity was in helping existing banks modernize,” CEO Nathaniel Harley, who cofounded Mantl with Benjamin Conant and Raj Patel, told VentureBeat via email. “We enable banks and credit unions to open deposit accounts online, often for the first time. This includes products like checking accounts, savings accounts, certificates of deposit, and money market accounts. We estimate that less than half of all banks in the US give their customers the ability to open deposit accounts online today.”

With Mantl, banks can customize the look, feel, and messaging on the platform using a no-code editor. A console aggregates data points and turns them into insights to show which marketing channels are driving conversions. Mantl’s campaign management tool, meanwhile, automates deposit operations including payment settlement. And the company’s data connectors work with over 50 systems including Plaid, Stripe, SendGrid, and Twilio.

“Currently, 43% of legacy banks are still running their core banking services on platforms that were designed with COBOL, a programming language that’s now over 60 years old,” Harley said. “This is why the gap keeps widening between the community banks who rely on these legacy players and the big banks who don’t: the top 15 banks hold 56.2% deposit market share today versus 16% 25 years ago. MANTL is fixing the legacy infrastructure problem, which is the biggest obstacle limiting modernization in the U.S. banking system today.”

Mantl says that its clients, which include Cross River Bank, Quontic, and Midwest BankCentre, have attracted hundreds of thousands of new customers and raised billions in core deposits to date. In the past year, revenue increased by 213%. And banks on the platform saw 300% growth in deposit volumes. For Midwest BankCentre, Mantl helped raise more than $180 million through a digital-only branch called Rising Bank. And in the case of Flushing Bank, Mantl estimates that 20% of all new accounts are now coming from digital channels that didn’t previously exist.

The future of banking

In what might be a boon for Mantl, eMarketer predicts that banks will increasingly partner with companies to offer “banking-as-a-service” products. For example, in August 2019, HSBC partnered with startup Amount to launch a digital lending product — and more partnerships like that could be on the way.  A PricewaterhouseCoopers survey of banks worldwide found that among those that wanted to collaborate with other sectors for growth, 47% were likely to work with a fintech firm.

“As the world prepares to fully open again, MANTL has rounded out our account opening suite with a fully omni channel platform that improves the customer experience across all bank channels — in-branch, online, mobile and through relationship managers in the field. The next step is to bring similar efficiencies to business onboarding, and we’re excited to introduce a first-of-its-kind business account opening solution to market,” Harley said. “We are launching it later this year and it will be met with significant demand as community institutions are urgently looking for ways to transition their [short-term] relationships into long-term deposit relationships.”

Mantl’s series B investment was led by Google parent company’s Alphabet’s growth fund, CapitalG, with participation from D1 Capital Partners, BoxGroup, and existing investors Point72 Ventures, Clocktower Technology Ventures, and OldSlip Group. It brings Mantl’s total raised to date to over $60 million following a $19 million series A round that closed in July 2020.