Constantinople’s “bank in a box” platform attracts $50 million in Series A funding

Australian fintech startup Constantinople has successfully raised $50 million in Series A at an undisclosed valuation. This round was led by Prosus Ventures, alongside participation from existing investors Square Peg Capital and Airtree Ventures.

Constantinople was founded by former Westpac executives Dianne Challenor and Macgregor Duncan in 2022. It quickly garnered attention for its $32 million seed round in May of that year – the largest in the Australian fintech space at the time.

Both Duncan and Challenor have held significant roles at Westpac. Their combined expertise spans investment in financial technologies, digital banking innovation, and leadership in transaction services and payments.

“We are incredibly excited to continue backing Mac and Di on their ambitious vision for the future of banking,” Square Peg co-founder Paul Bassat said in an email to SmartCompany.

“Constantinople is a standout company with all the ingredients for global success: amazing founders, an incredible team with experience scaling global platforms, and a phenomenal track record of disciplined and fast execution.”

According to co-founder and co-CEO, Macgregor Duncan, there are no current plans for a Series B.

What does “bank in a box” mean?

Constantinople seeks to disrupt the traditional banking software model by providing a more flexible and scalable solution to small banks.

The platform offers a suite of operational tools for small-to-medium-sized banks, addressing a niche, but growing, segment of the banking industry. The idea is to simplify and streamline banking operations by allowing banks to focus on customer relationships and the business of banking by utilising its tech and operations platform.

“Constantinople’s platform covers both retail and business banking, supporting a full product suite across transaction banking, payments and lending, as well as mobile and web apps for improved customer experiences,” Duncan said in an email to SmartCompany.

“Constantinople also handles operational activities on behalf of client banks, using software and AI for customer onboarding, financial crime monitoring, fraud detection, banking and lending operations, and automated compliance and controls. It’s an entirely new category of software which aims to fundamentally change and improve a bank’s operating model.”

According to Duncan, Constantinople differentiates itself in the market because it doesn’t just sell point solutions which require banks to integrate the software into legacy environments.

“A core banking provider might look to sell a bank its software for, say, $5 million a year, but it costs the bank $50-100 million to implement, and then you need 20 other software systems for everything else you need to run a bank,” Duncan said.

“Constantinople solves this challenge with an entirely new category of software which provides a complete tech and operations solution for banks. It’s pretty much everything you need to run a bank from a tech and operational perspective, enabling banks to focus on their customer relationships and the business of banking.”

Security is also a concern for legacy system banks that Constantinople says it is addressing.

“We take cybersecurity and compliance extremely seriously. Part of the challenge banks face is managing security and compliance with disparate legacy systems which have been incrementally built up over decades,” Duncan said.

“This creates vulnerabilities and requires extensive manual workarounds and controls. Constantinople’s platform is built from the ground-up using modern tooling and architecture which provides real-time insights into the platform and its controls.”

The platform is currently supporting its first client bank, Great Southern Bank, which has recently launched its new Business Bank in the market.

Constantinople is partnering with other clients in Australia and has recently expanded its team into New Zealand.

$50 million in a tough environment

The company’s $50 million raise is significant, not only due to the current economic climate that has been significantly impacting Australian investments.

According to the 2023 State of Australian Startup Funding report, investments dropped 54% in Australia last year.

The fintech sector in particular has also seen fluctuating levels of investment due to factors such as rising interest rates and increased regulatory scrutiny.

And yet, Constantinople has prevailed.

“I think investors are still looking to back companies with bold visions and global aspirations, but today they’re indexing more towards companies with a track record of disciplined execution and efficient use of capital. I think Constantinople has shown over the past two years that we can execute efficiently and with focus and speed,” Duncan said.

Looking forward, Constantinople has plans to expand its reach beyond Australia, eyeing markets with a high concentration of small regional banks, particularly in the United States.

The startup has laid out goals to be operational in five key markets by 2027, aiming to achieve significant revenue growth and a substantial increase in the number of banks hosted on its platform.

“With Mac and Di at the helm, Constantinople is building an exceptional team with deep domain expertise and technical know-how. Along with their rigour and speed, this continues to be their greatest advantage as they transform and simplify how banks run and operate,” James Cameron, Partner at Airtree said in an email to SmartCompany.

“They’ve got a big and bold vision that has our backing, going above and beyond the existing point solutions in the market to fundamentally change a bank’s operating model through software.”