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Apple launched a credit card last year that offers special rewards for those who make purchases with an iPhone or use it to buy the company’s products. The card is a new line of business for Apple but also a way to tighten its relationship with loyal customers.
Other companies may like to do the same by offering banking products tied to their brand. But the reality is that doing so is incredibly difficult, both from a technological standpoint and a regulatory one.
That’s why the arrival of a startup called Bond is intriguing. Launched by Roy Ng, the former COO of the cloud platform Twilio, Bond provides software that lets companies of all sorts offer products such as credit cards and debit cards. Bond has also worked to ensure the software integrates with a network of banks that can handle the regulatory obligations on behalf of its customers.
On Wednesday, Bond announced it has raised $32 million led by Coatue’s VC fund. Other investors include Mastercard, Canaan and Goldman Sachs—the bank that provides the financial backend for the Apple Card. Individual backers include John Mack, former Chairman and CEO of Morgan Stanley, and angel investor Sarah Friar.
In an interview with Fortune, Ng said he decided to launch Bond after seeing the incredible difficulties companies encountered when trying to launch financial products. He citied anecdotes of firms deploying dozens of employees to build software to integrate with banks, only to find the product they built was outdated or not a fit for their market. In other cases, the technological and regulatory challenges proved so cumbersome that it took 18 months to build a product—causing the firm to miss out on key market opportunities.
Meanwhile, Ng says banks are focused on their core services and are not adept at building bespoke products for third-party partners. Ng views what Bond is offering as an off-the-shelf solution that lets companies outsource the hard parts of launching financial products.
“All brands will become fintech companies eventually,” he says, predicting that many firms will follow Apple’s lead in launching financial products not only as a way to make money but to deepen their relationship with loyal customers.
Ng also believes Bond will increase access to the banking system for segments of the population—particularly Black Americans and other people of color—who have been excluded from the banking system. In practice, entrepreneurs who already sell to those communities—such as food or apparel vendors—could now have an easy way to offer debit or credit cards as well.
On a broader level, Bond is piggy-backing on an existing trend whereby fintech firms like Chime or Square rely on “small banks you’ve never heard of” like Cross River Bank to power their financial offerings. Such banks, known in the industry as sponsor banks, provide the necessary banking licenses and compliance work needed for those firms to operate.
In the case of Bond, the startup is accelerating this phenomenon by building software that integrates with dozens of such banks at once—making it easier for clients to offer a variety of products that might be available from one sponsor bank but not another.
“We want to be in the middle so a brand is not always tied to a single bank. One company told us, ‘We have outgrown sponsor bank and would like to be rid of them,'” Ng says.
Bond’s ambitions are enormous, and it’s too soon to say if the company will be able to execute in a manner that achieves them. But if it can, the startup is poised to launch a new wave of disruption in the financial industry.
This story was updated to clarify the Coatue investment came from its VC fund, not the hedge fund.
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