Tokenized payments receive earmarking through Fnality's introduction; £20 million funding announcement made public
In the ever-evolving world of finance, a new player is making waves. Fnality, a UK-based company, has announced the launch of its US subsidiary, Fnality XB, which appears to be a strategic move towards cross-border payments.
Fnality has been making strides in the industry, having applied for a banking license and successfully raising funds. In 2019, the company secured a Series A funding of £50 million. Last year, in 2023, the Series B funding increased to £77.7 million, with Goldman Sachs, BNP Paribas, and DTCC among the investors.
The company's institutional settlement solution, currently operational, is making headlines. BNP Paribas recently went live on Fnality's Sterling Payment System (£FnPS), executing an interest rate swap payment. This platform, unique in its use of tokenized central bank reserves as a low-risk settlement instrument, promises increased efficiency and programmability for institutional users.
One of the key features of Fnality's system is the earmarking of funds. While details are not explicitly detailed, the use of tokenized central bank reserves inherently supports earmarked (or dedicated) liquidity, enabling real-time settlement and risk mitigation in cross-border transactions.
Fnality is not resting on its laurels. The company is actively expanding beyond the sterling platform. It has obtained an 18-month interim approval as a state-chartered innovation bank, signaling plans to launch a U.S. dollar version of the payment system. There is also ongoing integration work with OSTTRA's FX payment-versus-payment (PvP) system and exploratory integration with the DTCC’s digital asset platform targeting collateral management.
The company's growth is backed by 20 major institutional financial players, including Lloyds, Santander, UBS, and BNP Paribas, all integrating the platform. This strong industry endorsement reinforces Fnality's credibility and potential for further adoption.
In its first full year of operation (2024), Fnality did not earn any revenue. However, with the range of use cases for Fnality set to expand significantly once a second currency goes online, the future looks promising for this innovative company.
References: 1. Fnality's Institutional Settlement Solution 2. Fnality Raises £50 Million in Series A Funding 3. Fnality Secures Series B Funding of £77.7 Million
