Investing in the digital transformation of European core banking with Tuum

The digital transformation of banking is in full swing. As incumbent banks increasingly seek to modernize legacy systems and embrace cloud services, the global market for core banking software (i.e., digital deposit accounts, payments and lending tools, etc.) reached $10 billion last year and is forecasted to hit $50 billion by 2032.

Several factors are driving this growth. One is cost pressure: Close to 70% of bank IT spend is devoted to maintaining legacy IT systems, and half of this spend is in core banking. Another is that legacy systems — many of which predate the internet — are unable to meet the shifting demands of the market: Per a 2022 McKinsey report, customer willingness to consider digital channels exceeds 70%.

While European banks are increasingly adopting cloud-native and SaaS core banking solutions, they have tended to use them primarily to launch new offerings, as efforts seeking to migrate and/or modernize legacy systems to the cloud have been often seen as overly costly, risky and time-consuming.

That’s why we’re excited to invest in Tuum, an end-to-end, cloud-native core banking platform that is helping banks and other enterprises across Europe in such daunting migration and/or modernization efforts in a timelier and more cost-efficient way. Founded in 2019 in Estonia, Tuum provides an integrated, API- and microservices-based platform that can implement cloud migrations within months — making it a rarity in the market.

Tuum offers 10+ banking products split into four “modules,” each of which can be seamlessly connected to a firm’s legacy systems via low-code/no-code integration middleware. In this way, Tuum’s customers can quickly turn on and scale only the modules and products they need.

Those modules are:

1. Core Banking: Provides different consumer and business account types (e.g., checking and savings), records all transactions made on the accounts, allows users to create customized interest rates and fees, enables currency exchange, etc.
2. Payments: Helps users initiate and validate payments in accordance with both local and global payment rules. The module incorporates automated payment processing and settlement capabilities via third-party payment service providers as well.
3. Lending: Allows users to set up and manage various consumer and SMB loan products, including secured, unsecured and Buy Now Pay Later loans. Facilitates the entire lending lifecycle, from origination to servicing to collections. The module also offers optional debt and collateral management APIs.
4. Cards: Enables customers to issue debit, credit and virtual cards tailored to the specific needs of the card user. By default, the card module is integrated with Tuum's banking core, but it can also be integrated with other core banking solutions via APIs.

The company also offers related services from its partner ecosystem, including anti-money laundering and know-your-customer capabilities, open banking regulation compliance and more.

Tuum is currently targeting mid-tier financial institutions in Europe, including regional banks, fintechs, neobanks and lenders, as it looks to offer flexibility with low cost of ownership. It is also investing in capabilities such as payments processing, advanced lending, risk management and investment product creation, which will allow it to expand its customer base to SMEs, corporates, tier 1 retail banks and private wealth management firms.

Leading Tuum’s charge to digitize core banking across Europe is an incredibly strong management team that has turned its deep collective experience in the space into a superpower. The company’s founding team — Chief Business Officer Rivo Uibo, Chief Technology Officer Ove Kreison, Chief Product Officer Jan Lakspere and Solution Architect Jüri Kirme — came from Icefire, a successful core banking software development platform that was acquired by Checkout.com in 2021. The founding team's exceptional reputation enticed two senior executives who used to be at Berlin-based cloud banking platform Mambu to join: Myles Bertrand as CEO and Edgardo Torres-Caballero as Chief Revenue Officer.

Given its industry-leading team and compelling value proposition to financial services firms of all sizes, we're pleased to participate in Tuum's Series B funding round led by CommerzVentures. We also join Speedinvest, Portage Ventures, Blackfin Capital Partners and Karma Ventures. Our congratulations to the Tuum team as they continue to open new possibilities in core banking!