BlackRock has joined other high-profile financial groups including JPMorgan and Nationwide Building Society as an investor in the fintech led by ex-Barclays chief Antony Jenkins.
10x Future Technologies, which Jenkins founded in 2016 after being ousted from Barclays the previous year, specialises in “core banking” platforms, the back-end technology that powers banks’ operations.
Fund manager BlackRock and CPP Investments, Canada’s largest pension fund, co-led a $187m investment in the company, along with existing backers.
Details of the transaction were not disclosed, but a person familiar with the terms said it valued 10x at around £500m before counting the new cash, up from around £160m when it last raised funds in 2019.
Jenkins said the cash injection would help fund a push into the US. “A lot of North American banking technology is very old and will need to be replaced in the coming decade, so we see that as being a massive opportunity for us,” he added.
IT systems at many banks have become inefficient patchworks after years of incremental developments and merger and acquisition activity. 10x is one of several start-ups that have launched in recent years offering cloud-based alternatives that they say will allow lenders to both cut costs and offer more advanced products.
Rivals include Thought Machine, which is backed by Lloyds Banking Group and Sweden’s SEB, and established firms such as Temenos.
Leon Pederson, CPP Investments’ head of thematic investing, said: “10x is very well placed to change how big banks are built . . . we believe they will benefit from their exposure to the structural growth trend of financial institutions investing in digital initiatives.”
10x is developing platforms for four lenders, including Nationwide and Australian bank Westpac, both of which have invested in the company. It has not publicly named the other two clients, but a person familiar with the arrangement said one of them is JPMorgan’s new UK-based retail bank, which is due to open later this year.
Jenkins said the company’s growing list of high-profile backers brought it “credibility” with potential clients, but added that the group had taken steps to ensure customers would not be put off by working with a company that is part-owned by rivals.
“We thought about that quite carefully. Clearly the quality of names investing in the company is incredibly important . . . [but] no bank shareholder owns a significant proportion of the company, and from a governance point of view we’re very careful about how we deal with client matters.”
Jenkins personally owned around 60 per cent of 10x before the latest investment, according to Companies House filings. JPMorgan and Westpac both held around 5 per cent, and Nationwide had 9 per cent.
10x reported revenues of £55m in 2019, the most recent year for which figures are available, and a pre-tax loss of £4.4m
Jenkins said: “We will continue to scale the revenues over time, but importantly with the capital we raised we can continue to invest in the business. We can expect to get to break-even in the next two to three years but the priority is to continue to expand the business.”