Software provider Railz, which offers an API integration that connects financial institutions with small and mid-sized businesses, today announced a $15 million series A funding round.

The fundraising round is indicative of the growing interest in open banking and open finance, said Oliver Yu, an intelligence analyst at business analytics provider CB Insights.

“APIs have become an increasingly common way for third-party applications to systematically request and receive data from financial institutions, unlocking new use cases and utility from previously siloed customer data,” Yu told Bank Automation News.

The solution allows banks and fintechs to connect directly to common accounting systems used by small- and mid-size enterprises (SMEs), specifically QuickBooks, Xero and FreshBooks. Currently, Railz clients include 40 fintech companies and three banking clients, including the $150.5 billion M&T Bank, which previously handled such integrations in-house, Railz CEO Sohaib Zahid told BAN, without naming the other clients.

Since accounting systems can be highly customized, the Toronto-based Railz also incorporates a data analytics platform that uses machine learning to normalize and standardize the accounting data. Without direct integration to these tools, the lending process is manual, requiring SMEs to submit PDFs and spreadsheets generated by these accounting systems, Zahid said. Then banks must then manually input the data into their lending systems.

“Our solution helps fintechs and banks to make processing faster and better,” Zahid said. “It also helps SMEs get better products and faster decisioning.” Use cases include small business lending, credit card applications, portfolio management, and cash flow management, he added.

Railz raised $3.1 million during its seed round, which closed at the end of 2020, according to the company The 22-person fintech will use the additional $12 million to build out its engineering and sales teams and focus on building out a more robust solution with more integrations and support for additional data sources, Zahid said.

The software provider competes primarily with APIs that banks and fintechs build internally, a lengthy process that can prove costly, Zahid said. It also competes directly with Codat, a London-based company that also provides a universal API to connect with small business financial software.

The number of API-first companies in fintech “has blossomed,” said CB Insight’s Yu, and include solutions such as the popular data aggregator Plaid.

“From Plaid’s multifaceted data aggregation APIs to Onfido’s identity verification platform, an emerging category of companies are looking, not only to facilitate data exchange, but to create proprietary insights and analytics to drive further value for end users,” Yu said.