Temasek-backed Partior has remained largely out of the public eye since becoming an independent company in 2021. However, this year saw a shift following the departure of former CEO Jason Thompson in January, which sparked a series of new developments.
The distributed ledger technology (DLT) company first emerged from Project Ubin in 2016, a multi-year project by the Monetary Authority of Singapore (MAS) to study the feasibility of using blockchain in financial institutions.
After achieving proof-of-concept, the firm was later backed by some of the biggest names in finance — DBS, JP Morgan, Standard Chartered and Temasek Holdings — as it embarked on its journey to become a publicly available DLT platform.
Five months after Thompson’s departure, new CEO Humphrey Valenbreder joined from Dutch neobank Bunq. The firm later announced a US$60 million ($80.86 million) funding round in July, led by Peak XV Partners (formerly Sequoia Capital India and SEA) and joined by Valor Capital Group and Jump Trading Group.
Not long after, in September, Partior announced the layoffs of more than a quarter of its staff, leaving a team of around 90 people from 130 previously. Later, reports of grievances towards new chief Valenbreder appeared on the employee review platform Glassdoor, centred around a “lack of vision” for the company’s future.
On Nov 27, Partior announced the second close of its series B funding round bringing the total amount to US$80 million, up from US$20 million in the previous round. It welcomed yet another new strategic investor — Deutsche Bank, the largest Euro clearer.
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At this year’s Singapore FinTech Festival in early November, The Edge Singapore caught up with Valenbreder about the company’s future.
“October last year was [when we successfully completed] the first US dollar transaction,” says Valenbreder. “And I think that this shows it takes a lot of time and effort to create new infrastructure in a way that we do it for wholesale settlements across borders.”
‘Rightsizing and fit for focus’
Partior, which was incorporated in 2021, is “unlike any B2C start-up”, claims Valenbreder. It cannot grow by simply acquiring customers through investing in marketing dollars. Instead, the company had to develop a new technology network from scratch to facilitate the instant and settlement of payments between banks through blockchain.
The firm took almost three years to build up the foundational layer, also known as the protocol. The engineers hired for this build were working constantly towards “100% uptime”, to ensure that the blockchain payment network was always operational.
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Now, Valenbreder says the “initial build” of this infrastructure has been completed, along with different cloud environments and node definitions, to cater to different customers who use different providers.
Looking ahead, the company will build for more features and functionality, resulting in a “switch in the type of resources allocated for future cases we solve for”, he says, therefore resulting in the round of layoffs which took place in September.
As the proportion of employees required to look after the foundational infrastructure decreases with the number of automated tools that they have been able to develop, these individuals will also gradually want to move on to another firm with more “interesting” challenges to solve, says Valenbreder.
“It’s right-sizing [the organisation] for fit and focus,” Valenbreder says. “We need to move from a start-up to a scale-up, from project thinking into product thinking.”
The way he sees it, Partior has progressed from unquestioningly experimenting and solving problems that it thinks a customer might have, to resolving cross-border clearance and settlement payments for financial institutions directly.
“Artificial intelligence (AI) today is what blockchain was four years ago; there was interest, hype, everybody wanted to do it, now I think [blockchain] has a more realistic proposition,” he says.
10% bits and bytes, 90% governance
The sheer size of the banks that Partior works with poses incredible challenges, says Valenbreder. The greatest hurdle has been implementing new technology into an existing core banking infrastructure and the compliance and audit processes that Partior has to endure.
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“It is the technical hurdle in introducing a new technology which poses a number of unsolved issues that can only be addressed by having time,” he says. “And I think it might have been underestimated how complex it can be to introduce a new technology.”
For instance, global bank JP Morgan, which has partnered with Partior from the very beginning, has entirely different entities in different parts of the world. The bank’s US entity is different from the Singapore entity, and they operate under different regulatory regimes. Even the cloud integration level could be different, the new CEO says.
“It’s 10% the bits and the bytes and 90% governance,” he says. These include risk reviews, audit reviews, regulatory reviews and Office of the Comptroller of the Currency (OCC) approvals.
Today on average, the pure technological fit of Partior’s blockchain into a banking system can be integrated between three to six months. However, with regulators involved, this timeline could be more uncertain.
“So it’s quite a complex environment that you operate in, and that is, I think, more difficult because it’s a ring fence-regulated environment,” he adds.
While Partior’s blockchain is now operable, the company is unable to disclose which fund flows their partner banks use with their blockchain. But Valenbreder says that some have begun using it in market flows, while others have chosen to start with Treasury flows.
He maintains that the Partior blockchain can solve every different fund flow, but ultimately, it is up to the banks to decide where to deploy the technology. “It’s really looking at what fits my needs the best,” he says.
Three things at the top of mind
Three things are top of mind for the new CEO today — network density, commercial agenda of business development and the go-to-market strategy. “So adding new banks, adding new logos, new currencies,” says Valenbreder.
He adds that as Partior is a network solution, much like Visa or Mastercard, the network is only valuable if it is used by thousands of individuals. A diversity of currencies coming through different trade corridors will also provide the company with more value.
Just this past couple of weeks, Partior announced partnerships with various banks. These include Nonghyup Bank in South Korea and fintech payment provider Nium. The Emirates NBD, a banking group with a presence in the Middle East, North Africa and Turkey, has also joined the Partior network, unlocking all the company’s Gulf Cooperation Council currencies.
The DLT platform will need to collaborate with other players in the space to make the entire chain of technologies available to end customers.
Valenbreder says that until recently, many thought there would be a “one winner” in the blockchain space. But in recent times, there is a clear sense of reality that it is better to have multiple successful players focusing on the use case that they set out to do and eventually collaborating.
For example, Partior’s “competitor”, Fnality International, creates solutions for central bank money movement, which complements Partior’s focus on commercial bank money.
“So we want Fnality to be successful because they unlock liquidity from central banks in different geographies, and then our [partner] banks can use our rails to make cross-border payments while having the backstop of liquidity guaranteeing the risk underlying these transactions,” he says.
Lastly, Valenbreder’s immediate focus is to build a more “agnostic universal layer” blockchain, compared to one that is used on a more “bilateral” basis at the moment.
Today, Valenbreder says that his blockchain has been commercialised. He maintains that the recent US$80 million funding round is evidence that the company has moved away from only strategic investors.
“We now have financial investors and financial investors often have more focus on the commercialisation and the profitability [of the product],” he says. Valenbreder is now focused on demonstrating that using Partior’s blockchain offers greater profitability and efficiency for his customers compared to traditional methods of transferring money. The key, he concludes, lies in the shared ledger.
