Zeta, a provider of banking software to banks and fintech startups, has raised $50 million from a strategic investor at a $2 billion valuation.

The new investment from American healthcare company Optum marks a 70% increase in the Bengaluru-based startup’s valuation from the $1.15 billion price tag (pre-money) it earned in 2021, when it raised $250 million in a round led by SoftBank Vision Fund 2.

Founded in 2015 by Bhavin Turakhia and Ramki Gaddipati, Zeta helps banks use modern tech and cloud infrastructure to launch and manage credit cards, checking accounts, and loans.

“In banking, 60%-70% of institutions still operate on mainframes — many created before some of us were even born,” Turakhia said in an interview. He compared it to the industry’s gradual shift to cloud computing, where banks initially managed their own data centers before adopting services like AWS and Azure.

He expects a similar evolution in core banking technology, though with higher stakes since it involves replacing what he calls “the heart and soul of the bank” — systems that process payments and manage accounts.

Zeta, which also counts Mastercard among its backers, says it serves 25 million accounts through its platform and has contracts to add another 25 million. Its flagship customer in India is HDFC Bank, the country’s largest private lender, which also used the startup’s technology to rebuild its PayZapp digital payments platform.

The startup also works with Pluxee, a global corporate benefits provider, and Sparrow Financial, a U.S.-based credit card issuer.

The U.S. is Zeta’s biggest market, followed by India, where it generates annual revenue of more than $50 million. The startup is in talks with several large U.S. banks, but Zeta’s executives cautioned that some of these partnerships can take years to materialize. 

Zeta says it has invested about $400 million in its platform since inception and expects to become profitable by March 2026. Its offerings include modules for core banking, payment processing, fraud detection, and customer engagement.

“Through the next decade, we intend to capture 25% of the market share,” Turakhia said. “That has never been done before, because a vast majority of the market share in this industry was captured decades ago and has mostly been through acquisitions.”

Turakhia started his first venture with his brother Divyank in 1998. Along the way, they sold four internet businesses to Endurance for $160 million. Zeta is the third startup Bhavin has co-founded since then. In August 2021, WordPress-parent firm Automattic backed Turakhia’s most recent startup, business-email provider Titan, valuing it at $300 million.

The company has 1,700 employees across the U.S., Middle East, and Asia. 

Turakhia said the startup didn’t need to raise capital: “In all likelihood, this $50 million is going to sit in the bank […] This investment reflects a reaffirmation of our journey.”