Mastercard to acquire Finicity to bolster open banking strategy

Source: IBS Intelligence 2020-06-24

Mastercard has announced that it has entered into a definitive agreement to acquire North American Finicity, a provider of real time access to financial data and insights.

Under the terms of the acquisition, Mastercard will pay total purchase consideration of $825 mn, and Finicity’s existing shareholders have the chance to earn-out of up to an additional $160 mn if performance targets are met.

Through the acquisition, Mastercard is looking forward to strengthens the existing Mastercard open banking platform with Finicity’s complementary technology and teams, to enable and safeguard a better choice of financial services, reinforcing the company’s long standing partnerships with and commitment to financial institutions and FinTechs globally.

Open banking gives people and businesses more control over their financial data. This includes determining how and where third parties such as FinTechs or other banks can access information to provide new services like money management programs or initiate payments on their behalf. The combination of these efforts with the Finicity technology powering platforms such as Quicken Loans Rocket Mortgage and Experian expects to boost the potential to shape the next-generation of open banking services.

“Open banking is a growing global trend and a strategically important space for us. With the addition of Finicity, we expect to not only advance our open banking strategy but enhance how we support and accelerate today’s digital economy across several markets. Finicity has a proven business, built on partnerships with thousands of banks and fintechs, similar to us. Finicity also shares our commitment to consumer-centric data practices, ensuring consumers have a say in how and where their information should be used. It’s through the use of next generation open banking APIs and clear consumer approvals that this financial information can deliver streamlined loan and mortgage processes, rapid account-based payment initiation and personal financial management solutions,” said Michael Miebach, president of Mastercard.

Finicity’s technology and its employees expect to stregthen Mastercard’s existing open banking solutions by assisting them to expand in North America and other key geographies. Through the acquisition, Mastercard will extend Finicity’s reach to be a one-stop partner for any consumer, FinTech, bank, merchant, or government’s data, payment and open banking needs.

On completion of the acquisition, Mastercard’s existing technology and expertise along with Finicity’s new analytics platforms will help streamline the credit-decisioning process for consumers and SMBs. Besides, the integration of Finicity’s account owner verification tools to Mastercard’s New Payment Platform capabilities aims to deliver an improved ACH and real-time payments experience to consumers, merchants and businesses. The transaction is anticipated to close by year’s end, is subject to regulatory review and other customary closing conditions.

“Since our founding, Nick Thomas and I have focused on developing industry-leading technology and building an organization that empowers consumers and organizations to better understand, manage and use their financial data to improve their financial lives. Enabling people to access and control their data, while ensuring best practices to protect that data, will continue to drive tremendous innovation that increases financial literacy, inclusion and health. This partnership with Mastercard helps us accelerate this mission globally,” said Steve Smith, chief executive officer and co-founder of Finicity.

Established since 2000, Finicity enables a financial data-sharing ecosystem that is secure, inclusive and innovative. The firm has a strong commitment to delivering best-in-class data management practices by partnering with banks and their customers to ensure reliable connectivity is established.

Mastercard to acquire Finicity to bolster open banking strategy

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