BankMobile likely to be first of many to go public this year
- BankMobile recently went public through its merger agreement with Megalith Financial Acquisition Corp., a special purpose acquisition company.
- As several fintech trends take hold, this may be the year for fintech IPOs.
On January 5, BankMobile, a subsidiary of Customers Bancorp, went public through its merger with Megalith Financial Acquisition Corp., a special purpose acquisition company. The companies combined are now listed under BM Technologies on the NYSE.
The merger valued the company at $140 million.
BankMobile, a challenger bank which serves college and university students and also offers a banking as a service platform, has tried selling itself and going public before.
In 2017, it entered into an agreement to be bought by Flagship Community Bank. The plan was for the two companies to merge, for Flagship to rename itself to BankMobile, and for the combined company to go public. But in 2018 that agreement was cancelled.
Now, the five-year-old challenger bank’s move to go public via a SPAC seems to be in line with a larger trend.
“You're seeing a lot of these SPAC holding companies and blank check companies targeting fintechs to take public,” said Kevin Dinino, fintech strategist and president of KCD PR, which provides communications for financial service companies. “So the stage is really set, if you will, to take advantage of that.”
Several fintechs have announced IPO plans, including SoFi, which last week announced that it would go public via a SPAC.
BankMobile, which has two million account holders, has already made moves that could increase its appeal to investors, including plans to join forces with Google to provide digital bank accounts to Google Pay customers. It also recently expanded its white label strategy with T-Mobile to launch T-Mobile Money.
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But there are still challenges that could come with going public. These include the current political climate and the sheer number of fintechs that are going public.
“It's probably one of the more fragile markets as well, with a significant amount of political unrest and uncertainty,” said Dinino. “You have a new administration coming in, and a ton of stimulus being pumped into the economy as well. So, on the flip side, you have high valuations, but you also have a lot of risk as well.”
But nonetheless the overall drive among fintechs to go public seems to be strong.
For M1, a privately owned money management platform that automates the investing process, it’s not a matter of if they go public, but when. The 5-year-old fintech raised $45 million in its recent round of funding and just announced reaching $3 billion in client assets.
While M1 seems to be putting its IPO plans on hold for now, CEO and founder of the company Brian Barnes seems confident that it will happen sooner in its lifespan rather than later.
“We absolutely would love to be public early,” said Barnes. “We don't have immediate plans to go public or anything like that. But we have a bias towards being public quite early, in that we think it's both in our interest and in the interest of our user base.”
As for BankMobile, its move to go public is indicative of the boom in popularity and interest fintech is already seeing this year.
“As cloud computing, third-party data management, and contactless payments become the norm, fintech companies will have clear advantage when it comes to carving out a piece of the Wall Street pie,” said Barr Moses, co-founder and CEO of Monte Carlo, a data reliability company that works with several fintech companies. “BankMobile is the first of many we’ll see this year.”