What's happening: Fiserv announced yesterday it has signed a definitive agreement to acquire Finxact. Finxact offers a cloud-native banking core as an alternative to other core providers like Jack Henry, Finastra, and FIS. Fiserv was an early investor in Finxact and will acquire the remaining ownership interest for approximately $650 million.
Why's it important: Finxact helps round-out Fiserv's digital banking strategy, sitting alongside the firm's account processing, digital, data aggregation, and payments solutions. As FIs and leading brands outside of finance are taking up technology for embedded commerce, finance and payments, Finxact can help Fiserv provide clients modern, flexible, and personalized digital banking experiences. Fiserv clients will need these capabilities if they want to launch competitive new products and partner with other tech firms.
We're in the process of a slow, multi-year rollout that has banks and other FIs migrating to digital cores. The success of fintechs as alternatives to banks and the pandemic's push towards digital are putting added pressure on banks to move to digital.
- For example, Jack Henry has been making progress moving its bank and credit union clients, like $25 billion Simmons Bank, to its Banno Digital Platform.
Finxact history: Founded in 2016 by Frank Sanchez, Finxact's core helps organizations of all sizes launch new products and digital capabilities via a set of APIs. Finxact also offers a marketplace where banks can integrate tech and data firms like Codat, Apiture, and MX.