Mastercard’s incoming CEO lays out how the $825 million deal for Finicity fits into its strategy for the future of payments

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Michael Miebach

Mastercard announced plans to acquire financial data startup Finicity for $825 million on Tuesday.
The deal will help Mastercard grow it’s open-banking platform, which launched in Europe last year.
Finicity’s data-sharing platform enables banks, fintechs, and lenders to access financial data for credit decision-making and real-time payment authentications.
Earlier this year, Visa announced plans to acquire data startup Plaid for $5.3 billion, which focuses on enabling startups like Betterment and Venmo to tap into consumers’ bank accounts.
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Mastercard is set to acquire a startup specializing in financial data as US banks and fintechs alike look toward growing open banking, which gives customers more control over how their bank, credit card and savings data are shared.

The payment processor entered into an agreement Tuesday to acquire Finicity for $825 million. It marks the second major deal between an incumbent in the space and a fintech. In January, rival Visa announced its plans to acquire buzzy data startup Plaid for $5.3 billion.

Both deals show the entire industry’s ongoing efforts towards open banking.

The basic idea of open banking is sharing customers’ financial data electronically and securely, but only under conditions that users approve. The rise of personal finance apps over the past decade has put a spotlight on the space, as fintechs and lenders want to link into consumers’ bank accounts to get financial information.

Finicity partners with banks, fintechs, and lenders to create a standard for consumer-consented financial data access. Its existing partners include Bank of America, Brex, Experian, and Rocket Mortgage — all of which plug into Finicity’s platform to access their users’ data.

“Finicity is a company that’s always been very stakeholder centric,” Michael Miebach, president and CEO-elect at Mastercard, told Business Insider.

Read more: $5.3 billion fintech Plaid is in the middle of a high-stakes fight over customer data. Its CEO told us why the startup wants to give users control.

“They cater to the banks on one side, trying to help the banks make better credit decisions,” Miebach said, “but they’re also helping the fintechs on the other side by driving better customer stickiness to providing insights into account of access.”

The acquisition, which is expected to close by the end of the year, has the potential to earn Finicity investors an additional $160 million if “performance targets are met,” according to a statement.

Finicity’s data-sharing platform specializes in credit and payments

Based in Salt Lake City, Finicity was founded in 1999 and has raised nearly $80 million to-date from investors, the majority of which has come in recent years as the focus on open banking has surged.

Finicity’s tech will be integrated into Mastercard’s existing open-banking platform, which it launched in Europe last year, where neobanks such as Revolut, Monzo and N26 have seen significant adoption.

Miebach acknowledged that part of the motivation for the deal was to extend into North America.

But he added that Finicity’s focus on credit-related data and real-time payments also made it an attractive partner for the card …read more

Source:: Business Insider

      

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