Fiserv will pay $650 million to buy the rest of Finxact
- Global Payments Processor Fiserv agreed to pay $650 million to acquire the stake in banking software company Finxact that it does not already own, he said on Monday in a press release. A Fiserv spokesperson declined to comment on the size of Fiserv’s existing stake. A Finxact spokesperson has reported to Fiserv on this issue.
- The 140 employees of Jacksonville, Fla.-based Finxact and the company’s CEO, Frank Sanchez, will join Fiserv, a Fiserv spokesperson said, without specifying Sanchez’s new role. Sanchez founded Finxact with his brother Michael Sanchez in 2016, according to the Company Website.
- The transaction is subject to regulatory approvals and other closing conditions, but is expected to close this year, Brookfield, Wisconsin-based Fiserv noted.
Overview of the dive:
Purchase Finxact’s cloud-native banking system will enable Fiserv to accelerate its digital banking strategy and provide customers with more modern and personalized account processing and payment offerings, the payments giant said.
Finxact could add $20-25 million in annual revenue for Fiserv, Baird Equity Research analyst estimate.
Acquisition expands and streamlines Fiserv’s digital offers “by bringing together Finxact’s very flexible and scalable [application programming interface]-first capabilities with the full portfolio of digital financial solutions and the expertise of Fiserv“, Fiserv CEO Frank Bisignano said in Monday’s press release.
The purchase plan Finxact continues a trend that has seen Fiserv, over the past two years, sharpening his serves while swallowing smaller fintechnologys.
last fall, Fiserv acquired New York-based BentoBox, a digital marketing and commerce company that helps restaurants connect with customers online; the terms of this agreement were not disclosed. Fiserv also made purchases of Pineapple Payments and Ondot systems last year.
“Our initial investment in Finxact was as First Data as part of a funding round in January 2019,” said one. Fiserv the spokesperson said via email. “Fiserv made an additional investment in Finxact in 2021.”
Fiserv’s stake in Finxact ahead of Monday’s proposed deal was likely below 20%, Baird analysts said.
For his part, Sanchez, Finxact’s CEO, said Monday, “We will be better positioned to serve many more institutions of all sizes when combined with the breadth and depth of our Fiserv abilities “at once”as the bank undergoes transformative change.”
Sanchez’s track record indicates he’s used to handling big-name acquisition interests. Prior to Finxact, he was co-founder and chief technology officer of digital bank ZenBanx, which was acquired by SoFi in 2017, according to Finxact’s website.
He and his brother also founded the banking software company Sanchez Computer Associates, which was bought in 2004 by Fiserv competitor Fidelity National Financial, now known as Fidelity Information Services, or FIS. Frank Sanchez worked for FIS from 2004 to 2011, holding positions such as global director of research and development as well as president of corporate banking and retail solutions, according to the Finxact website.