Mastercard (NYSE: MA) today announced it has entered into an agreement to acquire Finicity, a leading North American provider of real-time access to financial data and insights. The purchase price is US$825 million, and Finicity’s existing shareholders have the potential for an earn-out of up to an additional $160 million, if performance targets are met.
The addition of Finicity’s complementary technology and teams strengthens the existing Mastercard open banking platform to enable and safeguard a greater choice of financial services, reinforcing the company’s long-standing partnerships with and commitment to financial institutions and fintechs across the globe.
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 that information to provide new services like money management programs or initiate payments on their behalf.
Mastercard has increasingly invested in this space over several years, including the 2019 launch of a set of comprehensive open banking solutions in Europe. The combination of these efforts with the Finicity technology powering platforms such as Quicken Loans Rocket Mortgage and Experian Boost has 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,” said Michael Miebach, president of Mastercard. “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.”
“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,” said Steve Smith, chief executive officer and co-founder of Finicity. “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.”
- Advances Mastercard as a Strong Open Banking Partner for Fintechs, Financial Institutions. Finicity’s technology and dedicated employees will enhance Mastercard’s existing open banking solutions by enabling them to expand in North America and other key geographies. Today, Mastercard open banking services in Europe feature connections to more than 1,800 financial institutions. With a direct connection to the North American banking, lending and wealth management ecosystem, Mastercard will extend Finicity’s reach to be a one-stop partner for any consumer, bank, merchant, fintech or government’s data, payment and open banking needs.
- Strengthens Capabilities and Offerings to Consumers and Businesses. Following the completion of the transaction, Mastercard’s existing technology and expertise combined with Finicity’s new analytics platforms, will help streamline the credit decisioning process for consumers and small businesses. Additionally, the integration of Finicity’s account owner verification tools to Mastercard’s New Payment Platform capabilities will deliver an improved ACH and real-time payments experience to consumers, merchants and businesses.
- Enhances Commitment to Responsible Data Practices. Finicity shares Mastercard’s commitment to safe and secure data practices centered around the individual. Finicity’s co-founders have played a critical role in the advancing the discussion of best practices across multiple industries. Finicity has a strong commitment to deliver best-in-class data management practices by partnering with banks and their customers to ensure secure connectivity is established.
“Bank of America is a strong believer in giving people control over their financial information and the ability to share it securely,” said Mark Monaco, head of Enterprise Payments at Bank of America. “We’ve worked with both Finicity and Mastercard, as well as industry groups such as Financial Data Exchange, to accelerate the adoption of the highest standards of privacy and security for data sharing, and to eliminate the retention and storage of individuals’ financial details by third parties. We look forward to continuing our work with Finicity and Mastercard to further improve the customer experience.”
“Finicity has been a strong partner of Rocket Mortgage during the mortgage industry’s tech revolution. Fast, easy access to consumer-permissioned data is critical to lenders who are making well-informed mortgage real time decisions. We are happy for the Finicity team in joining Mastercard and look forward to a continued partnership,” said Scott Elkins, senior vice president of Investments at Rocket Mortgage.
“Brex’s innovative offering uses Finicity’s connectivity, giving us access to the best quality business-permissioned data to power our platform,” said Henrique Dubugras, chief executive officer, Brex. “The combination of Finicity’s capabilities with Mastercard’s products and services will enable us to create innovative solutions to enhance our Brex offerings.”
“We are pleased to see the combination of Finicity and Mastercard,” said Craig Boundy, chief executive officer of Experian North America. “We look forward to collaborating with them in our ongoing mission to help consumers.”
As with past acquisitions, Mastercard does not expect this acquisition to be incrementally dilutive to its business for greater than 24 months. This dilution is driven by investments in the business, including its international expansion, as well as the impact of purchase accounting and integration related costs.
The transaction, which is anticipated to close by year’s end, is subject to regulatory review and other customary closing conditions.
About Mastercard Incorporated (NYSE: MA), www.mastercard.com
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.
Finicity’s mission is to help individuals, families and organizations make smarter financial decisions through safe and secure access to fast, high-quality data. The company, which launched its first financial product in 2000, has since grown to provide financial data APIs, credit decisioning tools and financial wellness solutions. Finicity partners with influential financial institutions and disruptive fintech providers alike to give consumers a leg up in a complicated financial world. It has played a key role in innovative solutions like Experian’s Boost™ and it helps Rocket Mortgage by Quicken Loans access consumer-permissioned data for mortgage decisions. Finicity was awarded API World’s Finance API of the Year and has been an American Banker Best Places to Work in Fintech the past three years. Finicity is headquartered in Salt Lake City, UT and has approximately 500 employees worldwide. To learn more or test drive its API, visit www.finicity.com.
This press release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this press release, the words “believe,” “expect,” “could,” “may,” “would,” “will,” “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to Mastercard’s future prospects, developments and business strategies, as well as Mastercard’s acquisition and operation of Finicity. We caution you to not place undue reliance on these forward-looking statements, as they speak only as of the date they are made. Except for the company’s ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events.
Many factors and uncertainties relating to the proposed transaction, our operations and our business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of these factors could cause our actual results or the impact of the acquisition to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf. Such factors related to the completion and impact of the acquisition include, but are not limited to, whether all necessary conditions will be met, and whether the transaction will close on agreed terms and in a timely manner.
For additional information on other factors related to Mastercard’s overall business that could cause Mastercard’s actual results to differ materially from expected results, please see the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K for the year ended December 31, 2019, and any subsequent reports on Forms 10-Q and 8-K.