In one of its biggest acquisition deals since it bought First Data Corp. for $22 billion in 2019, Fiserv Inc. will purchase cloud-native banking solutions company Finxact Inc. for $650 million.
Brookfield-based Fiserv (Nasdaq: FISV) was an early investor in Finxact and has signed a definitive agreement to acquire the remaining ownership interest in the Jacksonville, Florida-based startup, according to a Monday press release.
Founded in 2016, Finxact's software platform is designed to power digital transformation for financial institutions. The product will complement Fiserv's account processing solutions, Fiserv CEO and president Frank Bisignano said in a statement.
“We’re accelerating the delivery of innovative digital banking experiences for our clients and elevating their ability to compete in a rapidly changing market," Frank Bisignano said. “Through this combination, Fiserv will create a streamlined path for clients to offer digital solutions to their customers."
The deal will give Fiserv the opportunity to distribute Finxact's core processing software at a scale that doesn't currently exist in the market, said David Koning, an analyst who follows Fiserv for Robert W. Baird & Co. Inc.
"We will be better positioned to serve a far greater number of institutions of all sizes when combined with the breadth and depth of Fiserv capabilities," Finxact chairman and CEO Frank Sanchez said.
Fiserv's acquisition of Finxact is expected to close later this year.
Finxact raised at least $42 million from investors since its founding, including $12 million in 2017 and $30 million in 2019 from investors including the American Bankers Association, Accenture Ventures, SunTrust Bank and First Data.
Fiserv chief revenue officer Christopher Foskett, previously a First Data executive, is a member of Finxact's board.
The Finxact deal also mirrors Fiserv's recent strategy of buying innovative technology companies and integrating them with its existing businesses, Koning said.
In buying First Data, Fiserv acquired the digital point of sale platform Clover, which competes with systems like Square and Toast. In October, Fiserv announced it would buy online restaurant platform BentoBox for an undisclosed amount.
Last year, Fiserv bought payment technology startup Pineapple Payments for $206 million and digital card services platform Ondot Systems for $270 million, among other smaller acquisitions.
