A pair of Triangle fintechs are combining as Raleigh-based Constellation Digital Partners buys out Durham-based WalletFi.
“The real thing that I’m excited about is the opportunity to say an exit happened here between two fintechs,” said WalletFi co-founder Marc Miller, whose employees all join Constellation with the deal and “get to experience a real exit.”
“That’s something they can build upon for their future,” Miller said.
Kris Kovacs, CEO of Constellation, said it’s an exciting marriage, as WalletFi was one of the first fintechs on its platform, which allows credit unions and digital banks to add fintech services to their offerings.
“We worked with them,” he said. “We have clients who are live with them on our platform. Knowing the product, being able to see it in action… we knew for sure it would be a good add to the core digital banking services for Constellation.”
The pain point
Miller moved to the region nearly a decade ago when his wife began working for Fidelity. He recalls his co-founder, Alain Glanzman, coming up with the initial pain point for WalletFi.
“He had moved several times … and it was really, 'every time I move, how do I manage how I’m paying for all these recurring services across different payment methods?'” said Miller, who becomes the new chief revenue officer of Constellation in the deal.
So WalletFi started, initially as a company that would automate the moving process – from managing those payments to getting your mail moved. It quickly evolved into helping people make sense of their subscriptions. By the time Miller and Constellation's Kovacs met for the first time at a fintech meetup four years ago, the firm had evolved into a subscription management analytics-as-a-service for community financial institutions.
Miller said the pivots were all influenced by real problems that impacted them personally, such as when his credit card was stolen and he felt the frustration of having to reset all of his payment methods.
“Then we looked at it from a B to C standpoint,” he said. “While this is a major problem for customers, it’s an even bigger problem for financial institutions.”
Fraudulent activity can mean lost customers, as while clients wait for a new card in the mail, they may “take out that next card” to pay the bill.
But that’s just one piece of WalletFi, which manages and tracks transactions so credit unions and banks can know their customers better.
“You get a bank statement, it’s all these numbers and characters you don’t really know,” he said. “It tells you something about the customer … what you learn there builds a better story.”
Customers want relevance, and that’s where WalletFi comes in, he said.
“I think where financial institutions have gone wrong in the past is, you get ads, emails all the time for services that don’t apply to you,” he said. “We’re now able to take this ability to bring personalized, specific recommendations to the members that apply to them.”
Financial terms of the deal weren't disclosed, but Miller said WalletFi employees had equity.
Daniel Obernesser, WalletFi’s CTO, becomes CTO of Constellation in the deal.