Online personal finance provider SoFi yesterday agreed to acquire US-based digital banking technology provider Technisys, which counts chipmaker Intel as an investor, in a $1.1bn all-stock transaction.
The sale involves a consideration of about 84 million shares of SoFi’s common stock, representing just under 10% of its share volume.
Technisys provides a core-banking system product – the backbone that powers banking apps and digital experiences – for traditional and digital banks in addition to other financial technology producers.
The deal will give SoFi its own core banking system, expanding its offering to what it describes as the only end-to-end vertically-integrated banking technology stack. It complements the company’s early 2020 purchase of payments and bank account infrastructure provider Galileo in a $1.2bn cash and stock deal.
Sofi claims the latest acquisition will bolster its product for both Galileo’s 89 million consumer and enterprise customer accounts and Technisys’ brand customers in Latin America and the US.
The fintech sector has seen a number of consolidation deals over the past year as companies look to not only integrate vertically but also to expand horizontally. PayU, the payment processing subsidiary of internet group Prosus, agreed in August 2021 to acquire online payment platform BillDesk in a $4.7bn deal.
Payment services firm Mastercard had completed its majority acquisition of payment technology provider Nets’ corporate services business five months earlier.
Other notable deals in the space include enterprise financial software provider Bill.com agreeing to buy expense management software provider Divvy for $2.5bn in May 2021, as well as financial services provider Nordax’s $2.2bn takeover of Norway-based digital bank Bank Norwegian in November.
Another cloud-based core banking vendor, nCino, agreed to acquire digital mortgage platform and app developer SimpleNexus for $1.2bn the same month.
SoFi chief executive Anthony Noto said: “Technisys has built an attractive, fast-growth business with a unique and critical strategic technology that all leading financial services companies will need in order to keep pace with digital innovation.
“The acquisition of Technisys is an essential building block in delivering on our member-centric, digital one-stop-shop experience for SoFi members and our partners through Galileo, our provider of fintech cloud services.
“Technisys has emerged as a proven leader in Gen 3 multi-product banking core technology. We are excited to bring their technology offering under the SoFi Technologies umbrella and deliver it to hundreds of millions of customers worldwide.”
Intel subsidiary Intel Capital invested in Technisys through its $13m series B round in 2014, alongside Alta Ventures, Kaszek Ventures, Holdinvest and Endeavor Catalyst. The company added $50m in a 2019 series C round led by Riverwood Capital.
