Fiserv acquiring bank tech provider Finxact

Fiserv has struck a $650 million deal to buy Finxact, a firm that provides cloud technology and open development tools for speedier IT upgrades, making it popular with bank technology investors.

The Jacksonville, Florida-based Finxact helps financial institutions launch a digital brand, modernize their technology or integrate with fintechs through open banking.

“Through this combination, Fiserv will create a streamlined path for clients to offer digital solutions to their customers. Finxact also enhances our ability to support a growing number of financial institutions and business clients," Frank Bisignano, Fiserv's president and CEO, said in a press release. Fiserv, which was already an investor in Finxact, will acquire the remainder of the fintech's ownership as part of the deal, which is expected to close later this year.

Founded in 2016, Finxact uses Amazon's cloud to operate bank technology systems, manage access to financial data, or power related functions through application programming interfaces. Finxact was founded by Frank Sanchez , a bank technology veteran who helped develop commonly used core banking technology that FIS acquired in 2004 under the brand Profile. Finxact became an alternative to mainstream core banking vendors such as Fiserv, Jack Henry, Finastra and FIS.

Live Oak Bancshares, for example, in late 2021 moved its consumer accounts from a Fiserv core banking system to Finxact, hoping to make it easier to partner with fintechs, send data into loan applications and other bank products, and integrate with platforms such as Quickbooks and Amazon's e-commerce site.

Bloomberg

Live Oak, founded in 2007, created a technology unit that it spun off as nCino. Live Oak's founder, Chip Mahan, later asked Sanchez to construct a real-time core banking system that could work with fintechs. Live Oak contributed $12 million in capital for Finxact.

Finxact in 2019 drew an additional $30 million from SunTrust Banks, the American Bankers Association and others, highlighting Finxact's ability to power open banking connections between banks and third parties.

Sanchez is expected to remain as part of Fiserv.

"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,” Sanchez said in Fiserv's release.