SALT LAKE CITY — Veteran financial technology innovator Finicity will be acquired by consumer financial giant MasterCard in an $825 million deal announced Tuesday.
Finicity, founded in 1999, developed a technology platform that has put the company on the leading edge of so-called open-banking practices that are helping power the new world of online banking and financial services. Finicity helps consumers control and direct access to their personal financial and banking information when applying for loans, making payments or conducting other online business with banks, lenders and financial service providers.
MasterCard President Michael Miebach said Finicity will play a major role in helping the company advance its open-banking strategy in a world where digital financial transacting is fast becoming the norm.
“Open banking is a growing global trend and a strategically important space for us,” Miebach said in a statement. “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.
“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,” he said. “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.”
Finicity’s consumer-permissioned data aggregation helps power systems like Rocket Mortgage’s online home loan offerings and enhanced credit options offered by Experian, FICO and others. Finicity co-founder and CEO Steve Smith said his company had already been working with MasterCard as a partner in planning for a future in which online and smartphone-driven personal banking and financial services were the coin of the realm. That future is now even closer as many businesses’ migration to the digital realm has been accelerated due to conditions brought on by the COVID-19 pandemic.
He also noted that consumers are increasingly looking for financial tools and products in which they retain control over their personal financial data.
“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,” Smith said in a statement. “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.”
Tuesday’s announcement is the second megadeal of 2020 involving Utah financial technology companies.
In April, online personal finance giant SoFi announced plans to acquire Utah-based financial technology firm Galileo for $1.2 billion in a cash-and-stock deal. Founded in 2000, Galileo was a very early player in the world of digital payment processes and has pioneered advances in application program interfaces, or APIs — the digital connections that allow one software program to communicate with another.
The two big wins are reflective of a vibrant fintech ecosystem in Utah, one born of a state that has seen both long-running and outsized success of its financial services and high technology sectors.
Smith said he’s not surprised at the evolution that’s taken place and, having been involved in technological innovation for some three decades, was proud to be among the pioneers of Utah’s fintech community.
“We do great technology and we do have that foundation of significant banking here in Utah,” Smith said. “I really believe that Utah will continue to grow in its financial technology innovations.
“Galileo and Finicity are part of a long and growing list of great transactions and great companies.”
Smith said Finicity’s executive team will remain in place and expects only continued growth in its global staff of around 500, including the 150 or so employees based at the company’s Salt Lake City headquarters.
MasterCard closed regular trading Tuesday up a little less than 1% at a stock price of $306.88 per share and a market capitalization over $300 billion.