Fortune’s Post

Moody's acquired Numerated today in a #GonzoBanker #fintechdealtowatch. While financial terms were not disclosed, this deal has to be right up there with Candescent (Veritas Capital's acquisition of the artist FKA NCR Voyix Digital), GTCR LLC's controlling interest acquisition of Worldpay from FIS, and CSI's pearls-on-a-string acquisition of Velocity Solutions for industry deal of the year. Why? Look, here's the deal in my 5-point take (official Moody's announcement link in the comments)... 1. Goliath Needeth David. $86B Moody's was already "kind of a big deal you might've heard of" through builds and some buys -- including WebEquity Solutions— A Moody’s Analytics Company a decade ago. It wasn't enough. What Numerated -- hatched out of Eastern Bank with former Capital One exec Dan O'Malley -- accomplished in the banking market over a short time period is remarkable. Numerated's solution scaled from community financial institutions up all the way to Citi (both the bank as a client/user and their ventures arm as an investor) in a Wowza deal announced in June. 2. Industry pained with commercial. Substantial growth in the client bases of Numerated, nCino, Inc., Abrigo, Hawthorn River, a CSI company, (and Baker Hill to a lesser degree) are testaments to acute bank pain in managing business relationships. The lion's share of U.S. banks are commercially-focused (and getting moreso). Detached risk models and curious wonky credit analysis are dandy, but at some point, it's go-time on executing process change. There is a ton more latent pain building up (behind the acute) yet to be addressed. 3. Competitive funding: A commercial bank's ability to maintain strong, loyal, lower-cost deposits is just as much about lending process since it's about whole process with whole clients. Commercial & Industrial (C&I) lending is tied to operating (deposits + payments) accounts and commercial banks need to be responsive and competitive. 4. Rent-to-own merger-and-acquisitions pattern: Moody's started with Numerated as an integration partner in the same way that CSI began with Hawthorn River as a reseller. If you ever want the inside skinny on who might be a strategic acquirer, get a bucket of popcorn and pull up existing lists of partners. 5. Cool-calm-collected growth from experienced people who attract other smart people. It's interesting listening to Dan O'Malley speak at events (or, say, on the #Fintech #Hustle podcast) because his experiences come from the position of banker/buyer, fintecher/seller, and investor. Same thing from teammates like Cheryl Kardos and Brian O'Neill. They care enough to calmly talk through how to help banks improve without the buzzword bingo and wild claims rampant in the halls of corporate fintechland. Congrats to the Numerated and Moody's teams and investors including JAM FINTOP, Patriot Financial Partners, Venrock, and Citi Ventures!

Quarterly Fintech M&A Review: Tracking Big Bank M&A Key takeaways • Corporate M&A begins to gain steam: Corporate acquisitions of B2B fintechs rose by an estimated 42% YoY in Q3 after several quarters of minimal growth. We believe we are in the early innings of a sustainable corporate M&A recovery. Recall that C-suite and board appetite to make acquisitions rises and falls with stock price, revenue growth, FOMO, and the confidence that comes from stableto-improving performance over time. Q3’s rebound was led by acquisitions from Stripe, Shift4 Payments, Pagaya, US Bank, and Paylocity. • PE buyouts jump, and the rise appears sustainable: We believe we are observing a real recovery in PE fintech buyouts. Q3’s buyout count rose by an estimated 77% YoY after declining by 14% YoY in the prior four quarters. We see another sign of PE’s strength in Q3’s disclosed platform deal value, which rose to $13.8 billion compared with an average of $7.7 billion in the prior four quarters and an average of $3.9 billion per quarter from 2019 to 2024. Lower rates and a robust economy are helping, but large corporate M&A and PE-backed IPOs will likely need to pick up for buyouts to materially accelerate. • Acquisitions by public fintechs remain slow: Acquisitions by the 46 publicly traded fintechs we track reached an estimated 33 transactions in 2024 compared with 34 in 2023 and 62, on average, from 2018 to 2022. Estimated 2024 deal value is tracking similarly. The decline has been driven by drop-offs from Stone Pagamentos, WeWork, PayPal, and several deSPACs. In other words, 2021’s froth has subsequently normalized. Acquirers that remain active include Visa, Mastercard, Shift4, Corpay, WEX, Nuvei, and others. • New federal regulatory posture is unlikely to materially accelerate corporate fintech deals: We believe that large public fintechs such as Visa and Mastercard may be slightly more acquisitive, at best, under the new presidential administration. However, these organizations likely know that major acquisitions, such as Visa’s proposed acquisition of Plaid, can easily be challenged by the next Democratic administration. We expect a greater bump to Big Bank M&A. • Big Bank M&A is at a low but should rebound: We estimate that 2024 will see 12 acquisitions by the 30 largest US banks compared to 10 in 2023 and 29, on average, from 2018 to 2022. Despite low deal count, Capital One’s proposed acquisition of Discover would propel 2024’s recorded deal value to $46 billion, a 10-year high. The most active big banks over the past two years include American Express, First Citizens Bank, BMO Bank, Fifth Third Bank, and J.P. Morgan. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source Pitchbook #fintech #payments #banking Brice Ali Alex Michele Nafis  Monica Lex Theodora Saleh

🟧🟩🟦 Mark Wilson, former Aviva CEO, joins Zilch's board! This is a major win for the UK fintech firm, known for its innovative BNPL solutions. 🟠 Key points: ◾ Industry expertise: Wilson brings a wealth of experience from the insurance and investment sectors. ◾ Growth strategy: Zilch aims to expand its customer base and product offerings.  ◾ Profitability: Zilch has achieved profitability ahead of schedule, joining a select group of UK fintechs.  ◾ Market ambitions: Zilch is eyeing a stock market listing in the near future. 🔵 Key milestones: ◾ Reported its first month of operating profit Jul 2024 ◾ Secured £100 million debt financing from Deutsche Bank in June 2024 to fuel growth.  ◾ Doubled revenue in the year to March 2024. ◾ Surpassed £30 million in revenue in the year ending March 2023.  ◾ Achieved a valuation of $2 billion in October 2023. #fintech #BNPL #UKbusiness #leadership #investment #growth #innovation #profitability #RokaSearch

As a former founding engineer at a neobanking startup, this is the stuff of my nightmares. “In the immediate aftermath of Synapse’s bankruptcy, which happened after an exodus of its fintech clients, a court-appointed trustee found that up to $96 million of customer funds was missing. The mystery of where those funds are hasn’t been solved, despite six months of court-mediated efforts between the four banks involved.” Customers of some fintech apps using Synapse as their bank-as-service provider stand to lose tens or hundreds of thousands of dollars. From the article: “We were informed last Monday that Evolve was only going to pay us $500 out of that $280,000,” Morris said during a court hearing last week, her voice wavering. “It’s just devastating.” I’m assuming much of end-user funds were managed via FBO accounts owned by Synapse’s fintech clients. The FBO account would be managed through Synapse while the funds are actually held in a bank partner like Evolve. An FBO account is essentially a giant bucket of funds that often contains the collective deposits of a fintech company’s entire user base. On top of that FBO account, a fintech company manages its own ledger and balance totals for each user. How this ledger should be maintained is not well defined or regulated. Lose those ledgers, and it becomes incredibly difficult to determine how much each user is owed. The fact that a) the Synapse can just lose track of $96 million during the course of a bankruptcy and b) that this somehow didn’t fall under FDIC safeguards for end users is pretty unnerving. Given how many fintechs are managing their own ledgers and may incur similar failures (maliciously or otherwise), I’m a bit hesitant to manage funds through any neobank at this point without in-depth research and assurances. Essentially, the FDIC covers losses incurred by customers if the fintech’s underlying partner bank collapses, but the FDIC apparently will not cover losses for customers of the fintech if the fintech itself collapses. New regulations have been proposed by the FDIC for better record keeping and customer safety, but that doesn’t help anyone in the present moment.

Exciting times ahead! Zopa Bank is actively pursuing acquisitions to bolster its position in the competitive digital banking sector, targeting growth as it prepares for a potential IPO on the London Stock Exchange. By expanding its offerings and capabilities, Zopa Bank aims to strengthen its challenge to fintech giants like Revolut, Monzo, and Starling, signalling its ambition to become a leading force in the UK’s digital banking landscape.

Fintech News 🚨: Santander-Backed Ebury Starts London IPO Investor Talks Banco Santander SA-backed British payments group Ebury is starting to sound out potential investors for an initial public offering in London, according to a person familiar with the matter, as the Spanish bank and its founders continue to weigh options for the business. Ebury is working with firms including Goldman Sachs Group Inc. and Bank of America Corp. on the possible listing, people familiar with the preparations said. Should it proceed, an Ebury IPO could take place as soon as the first half of next year, the people said, asking not to be identified as the deliberations are private. An IPO isn’t necessarily the option Santander will pursue, Chief Financial Officer Jose Garcia Cantera said in July, suggesting that alternatives could include bringing in a strategic investor. Santander had offered to buy the founders of Ebury’s stakes last year, some of the people said. The payments firm has brought on Bruce Carnegie-Brown as chairman of its board of directors, according to an announcement Friday. He’s been chairman of Lloyd’s of London since 2017, and had been vice chairman and lead independent director of Santander until earlier this year. Ebury also named Ana Muñoz Fenollosa as its chief financial officer, with Jose Esteban becoming Brazil managing director, the announcement showed. The listing plans for Ebury could still be postponed or shelved, and no final decisions have been made, the people said. Details of the proposed offering could change and more banks could be added to the lineup, they said. Representatives for Bank of America, Ebury, Goldman Sachs and Santander declined to comment. Co-founded in 2009 by Chief Executive Officer Juan Lobato, Ebury specializes in cross-border payments, transacting more than £25 billion last year. It has more than 1,600 employees in over 29 countries, according to its website. Santander acquired a majority stake in Ebury for £350 million ($459 million) in 2020 and added it to its PagoNxt payments platform. The Spanish lender increased its stake in 2022. Ebury could be valued at as much as £2 billion in an IPO, people familiar with the matter said in March. A successful float would come as a boost to the London market, which has been struggling with a dearth of IPOs and a string of defections from locally listed companies to New York. A number of UK financial and fintech firms are also considering going public, such as challenger banks Starling Bank and Revolut Ltd., Bloomberg News has reported. 👉 Subscribe for more news https://lnkd.in/d94JgWBU Source Bloomberg #fintech #ipo #payments

BREAKING: Revolut CEO all but confirms the US as future IPO destination KEY INSIGHTS FROM THE 20VC INTERVIEW Yesterday Harry Stebbings released his latest 20VC interview with Revolut founder and CEO Nik Storonsky and it is a BANGER. Here are my takeaways / insights: 1. Nik practically confirms that Revolut will IPO in the US 🇺🇸 When asked if Revolut will IPO in the UK Nik said: “I don't understand how the product that is being provided by the UK can compete with the product that is being provided by the US” He goes on to say that the UK market is less liquid and much more expensive, and that therefore listing in the UK is “just not rational”. When Harry pressed and said “so you would list in the US?”, Storonsky replied “well I consider myself a rational person” 😂. He did go on to say that “If I get a better product in the UK I will list in the UK”, but it’s hard to imagine the UK capital markets are going to become liquid enough and cheap enough to entice Revolut to list here. 2. When Revolut will pursue a US banking license and why they will win there 🥇 Revolut will first roll out the UK bank. This means completing their mobilisation conditions and then moving all the UK customers over to the bank. After this is done they will apply in the US. This makes it sound like they’re likely to apply themselves as opposed to acquiring a company which already has a licence (as others had suggested they might do). Nik then said the reason they will win is that they will take their current experience (i.e. a financial super app) and pair it with a credit offering. Most neobanks have failed in the US as they are still debit-focused despite the US market being much more credit-orientated. 3. No real motivation to IPO 🏦 When asked why he would want to IPO, Nik responded saying that they still have VCs who are going to want to sell their shares eventually. This doesn’t sound like great motivation but it makes a lot of sense given the Revolut founders and employees have already sold over $500m worth of shares this year. Given the relatively weak motivation to IPO I can’t see it happening anytime soon, especially as their earliest investors have also sold about $500m worth of shares. 4. eSIM is the product Nik is most excited about 📱 When asked which product he was most excited about at the moment, Nik said Revolut’s eSIM (essentially a digital sim card). I absolutely LOVE this product. I work abroad a lot and being able to pay for cheap data through the Revolut app is an amazing experience. This interview was also full of insights on how to build high performance teams, how to launch new products and why Nik Storonsky thinks VC is broken. It's a great listen so I'll add the link in the comments. #revolut #ipo #founders

Fintech #IPOs are resurfacing and UK fintech employees are among the beneficiaries. The latest example is payments fintech Ebury, which is going public next year with the help of Goldman Sachs. Its £2bn ($2.59bn) expected valuation may be significantly lower than Revolut's most recent valuation of $40bn, but it's still making millionaires of a fair few employees. https://buff.ly/46cVc15 #FinTech #FinServ #Banking #Payments #PayTech

Top 10 Fintech Acquisitions of Summer 2024 (So Far) The summer heat usually comes with a slowing of news activity, and while this is generally still holding true this summer, there have been some notable merger and acquisition activity throughout the past few months. This season, the fintech landscape has had its fair share of strategic moves, as companies look to expand their capabilities, enter new markets, and expand on their offerings. These acquisitions are not just reshaping individual companies but they are also working to build out what the future of financial technology will look like. As venture capital funding has dwindled over the past few years, the fintech sector has had to get creative in staying afloat. That may be one reason why we are seeing a growth in deal numbers. Let’s dive into the top 10 fintech acquisitions so far this summer. Pluto acquired by Robinhood Robinhood, a commission-free trading platform that aims to democratize finance acquired Pluto, a fintech startup focused on personalized financial planning and investment tools. Deal Details: Financial terms were not disclosed. The deal is expected to close in Q3 2024. Strategic Rationale: Pluto’s AI-driven tools will enhance Robinhood’s financial advisory capabilities. Impact on Industry: The deal may encourage other trading platforms to improve their advisory services, increasing competition. Future Outlook: Integrating Pluto’s technology will help Robinhood offer personalized financial advice, boosting user engagement and retention. Theorem acquired by Pagaya Pagaya, an AI-driven asset management firm that focuses on portfolio optimization through machine learning and big data acquired Theorem, a provider of financial analytics and modeling tools. Deal Details: The specific financial terms of the deal remain confidential. Strategic Rationale: Theorem will strengthen Pagaya’s AI and data analytics capabilities, resulting in robust investment strategies. Impact on Industry: Pagaya’s purchase highlights the importance of AI in asset management, pushing competitors to innovate. Future Outlook: Pagaya’s platform will demonstrate enhanced analytical power, offering more value to institutional clients. Aion Bank acquired by UniCredit UniCredit, a leading European commercial bank that offers a wide range of banking services, acquired Aion Bank, which is known for its digital banking services and innovative financial products. Deal Details: Financial details of the deal were not disclosed. Strategic Rationale: Aion Bank will help UniCredit expand its digital banking capabilities and customer base. Impact on Industry: The deal will help to increase competition in digital banking, driving more customer-centric services. Future Outlook: Integrating Aion Bank’s technology will enhance UniCredit’s digital offerings and expand its market reach. Envestnet acquired by Bain Capital Bain Capital, a private investment firm that focuses on private equity, ven...

🏦 Starling Bank signals IPO prep with new job listing Starling Bank is inching towards an initial public offering (IPO) as the fintech advertises a group head of investor relations. The fintech unicorn is recruiting for a London-based role, which will “play a role alongside senior management, appointed advisors and underwriters to execute a successful IPO or other capital event”. The job description also said the new hire would “support the business in its steps towards its consideration of IPO readiness”, suggesting the upcoming exit event is at an early stage. A spokesperson for Starling Bank told UKTN: “This new role will play a part, amongst other roles, in supporting the CEO and CFO with existing investor relationships and support them in considering the long term future, which might include a possible IPO.” Financially, Starling is in a strong position, having posted its third full year of profitability in June, raking in £301m in pre-tax profits. The challenger bank first reported a profit in July 2022. It still remains early days, however, for Starling Bank CEO Raman Bhatia, the former OVO Energy chief who took the helm earlier this year following the departure of founder Anne Boden. Boden announced she would leave in May 2023, saying it was the “right time”, with the group having posted its second year of profit. On the appointment of Bhatia, Boden said he was “someone who can take Starling into its next phase of growth”. The destination of a potential IPO for Starling Bank will be watched closely, as the London markets continue to struggle to attract IPOs from tech firms. Last week, it was reported that City Minister Tulip Siddiq planned to hold talks with fellow fintech Revolut with the hope of convincing the $45bn group to consider London in a listing event. A spokesperson for the Treasury told UKTN Siddiq will meet with a range of industry figures, including Revolut and Starling Bank, however, declined to comment on the specifics of any discussion. Source: https://lnkd.in/dQcXV3uC