BankTechM&A / Funding

DOJ gives Mastercard the green light to acquire Finicity for $825 million

At least one major fintech acquisition is moving forward.

Mastercard revealed Monday that the Department of Justice has given it the green light to proceed with its planned $825 million acquisition of Finicity.

With all the scrutiny major fintech M&As are currently under, the DOJ’s clearance of this deal is certainly good news for the space.

In a statement, Mastercard said it is, naturally, “pleased to have reached this milestone.”

It went on to say that the acquisition of Finicity accelerates its open banking strategy and gives it the ability “to offer consumers and businesses more choice in how they pay and how they simplify their lives and maximize their financial relationships.”

Open banking allows for things such as determining how and where third parties – such as fintechs or other banks – can access that information to provide new services like money management programs or initiate payments on their behalf. (Read our explainer here).

The deal is expected to close in the fourth quarter.

Mastercard first announced its plans to buy Finicity, a provider of real-time financial data aggregation and insights, in late June.

At the time, Mastercard President Michael Miebach called open banking a “growing global trend” and said it was “a strategically important space” for the company.

“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,” he added in a written statement. “It’s through the use of next-generation open banking APIs and clear consumer approvals that..financial information can deliver streamlined loan and mortgage processes, rapid account-based payment initiation and personal financial management solutions.”

Finicity’s self-described mission is to help individuals, families and organizations make smarter financial decisions through safe and secure access to fast, high-quality data. The company launched its first financial product in 2000 and has since grown to provide financial data APIs, credit decisioning tools and financial wellness solutions. 

Finicity partners with financial institutions and “disruptive” fintech providers alike with the goal of giving consumers “a leg up in a complicated financial world.”

At the time the acquisition was first announced, Finicity CEO and co-founder Steve Smith told me that the company aims to allow people to connect their financial accounts to the apps and services they want to use. For example, if someone has a budgeting app, it is likely they’d want to connect their bank accounts and maybe credit card accounts so they could track and manage their income and expenses. Typically the budgeting app doesn’t have the technical ability to manage those connections across the thousands of financial institutions, so they’d work with a company like Finicity to provide that capability.

I had also asked Finicity if an acquisition was part of its goals, and Smith said the company had previously worked with Mastercard on industry committees and “the relationship grew from these engagements to the point it seemed like an excellent fit to join forces together.”

“We did not build our company with a view of acquisition, but were focused on creating a very viable standalone organization. We believe this approach makes for the strongest organization and positioned us for such a relationship,” he added.

Finicity is based in Salt Lake City, Utah, and as of June, had about 500 employees globally. Since its 1999 inception, it has raised a known nearly $80 million in venture funding, according to Crunchbase data. In December 2016, the company raised $42 million in a Series B financing led by Experian.

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