Mastercard recently announced an agreement to acquire Fincity, a North American provider of real-time access to financial data and insights. Mastercard purchased Fincity for $825 million, and Fincity shareholders have the potential for an earn-out of up to an additional $160 million if performance targets are met.

Fincity’s complementary technology and teams serve to strengthen Mastercard’s existing open banking platform, enabling a greater choice of financial services, reinforcing the company’s long-standing partnerships with financial institutions and fintechs across the globe.

“We believe Finicity is the best partner for us in this space. They offer the best direct connectivity to the U.S. banking system. And, we have a common commitment to the highest standards around the security, privacy and transparency in managing personal data,” said Seth Eisen, Senior Vice President, Communications at Mastercard. 

The Benefits of Open Banking

Open banking gives people and businesses more control over their financial data. This includes 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.

Mastercard has increasingly invested in this space over several years, including the 2019 launch of a set of comprehensive open banking solutions in Europe. Finicity also powers platforms such as Quicken Loans Rocket Mortgage and Experian Boost. The combination of these efforts has the potential to shape the future of open banking services. 

Today, these services are live in a dozen countries. Finicity allows Mastercard to build on that foundation and expand to North America and other key geographies to meet the unique needs of customers and partners. The acquisition further strengthens the company’s ability to offer consumers and businesses more choice in how they pay and manage financial relationships.

“Open banking is a growing global trend and a strategically important space for us. 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,” said Michael Miebach, President of Mastercard. “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. 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.”

Mastercard’s Strategic Rationale for Advancing Open Banking

1. Advances Mastercard as a Strong Open Banking Partner for Fintechs, Financial Institutions. Finicity’s technology and dedicated employees will enhance Mastercard’s existing open banking solutions by enabling them to expand in North America and other key geographies. Today, Mastercard open banking services in Europe feature connections to more than 1,800 financial institutions. With a direct connection to the North American banking, lending and wealth management ecosystem, Mastercard will extend Finicity’s reach to be a partner for consumer, bank, merchant, fintech or government’s data, payment and open banking needs.
2. Strengthens Capabilities and Offerings to Consumers and Businesses. Following the completion of the transaction, Mastercard’s existing technology combined with Finicity’s new analytics platforms will help streamline the credit decisioning process for consumers and small businesses. Additionally, the integration of Finicity’s account owner verification tools to Mastercard’s New Payment Platform capabilities will deliver an improved ACH and real-time payments experience to consumers, merchants and businesses.
3. Enhances Commitment to Responsible Data Practices. Finicity shares Mastercard’s commitment to safe and secure data practices centered around the individual. Finicity’s co-founders have played a critical role in advancing the discussion of best practices across multiple industries. Finicity has a strong commitment to deliver data management practices by partnering with banks and their customers to ensure secure connectivity is established.

Moving Forward with the Acquisition

“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,” said Steve Smith, Chief Executive Officer and Co-founder of Finicity. “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.”

This partnership also comes at a time where Mastercard recently announced that it will join the ID2020 Alliance to investigate and collaborate with other organizations that are innovating in the digital identity space.