SoFi Technologies, an acquisitive US-based fintech, has entered into a definitive agreement to purchase core banking software provider Technisys.
SoFi acquires Technisys, builds “the AWS of fintech”
Technisys’ shareholders will receive approximately 84 million shares of SoFi common stock (less than 10% of SoFi’s fully diluted share count, as of 30 September 2021), which have an aggregate value of around $1.1 billion.
Technisys has been around since 1995, based in Miami. It provides cloud-based core banking and digital channels software, Cyberbank.
Its clients are primarily in Latin America, but it has also been making inroads into the US and Canada. Among Cyberbank takers are Canada-based Brightside (ATB Financial’s digital banking offshoot) and US-based neobanking service Rellevate.
Last year it also made an acquisition of its own – chatbot developer Kona.
Anthony Noto, CEO of SoFi, describes Technisys as “an attractive, fast-growth business with a unique and critical strategic technology that all leading financial services companies will need to keep pace with digital innovation”.
Technisys is expected to deliver approximately $70 million in revenue for calendar-year 2021. Once the merger transaction closes, which is expected in Q2 2022, the vendor will operate as an independent subsidiary of SoFi, with founder Miguel Santos continuing as CEO.
Building the AWS of fintech
SoFi says its ambition is “to build the AWS of fintech”. Earlier this year, it received regulatory approval in the US to become a national bank, following its purchase of California-based Golden Pacific Bank.
The company targets established banks, fintechs and non-financial brands looking to enter financial services in North and South Americas.
Commenting on the acquisition of Technisys, SoFi says: “The combined technology stack will create what is expected to be the only end-to-end vertically integrated banking technology stack, from user interface development capabilities to a customisable multi-product banking core and ledger with fully integrated processing and card issuing available for SoFi products and Galileo/Technisys partners.”
The combination of Technisys’ platform with SoFi’s earlier acquisition, the aforementioned Galileo, will support multiple products, including checking, savings, deposits, lending and credit cards.
The estimated incremental revenue from the acquisition, including base revenue of Technisys and revenue synergies of the vertically integrated capabilities, is expected to add a cumulative $500 million to $800 million through year-end 2025, SoFi anticipates.
It also expects significant savings in third-party costs by integrating Technisys. Once SoFi has migrated off its current multiple third-party cores to a single-owned and operated Technisys core, coupled with the vertical integration with Galileo, it will create $75 million to $85 million in cumulative cost savings from 2023 to 2025 (and $60 million to $70 million thereafter).
