According to Reuters, the company is in the midst of splitting off the universal banking sector, which provides software to banks and credit unions to conduct fundamental activities, as it prepares to launch a sale process in the coming weeks.
Finastra is consulting with a financial counsel as it considers its alternatives for the company, which now generates approximately USD 1.7 billion in revenue and approximately USD 500 million in earnings before interest, tax, depreciation, and amortization.
Several private equity firms, as well as competitors in the financial software area, are among the potential buyers of the universal banking unit.
Finastra and its owner have previously explored other business models. Finastra attempted but failed to sell its capital markets business in 2021.
Vista created Finastra in 2017 by acquiring Canadian payments technology provider D+H Corp private in a USD 3.6 billion deal and merging it with Misys, a banking and capital markets software company that it already owned.
Because the conversations are in their early stages and no agreement is certain, this sale could fall through, especially because M&A activity began to diminish considerably in the second quarter of 2022.
Nonetheless, due to the financial backdrop, fintechs continue to seek a rapid exit. In contrast to the more typical options in recent years, which were raising money to fuel growth or going public, this will lead to companies being more motivated to merge with or be purchased by larger peers.
Finastra's products in the banking and credit union market include:
Phoenix's core banking system is based on Harland Financial Solutions, a long-established core solution for small and mid-tier banks and credit unions in the US.
Essence’s core banking system, as well as its much older brothers, Equation and Midas, which are descended from Misys, are available to banks worldwide.
Malauzai's digital channel solutions for community financial institutions in the US.
Q4 2022's expansion plan was fruitful, and it continued prior similar collaborations. Finastra introduced Contour's Fusion Trade Innovation software in October to help banks conduct Letter of Credit transactions. The two companies will accelerate the adoption of digital trade solutions by connecting the two key components of digital trade finance – a deeply integrated core banking platform for internal processes and an external decentralized network for bank and corporate customer communication.
Furthermore, the fintech ventured into BNPL through a collaboration with Jifiti. Jifiti's white-labelled platform enables financial institutions to easily incorporate finance or split pay solutions at any merchant's point-of-sale at scale, whether online, in-store or via a contact center. Jifiti's platform is pre-integrated with Finastra's systems for financial institutions working with Finastra to power core banking capabilities; cloud deployment is offered through Finastra's FusionFabric.cloud open development platform.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now