Mastercard buys Finicity for $825 million

  •   26/06/2020 - 10h17
  •   DEHOUI Lionel

Mastercard's willingness to perfect its open banking methods is well established. A will that has just been reinforced with the purchase of Finicity at 825 million dollars. The company's shareholders could see their profits increase if the planned objectives are met.

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Mastercard buys Finicity for $825 million

Mastercard, a major investor in open banking

The performance of banks and payment systems lies in their number of customers and the quality of their service. This is why they are turning to open banking, with the aim of making their offers more reliable, fast and secure.

As a result, start-ups in this field are booming. The open banking market could reach nearly $7.2 billion by 2022, according to PwC.

For greater performance, open banking platforms are working to provide services that make the banks' customer experience more enjoyable. The various services are being strengthened to speed up the study of credit applications and make it easier to pay salaries.


Mastercard's objective in acquiring the start-up

Apparently, buying out start-ups costs banks less than developing solutions. The competition observed in the field proves that investors see this as an opportunity to make money.

In 2019, Mastercard had already offered four solutions related to open banking in Europe. Its partners are located notably in Poland and the United Kingdom (including Streeca, Alior Bank, Kikapay, DiPocket...).

Thanks to the purchase of Finicity, with nearly 10% of its sales in 2019, or $825 million, it will be able to significantly increase the number of its partners.


Finicity: a giant in open banking

In North America, it is the specialist in payments. It is also adept at providing timely financial data and information. The company is emerging in the development of banking solutions. Solutions capable of attracting more customers with the best possible experience.

According to Mastercard president Michael Miebac, Finicity shares the same vision as his company. A vision of allowing users to decide how their information would be used. This perspective would keep users loyal and confident.


Purchase of Finicity: good or bad operation for the shareholders?

Indeed, this is not Mastercard's first start-up acquisition. However, this is reassuring for its shareholders, because in the case of previous acquisitions, the dilutive effect on the company's activities did not exceed 24 months.

By definition, the dilutive effect is the reduction of shareholder power, or of the earnings per share, or of the profitability of a company after a financial transaction. It can be caused by an increase in capital or in the number of shareholders. In a company, this effect could cause the cost per share to fall in the short term.

However, it can increase shareholders' profits in the long term. This is because the increase in capital facilitates the development of new activities and the pursuit of acquisitions.