FIS, a prominent fintech player offering a wide range of payment, banking, and investment services, recently made a significant move by acquiring Bond, an embedded finance firm based in San Francisco.
Embedded finance, also known as BaaS (Banking as a Service), enables non-financial companies to integrate financial services, such as credit cards and bank accounts, into their offerings for their customers.
While the exact amount for the acquisition remains undisclosed, PitchBook reveals that Bond successfully raised $182 million in 2020, with an additional $42 million raised since 2019, according to Crunchbase.
Bond boasts an impressive list of backers, including Coatue Management, Mastercard, Goldman Sachs, Canaan Partners, B Capital Group, and former Morgan Stanley CEO John Mack. In 2020, Coatue Management led a $32 million Series A funding round, solidifying Bond's position in the market.
Bond specializes in assisting fintech companies like Pocketbook and Everest in providing personalized and compliant banking products, utilizing an AI-powered infrastructure. With a team of 30 employees, Bond develops APIs and software solutions for both commercial and consumer credit card services, debit cards, and accounts.
The acquisition of Bond by FIS comes at a time of turbulence in the technology, venture investment, and financial services sectors. Startup funding has slowed down, resulting in the failure of two technology-focused banks.
In response to increased competition, major incumbents like FIS and larger fintech companies have been acquiring smaller fintech firms to augment their workforce and enhance their technological capabilities.
The leadership teams of both companies will carefully decide how to incorporate Bond's expertise into FIS's current infrastructure. This integration will likely focus on leveraging Bond's capabilities to further enhance FIS's connections and offerings.
Earlier this year, Marqeta acquired Power Finance for $275 million, while JPMorgan took over Aumni. Visa and Mastercard are also reportedly in talks to acquire Brazilian fintech infrastructure startup Pismo for a staggering $1 billion.
However, it is worth noting that the largest M&A deals in the industry can sometimes be challenging to execute successfully. FIS's acquisition of WorldPay for $43 billion in 2019, one of the largest payments purchases ever, failed to meet expectations. As a result, FIS announced its decision to spin out WorldPay in February.
As major incumbents and larger fintech firms continue to pursue acquisitions, the landscape of the financial services industry is rapidly evolving, paving the way for new opportunities and challenges.