Wave of FinTech Dealmaking Spotlights Appeal of Embedded Finance

Within the FinTech space, a surge in dealmaking over the past few months is taking shape as macro factors set the stage for mergers, acquisitions and go-private deals.

The cost of capital is high, and the uncertainty of consumer demand and the Federal Reserve’s path on interest rates linger.

Going private helps firms escape the volatility of public markets as issuing stock or debt is no sure way to shore up balance sheets and shares routinely swing by double-digit percentages day by day.

FinTech-focused corporate actions also spotlight the appeal — for the acquirers, whether they are investment firms or other FinTechs — of embedded finance and automation that are reshaping financial services.

Embedded and Personalized

Bilt Rewards announced Thursday (March 13) its deal to acquire item-level receipt data provider Banyan.

Bilt will tap into Banyan’s database of item-level purchase insights, allowing for hyper-personalized rewards and automated benefits. Rewards are earned and redeemed across a variety of use cases beyond Bilt’s core business of helping renters earn points as they pay rent and take advantage of local merchant promotions.

Banyan’s ability to help enterprises craft card-linked offers in turn embeds and personalizes those same offers across channels and incentivizes consumer behavior.

At the end of last year, MoneyLion was acquired by cybersecurity firm Gen Digital in a $1 billion deal. MoneyLion’s embedded finance offerings are being folded into the Gen Digital portfolio.

PYMNTS had long chronicled MoneyLion’s push beyond its neobank roots to emerge as a financial services marketplace, as operations also allow partner firms (including banks) to extend offers, including credit cards and loans, to end users. MoneyLion CEO Dee Choubey discussed in a March 2023 interview with PYMNTS that cross-pollination had been a hallmark of the platform, as the consumer who opens a checking account might naturally gravitate toward investing or credit building.

The MoneyLion deal came in the wake of a go-private action seen in November, when Canadian FinTech Nuvei became a wholly-owned subsidiary of purchasers Advent, Nuvei CEO Philip Fayer, Novacap and Caisse de dépôt et placement du Québec via a $6.3 billion deal. The company’s Nuvei for Platforms product helps marketplaces, commerce platforms and businesses embed financial functions, such as pay-ins and payouts and card issuing, into their own operations.

Elsewhere, fraud prevention software firm Riskified is reportedly exploring a sale or other corporate actions, where suitors might include private equity and online shopping platforms, among others.

For Riskified, Nuvei and MoneyLion, the downtrend since their initial public offerings (IPOs) has been a lure for acquirers and would-be acquirers. Riskified shares are down about 80% since the company’s 2021 IPO. MoneyLion was off about 77% from its peak in 2021 before its deal was announced last year.

The common thread that winds its way through these deals — and likely for announcements yet to come — is that the platforms and embedded offerings complement the existing strategies of the acquirers (in the case of strategic actions) and make payments, rewards and lending simpler and ubiquitous.