Deposit Solutions Acquisition: Key Details, Impact, and What Comes Next

Raisin's acquisition of Deposit Solutions marks a significant consolidation in the fintech industry. This merger, forming Raisin DS, aims to enhance the savings market by combining their strengths. With a combined reach of 400 banks and 550,000 customers, the new entity is poised to offer more robust financial solutions across Europe and the US.

What Is Deposit Solutions?

Founded in 2011, Deposit Solutions specializes in open banking platforms that connect banks and depositors. Its core products include solutions for seamless integration of third-party deposit products into banks' offerings. A unique selling point is its ability to provide banks with access to a broader range of deposit products without the need for additional infrastructure, setting it apart in the financial technology market.

Who Acquired Deposit Solutions?

Raisin is a leading fintech company that specializes in providing online savings and investment products. It offers a platform where customers can access a variety of deposit accounts and investment opportunities from multiple banks across Europe. Known for its user-friendly interface and competitive interest rates, Raisin has established itself as a significant player in the financial technology sector, helping consumers maximize their savings with ease and efficiency.

When Was Deposit Solutions Acquired?

Raisin acquired Deposit Solutions on June 25, 2021. This merger occurred during a period marked by significant consolidation in the fintech industry, driven by European Union rules on open banking. The timing aligns with a broader trend of fintech companies either merging or being acquired to enhance their market positions and achieve scalability. The new entity, Raisin DS, aims to leverage these industry trends to offer more comprehensive financial solutions and potentially prepare for an IPO.

Why Was Deposit Solutions Acquired?

• Market Expansion: The merger between Raisin and Deposit Solutions aims to create a pan-European firm with significant ambitions in the US market. Raisin DS plans to invest in its platforms, extend its product range, and expand into further markets, particularly targeting the US, where it sees a $17 trillion deposit sector. The new entity will serve 550,000 customers in 30 markets, indicating a significant market expansion.
• Technology Integration: Raisin DS plans to integrate with core banking systems from FIS and Jack Henry. The firm has also patented its Savings-as-a-Service platform in the US, indicating a focus on technological innovation and integration to enhance its service offerings. The merger will help the financial industry grow a more robust backbone with much-needed open banking standards, enhancing both B2B and B2C offerings.
• Competitive Advantage: By merging, Deposit Solutions and Raisin aim to boost profitability through higher revenues, better unit economics, and cost-efficiencies. The combined strengths of both companies will provide a competitive advantage in the market, allowing them to set new industry standards and become a global market leader. The involvement of significant investors such as Deutsche Bank, PayPal co-founder Peter Thiel, and Goldman Sachs provides a strong financial backing and credibility.

Acquisition Terms

• Acquisition Price: The financial details of the deal or the valuation of the merged firm were not disclosed.
• Payment Method: The payment method used in the merger was not specified.
• Key Conditions or Agreements:
  • The merger will create a new entity named Raisin DS.
  • Raisin DS will work with around 400 banks and manage a deposit volume of around 20 billion euros.
  • The merger aims to bring the companies closer to capital market viability, with an IPO being a potential future option.
  • A new financing round for Raisin DS is expected to start soon due to favorable market conditions.
  • Notable investors such as Deutsche Bank, PayPal co-founder Peter Thiel, and Goldman Sachs will remain on board after the merger.
  • The merger has been 17 months in the making.
  • Tim Sievers and Tamaz Georgadze will serve as co-CEOs of the new entity.
  • The merger has been in preparation for a year and only needs confirmation in Germany’s commercial register.
  • The combined firm aims to maximize benefits for market participants by offering more product choices and decision power for savers and more implementation offers for banks.
  • Raisin DS plans to invest in its platforms, extend its product range, and expand into further markets, particularly targeting the US market.
  • Raisin has already signed its first US partner for its Savings-as-a-Service platform and patented the product in the US.

Impact on Deposit Solutions

The merger of Deposit Solutions and Raisin into Raisin DS has led to significant changes in operations and management. Tim Sievers and Tamaz Georgadze will serve as co-CEOs, steering the new entity towards its ambitious goals. The combined company will operate in multiple cities across Europe and the US, collaborating with around 400 banks and managing a deposit volume of approximately 20 billion euros. This strategic consolidation aims to enhance the companies' market positions and prepare for potential future IPOs, reflecting a robust shift in operational dynamics.

In terms of product offerings, Raisin DS will provide a broader range of financial solutions, including deposit products, ETF portfolios, and ETF-based pension products. The merger aims to create a utility-like infrastructure for moving savings, benefiting both B2B and B2C customers. While specific employee and customer reactions are not detailed, the merger's scale and scope suggest a positive impact on service quality and product variety. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly, ensuring a smooth and efficient transition.