Technisys Acquisition: Key Details, Impact, and What Comes Next

SoFi Technologies has acquired Technisys, a cloud-native core banking platform, in a significant move for the financial technology sector. This acquisition aims to enhance SoFi's digital banking capabilities, creating a vertically integrated technology stack. The deal is expected to drive substantial revenue growth and cost savings, positioning SoFi as a leader in the fintech industry.

What Is Technisys?

Technisys, now part of Galileo Financial Technologies, offers the Cyberbank platform, which includes Cyberbank Core, Cyberbank Digital, Cyberbank Konecta, and Cyberbank Marketplace. The platform stands out for its dynamic adaptation to customer behaviors, flexibility, and speed, enabling digital banking transformations in as little as three months. It provides a seamless customer experience and is recognized by industry analysts for its innovation and security features, ensuring compliance and future-proofing without constant rebuilding.

Who Acquired Technisys?

SoFi is a comprehensive financial services company that offers a wide range of products, including loans, banking, investing, credit cards, and insurance. Key offerings include student loan refinancing, personal loans, mortgage loans, active and automated investing, and high-yield savings accounts. SoFi positions itself as a modern financial services provider with a strong emphasis on technology and user experience, aiming to empower users to achieve financial independence through innovative solutions and exclusive member benefits.

When Was Technisys Acquired?

SoFi announced its acquisition of Technisys on February 22, 2022, and completed the deal on March 3, 2022. This acquisition aligns with a broader industry trend of financial institutions investing heavily in technology to enhance their digital capabilities. The timing is significant as it marks the largest bank-infotech deal since 2012, reflecting SoFi's strategic move to integrate Technisys' platform with its existing Galileo business, aiming to create a comprehensive, vertically integrated banking technology stack.

Why Was Technisys Acquired?

• Market Expansion: The acquisition enables SoFi to expand its market presence by integrating Technisys' platform, which supports over 60 established banks, fintechs, and non-financial brands in Latin America and the U.S. This move will help SoFi and Galileo serve additional established banks, fintechs, and non-financial brands looking to enter financial services, broadening their partner base across 16 countries, including the U.S., Mexico, and Colombia.
• Technology Integration: The integration of Technisys with SoFi's Galileo business will create an end-to-end vertically integrated banking technology stack. This stack includes user interface development capabilities, a customizable multi-product banking core, and a fully integrated processing and card issuing system. The combined technology stack is expected to support multiple financial products and enable faster innovation, real-time decisioning, and greater personalization for SoFi's members.
• Competitive Advantage: The acquisition provides SoFi with a unique and strategic technology that is essential for digital innovation in financial services. The combined Galileo/Technisys technology stack will be the only end-to-end vertically integrated banking technology stack available, offering a comprehensive suite of financial products and services. This integration will enhance SoFi's technological capabilities, achieve significant cost savings, and accelerate revenue growth, positioning SoFi as a leader in the fintech space.

Acquisition Terms

• Acquisition Price: The acquisition price is approximately $1.1 billion, based on the volume-weighted average price of SoFi common stock for the 20-trading day period ended February 15, 2022.
• Payment Method: The payment method involves the issuance of approximately 84 million shares of SoFi common stock to Technisys' shareholders.
• Key Conditions or Agreements:
  • The transaction is subject to customary adjustments set forth in the Merger Agreement.
  • The transaction is expected to close by the second quarter of 2022, subject to the satisfaction of closing conditions.
  • Following the closing, Technisys will operate as an independent subsidiary of SoFi Technologies, Inc.
  • The acquisition is expected to deliver a mid-teens internal rate of return (IRR) on a standalone basis through 2025, with significant upside when accounting for anticipated revenue and cost synergies.
  • SoFi expects to achieve cumulative cost savings of approximately $75 to $85 million from 2023 to 2025 and approximately $60 to $70 million annually thereafter by integrating Technisys.

Impact on Technisys

The acquisition of Technisys by SoFi has led to significant changes in operations and management. Technisys will continue to operate as an independent subsidiary, with Miguel Santos remaining as CEO. This structure aims to maintain Technisys' innovative culture while integrating its technology with SoFi's Galileo business. The combined platform is expected to streamline operations by migrating SoFi off multiple third-party cores to a single, owned Technisys core, enhancing efficiency and reducing costs.

Product offerings and services are set to expand significantly. The integration of Technisys' digital banking platform with SoFi's existing services will support a wide range of financial products, including checking, savings, deposits, lending, and credit cards. This merger is anticipated to foster faster innovation, real-time decision-making, and greater personalization for SoFi's members. While specific employee and customer reactions are not detailed, the overall sentiment appears positive, with expectations of improved customer experiences and enhanced service offerings.

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