Fiserv buys data driven rival Ondot

US payment processing and data services group Fiserv has been on the acquisition trail and has purchased start-up competitor Ondot.

Ondot was founded back in 2011 but has grown rapidly since then. It now provides digital payments services and support to 4500 banks and credit unions across the USA. Today Ondot processes more than 1.0 billion transactions per month.

Ondot is a data-driven service and it provides the consumers who use its payment app with insights on their spending habits. Whilst in the B2B space it designs and creates the digital ecosystems that enable banking customers to roll out modern payment gateways and processing systems. Including cards and card payment apps.

Ondot is headquartered in Silicon Valley California but it also has offices in Atlanta, Chennai and Bangalore and it employs around three hundred staff across these locations.

The transaction is expected to close during Q1 2021 however the financial terms for the deal were not disclosed.

Frank Bisignano, President and Chief Executive Officer of Fiserv speaking about the transaction said that: “The importance of digital has accelerated and consumers are increasingly turning to online and mobile banking, as well as contactless payments experiences,”

Mr Bisignano further commented that “By combining Ondot and Fiserv capabilities at scale, we plan to provide our clients with a unified digital experience, spanning card-based payments, digital banking platforms, core banking, and merchant solutions, enabling them to deliver best-in-class solutions that continue to reduce friction for their customers. He added that “We look forward to welcoming the talented Ondot team to the Fiserv family as we continue to help our clients deliver innovative ways for their customers to actively manage their financial lives – at the point of thought.”

Fiserv is a financial services giant with a market cap of $76.55 billion with $10.18 billion in annual sales and $893 million of annual profits. Yet it is the second S&P 500 constituent to be involved in a fintech purchase in recent weeks. We wrote last week about the conclusion of Intuit’s acquisition of Credit Karma, another data-driven consumer finance app.

Despite Intuit’s size and reach in its traditional businesses it had not been able to establish the kind of community that Credit Karma had among its users.

The same looks to be true with Fiserv’s bid for Ondot. That is a larger incumbent bidding for a smaller successful and agile disruptor. Rather than trying to replicate the success of their smaller competitors. Intuit’s deal for Credit Karma was valued at $8.10 billion which doubtless created a bumper payday for founders VC backers and shareholders alike.

A pattern is definitely being established here and it’s highly likely that we will see more of these types of transactions in the New Year. Whether they begin to extend across the Atlantic as well remains to be seen. Fintech deals in Europe have largely been between VCs and other investor groups rather than trade sales but that may now begin to change.