Fiserv and Jack Henry made announcements today that show core providers are shifting their strategies to the cloud.

Fiserv — an early investor in Jacksonville, Fla.-based core-as-a-service provider Finxact — plans to acquire the remaining ownership of the company for approximately $650 million, Fiserv said in an announcement.

Through the acquisition, Wisconsin-based Fiserv will acquire a broad range of embeddable services accessible through application programmable interfaces (APIs), David McIninch, senior vice president of strategy and retail product management at Fiserv, told Bank Automation News. Finxact will complement, not replace, existing Fiserv account processing platforms, he added.

“The ability to facilitate embedded services is a key benefit of the Finxact and Fiserv combination, as Finxact APIs can be used to deliver flexible and highly personalized digital banking and payments capabilities from Fiserv,” McIninch told BAN. “A number of financial institutions and technology providers already use Finxact to power unique banking solutions for both retail and commercial banking needs.”

Finxact’s cloud-native, componentized architecture also enables financial institutions and fintechs to innovate across digital banking, payments and embedded commerce, finance and payments, he added.

The acquisition may bring cryptocurrency capabilities to Fiserv. Anchorage, a San Francisco-based crypto custody firm, partnered with Finxact to add crypto capabilities to its core systems, Banking Dive reported in November 2021. However, since the acquisition has not closed there has been no discussion of changes to the Finxact ecosystem, McIninch said.

Finxact’s clients include VirtualBank, a division of the Memphis, Tenn.-based $43.7 billion First Horizon Bank, and Wilmington, N.C.-based Live Oak Bank, an $8 billion small business administration loan specialist. Live Oak Investors was an early investor in Finxact.

Finxact, founded in 2016, has raised $42 million over two funding rounds, with the last round on Jan 25, 2019, according to Crunchbase.

Jack Henry announces cloud-native tech strategy

Core provider Jack Henry & Associates revealed today that it has spent more than two years working on a cloud-native technology strategy that will target community and regional financial institutions by leveraging third-party fintechs.

Additional details will be released Wednesday during the company’s earnings call, but the strategy centers on the “company’s ongoing development of a single, modern, open banking platform,” David Foss, board chair and CEO at Jack Henry, said in today’s release.

“In addition to our current core systems, we are building our full stack of solutions on the cloud and augmenting them with open integrations and real-time data to help community and regional financial institutions compete and capitalize on the opportunity presented by the latest disruptions to our industry,” Foss said.

It is not a rebuild of the entire core platform, but a “componentization” of different parts of the core, according to Foss.

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