What the Finastra Acquisition of Malauzai Means for Credit Unions

London, UK-based financial technology company Finastra has acquired Austin, Texas-based Malauzai, a provider of mobile and Internet banking solutions for community financial institutions.

The deal, according to Finastra, reflects its commitment to the U.S. retail and business banking sectors by further enabling digital transformation for community banks and credit unions.

“Credit unions and community banks are the fabric of American financial services. We strive to help them realize the benefits of digital transformation – including being able to deliver outstanding experiences right across their consumer and business customer lifecycles,” Simon Paris, CEO at Finastra, said. “Together, our two companies deliver a fully integrated open core platform for payments, lending and digital, across Finastra’s 4,500-strong U.S.-based community market customers and Malauzai’s non-core U.S.-based customers.”

The acquisition builds on an already successful and proven partnership between Finastra and Malauzai, which saw the latter’s digital solution integrated into Finastra’s Fusion Phoenix core banking system. Since 2015 the two companies have amassed over 130 joint customers.

Tom Shen, CEO at Malauzai said, “We’re extremely excited for the next chapter of our story with Finastra. Together we have a deep understanding of the community banking space. By combining a best-in-class core experience, backed by leading innovative mobile and Internet banking capabilities and our mobile-only design approach, community financial institutions win. The acquisition creates a compelling proposition for our existing customer base and enables Finastra’s customers to deliver a seamless banking experience with a robust breadth of services, via a single provider.”

Mike Dionne, SVP, community markets, Americas for Finastra and Robb Gaynor, chief product officer, Malauzai provided insight on how this acquisition should affect credit unions.

“What used to be done in the form of paper checks or in a branch, is now done via digital channels,” Dionne said. That electronic evolution now increasingly encompasses mobile. “Malauzai, at the forefront of that, will continue to stay at the forefront of that. A digital asset like that represented by Malauzai is an important part of a financial portfolio.”

Malauzai also brings on board some 350 community financial institutions, about a third of which are credit unions. “We’re hopeful that this is a very large demonstration of our commitment to the credit union space here in the U.S.,” Dionne said.

Gaynor added, “That commitment to the markets means that we’ve now become part of what is the first 100% open core that has the best fully integrated digital capability.” Gaynor indicated it allows Malauzai to expand its digital footprint. “We’ve done well independently but the resources we’ll get from Finastra as a combined entity allow us to be better and bigger and more challenging to the traditional digital players.”

Dionne explained the way the new relationship is set-up, current credit union clients already using one of Finastra’s core products, Fusion Phoenix or Fusion UltraData, will continue to work with their present contact. If they are a legacy Malauzai client without that core relationship they should continue to work with their current connection to get issues resolved. “We really view this as expansion of our capabilities and our effectiveness in servicing the credit union market and in turn their members.”

Dionne noted that Finastra aims to allow Malauzai to continue to operate with some of the autonomy that allowed them to be innovative and agile. “That said, we believe at Finastra, we’ve got some practices and some resources that can accelerate the growth of the Malauzai’s digital platform in the credit union space in the U.S.”

A big part of Finastra’s plan globally is establishing the Finastra FusionFabric.cloud platform, which allows the creation and deployment of groundbreaking apps, as a service. By opening their capabilities through a PaaS solution, they are inviting fintechs, customers or universities to innovate.

“Consumers are seeking more innovative solutions that we can provide to our credit unions and this open strategy based on FusionFabric.cloud is one of the keys to being able to actually make that happen,” Gaynor said. “We can find practical ways to better the lives of the members of the credit unions and that’s what this synergy is going to get.”