Core Banking & BaaS Market Update

DATE: September 2023

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Our latest thematic report provides a comprehensive overview of the tech-overlay platforms for banking solutions, whether to licensed banks or to non-banking clients that want to launch such banking products to their end clients.

 

Key Highlights

 

✔ Landscape & trends: We lay out a comprehensive landscape with 100+ platforms in the core accounts and payments space, as well as with extended middle-ware solutions. We note 8 trends in the space, with a zoom into the regulatory aspects and how BaaS providers and their licensed banking partners continuously adjust their risk management coordination.

 

✔ Public Markets: We note the market recovery of public peers the last months, with revenue multiples around 4-5x and highly correlated with their revenue growth and ebitda margin profile (‘rule of 40’). We highlight the different economics between public peers that investors should be aware of when applying their multiples to any ‘comparable’ private company.

 

✔ Private Markets: Financing of ~$3bn during the last ~18 months (2022-2023 to date) is also accompanied by an increasing M&A activity including Marqeta’s acquisition of Power ($275m, ‘23), Sofi’s acquisition of Technisys ($1.1bn, '22) and Fiserve’s acquisition of Finxact ($0.7bn, ‘22). We highlight several active financial and strategic investors in the space.