Digital banking solution provider Alkami has announced it will acquire account opening solution provider MANTL for $400 million. Here's my 5-point gut take on the deal….
- Deposit origination: Job #1. Ron Shevlin's What’s Going On In Banking research shows deposit gathering is still the #1 challenge for banks while new member growth (requiring deposit accounts) is the #1 challenge for credit unions. Deposit account opening is the #1 planned tech add/replace, both commercial and consumer. Not every account opening solution can handle businesses. MANTL's can.
- Speed and UX (the former impacting the latter) are SO important. MANTL and Alkami have always had UXs that demonstrated well from the stage. And, look no further than the deal announcement touting claimed minutes to complete both business and consumer account originations.
- Growing the bank pipeline through integrated Marketing>Sales>Service. Smarter bank growth involves using data to identify more needs and drive in more customers to service digitally. It's crystal clear to me that this MANTL deal complements Alkami's 2022 Segmint data analytics acquisition. Outside of maybe lending flows, however, it's less clear what (if any) value Alkami's 2021 acquisition of MK Decision still brings. But the way this MANTL deal ties together origination process to data is reminiscent of Moody's recent deal to acquire Numerated.
- The business/consumer capability complement. As ZSuite Tech's Nathan Baumeister recently pointed out at Bank Director’s Acquire or Be Acquired Conference, new business clients are a BOGO opportunity for financial institutions because they can get both the business and the consumer. But that assumes banks can handle both well without being embarrassingly slow and digitally clumsy right out of the gate. Nearly all digital banking companies have launched or acquired consumer digital account opening, but MANTL was early to offer consumer and business together.
- Bank and credit union market crossover opportunities. While both companies serve both market segments, MANTL's current client base leans heavily toward banks while Alkami's leans heavily toward credit unions. With Alkami’s organic inroads into banks with digital banking and through the Segmint acquisition, there is a complement across the bank/CU divide.
Deposit account opening fintech is white hot for consumers and businesses for all the right reasons, so it makes perfect sense that one of the few standalone account opening providers (MANTL) is acquired by one of the major digital banking providers (Alkami). While not all mergers and acquisitions in fintech end up making sense for all the stakeholders (buyer, seller, clients, employees, investors), this deal seems to check all the boxes. We’ll see.
Sam Kilmer is a managing director leading Cornerstone Advisors’ Research & Fintech Advisory Practice. He hosts the Fintech Hustle podcast. Follow Sam on LinkedIn.