Cash Infusion for Candescent and Lumin: Now What?
Will new infusions in the digital banking space translate to real innovation?
This year has delivered many “that wasn’t on our digital 2024 bingo card” moments for our industry. Two deals that were very much needed in the market were Candescent’s (the artist formally known as NCR Voyix) acquisition by Veritas Capital in September for $2.45 billion in cash (plus up to $100 million in contingent considerations) and Lumin Digital’s growth equity raise of $160 million led by Light Street Capital, NewView Capital and Partners Group. Together, both deals show that digital isn’t hitting a lull, but rather ramping up speed for future growth.
Now What?
Candescent, more like phosphorescent
Picture it: Duluth, Georgia, 2014: It’s a new year, and bankers are returning from a much-needed break to learn that NCR acquired Digital Insight in a $1.65 billion cash deal. It’s a pretty sweet deal, with Thoma Bravo quickly doubling its investment. NCR, known for its ATM and POS solutions, had stepped into digital banking to expand its offerings for banks and credit unions. With this cash infusion and a new management team, the sky was the limit for the digital banking solution.
Over the years, a hardware-focused company owning a digital banking solution proved to be more of a struggle with consistent client market share losses in the Digital Insight client base. Presentations were fraught with “we are this, this, this, AND digital,” which led to a rough road for the once favored Digital Insight solution and came with the struggle to innovate over its hardware sibling.
Fast forward to September, and in steps Veritas Capital. Now, most would be skittish about a private equity firm coming in with the stigma around a thirst for profitability. In talking with NCR leadership and others involved, this could be the growth catalyst the solution needs. The investment is a revitalization that gives Candescent the power to break free from the hardware-focused environment of NCR to one that can thrive, make real headway on its new strategic plans, and get back to its grassroots in digital banking.
Of note: Through all of its M&A activity, including the 2019 acquisition of D3 and the 2021 acquisition of Terafina, the company has gained new energy with the transitional guidance of FIS alums Mike Hayford and Doug Brown, and even the temporary presence of Frank Martire on the NCR board. Veritas would be wise to put Candescent into a great position by investing in digital banking UI/UX, deeper third-party integrations, and roadmap innovation.
Additionally, do not forget about the Terafina and D3 solutions, as they will become dated if left untouched.
Lumin Digital, illuminating growth
A solution founded in 2016 by Velera (the artist formally known as PSCU), born of experts who have learned the dos and don’ts of the industry, has had a killer run over the past couple of years, growing its client base at a slow and steady pace. It is a breath of fresh air for banks and credit unions that are used to seeing the “sign as many as you can and jam-pack your implementation schedule” approach vendors normally take; kudos to Jeff Chambers and the team.
From the outsider’s point of view, the Lumin engine is running full steam ahead on all cylinders. This deal reads as a growth expansion into additional product/service offerings and further investments in the team – and, dare we say, the opportunity to expand into the bank market with deeper up-market commercial banking capabilities. The amount of capital market interest in partnering with scaling credit union service organizations is another sign of the times.
With that being said and an open letter to the firms that have invested deeply into Lumin Digital: Don’t fix what’s not broken. Focus on investments into growth in resources and innovation.
For Future Thought
An acquisition may seem like unchartered waters, and I would be kidding you if I said they won’t be. But we hope this will bring the right change to these solutions through innovation, delivery of service and enhanced partnerships with banks and credit unions.
Chris Miller is a senior director in the Delivery Channels practice at Cornerstone Advisors. Follow Chris on LinkedIn and X.
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