A week after the unraveling of a deal that would have allowed Visa to acquire data aggregator Plaid for $5.3 billion, the agreement's termination brought renewed enthusiasm around growth prospects not just for Plaid, but for other aggregators in the space.
MX — an 11-year-old company whose toolset allows banks, credit unions and fintechs to securely connect to financial data through account aggregation, application programming interfaces (API) and transactional data enhancements — announced last week it raised $300 million in Series C funding, led by TPG Growth. Including the new funding, MX said it has raised $475 million.
The company will use that funding to help clients "automate the money experience," using aggregated and enhanced data to make interacting with money "as intelligent and personalized as shopping on Amazon," MX said in a press release. Over the past year, MX has quadrupled its valuation to $1.9 billion and supported more than 2,000 banks, credit unions and tech companies, as well as 85% of digital banking providers, to reach more than 200 million consumers, the company said.
The growth of digital financial services will allow MX to expand and differentiate across a broad spectrum of offerings, moving beyond data connectivity to what it calls personalized money experiences.
"It's not about dumb pipes; it's not about just connecting the data — that's the first step," Ryan Caldwell, MX's founder and CEO, said at a virtual event hosted by the company Friday. "The real value-add is to take this data and to enrich it, and to have all these insights into that data, so that you can provide not just a personalized experience, but what's really exciting is how you can automate things."
For MX, personalized money experiences include banking, wealth management and insurance, said Jon Winkelried, co-CEO at TPG. Winkelried and Caldwell also highlighted MX's focus on regulatory compliance, including privacy and security, which is noteworthy as fellow aggregators Plaid and Envestnet | Yodlee face lawsuits in that arena.
Over the next decade, MX plans to move into new areas of the customer lifecycle, said Mike Zappert, a partner at TPG Growth.
"As we continue to scale and innovate, I would hope to be a large public-scale company that's continuing to grow and innovate," he said.
Caldwell told Bloomberg last week the company stands a "good chance" of moving toward an initial public offering. MX also leaves open the possibility of further private fundraising rounds.
Stephen Greer, a senior analyst at Celent, said the data aggregation market has considerable room for "co-opetition," as banks and other companies tap multiple data aggregators.
"All of these [data aggregator] players over the last year have accelerated their importance," he said. "In the case of MX, they've evolved quite a bit over the years from a personal finance management provider to aggregator, to aggregator of aggregators, with data services and different products they provide which incorporate some of those capabilities. They've focused not only on connectivity to data, but what a bank does with it after it has that connectivity."
MX and its investors said the company is open to expanding beyond its current geographic footprint of Canada and U.S., but it's taking a careful approach. It also plans to support new types of customer experiences, including embedded finance.
"We have a lot of people coming to us right now wanting to leverage the MX platform," Caldwell said. "They're not just financial institutions like banks and credit unions or fintechs, they're also nonbanks that normally wouldn't play in the financial world at all but now have a need to connect to it and understand it."
Lindsay Davis, head of markets at payroll API provider Atomic Financial, told Banking Dive MX is positioned to move into areas where Plaid doesn't have strong distribution or product adoption, including payments. A year ago, Plaid had a 3% share of an estimated $950 million consumer payment space. For embedded finance use cases, time will tell if they generate significant demand, she said.
"A wild card for MX, Plaid, or others in infrastructure is embedded finance and the software companies that start to monetize payments or offer banking services outside of traditional financial institutions," she said.
For MX, the longer-term objective is to help build financial brands that customers love.
"There will be this new version of this incredibly loved brand that you really trust, that guides you and protects you and automates this complex part of your life," Caldwell said.