Change Financial looks to shake up the status quo for financial enterprise

US-based yet ASX-listed fintech company Change Financial (ASX: CCA) has announced three commercial deals to assist the growth of its enterprise division ahead of the full launch of its Software as a Service (SaaS) solution.

The fintech newcomer has secured variously structured deals with Mastercard, Central Bank of Kansas City (CBKC) and Pulse, respectively.

The deals aim to improve operating conditions primarily for its enterprise division, although upon further analysis, it seems Change will be able to derive synergies for all three of its business units, serving consumers, enterprises and blockchain users.

Its consumer unit is focused on ChimpChange, an award-winning digital bank account and mobile app. ChimpChange makes free retail banking available to US-based customers who typically pay fees to maintain bank accounts.

In effect, its services look to erode the current dominance of banks in the expansive arena of financial services.

The enterprise unit provides a turn-key, SaaS solution for US banks capable of authenticating transactions and pushing Change Financial from financial technology (fintech) provider to established financial services provider.

The blockchain unit pursues value-accretive investments in the burgeoning blockchain space with its most recent investment being ivyKoin, a blockchain-based cryptocurrency that ensures embedded provisions for Know Your Transaction (KYT) and Know Your Customer (KYC) requirements set forth by regulators in several territories including the US, considered to have the strictest prerequisites.

Diving into deal making

In its deal with Mastercard, Change Financial selected the globally eminent credit card provider as its chosen network gateway and transaction connection linking the fintech’s processing engine to its partner bank — the Central Bank of Kansas City.

The relationship covers network communication and the transmission of transactions to Change Financial for authorisation. According to Change Financial, the arrangement with Central Bank of Kansas City and Mastercard will significantly improve its processing capabilities and allow it to “aggressively pursue expansion plans for its enterprise division.”

There is further scope for this deal to develop, with the central bank registering Change Financial as a Mastercard third-party processor by the end of June this year.

Not stopping there, Change Financial has secured a letter of intent from the central bank which positions it as the fintech’s first enterprise customer — considered a significant milestone for the burgeoning small-cap ASX company.

The company said that the growing level of business between indicates “the bank’s willingness for Change Financial to expand beyond its current program manager role into transaction processing and other enterprise services”.

“Change Financials’ entry into transaction processing ensures that their infrastructure keeps pace with their product roadmap and award-winning mobile experience for cardholders,” said Mr Trent Sorbe, president of central payments division of CBKC.

“This new endeavour also enables CBKC to provide issuing services to additional companies signing on with Change Financial and their vision for payments technology,” added Mr Sorbe.

Pulsing into its third deal of the day

Last but not least, Change Financials’ third deal is with Pulse, the third largest debit/ATM network in the US and a subsidiary of Discover Financial Services (NYSE: DFS).

The terms of the deal stipulate the Change Financial will provide processing services for transactions routed through its vast network. More specifically, Change Financial will be tasked with handling “transaction, routing, and settlement services for thousands of US banks”.

Change Financial said that its flurry of deals sets up the company to launch its long-awaited enterprise SaaS solution as the company continues to ramp up its commercial momentum.

Change Financial is aiming to launch a product that combines innovative processing functionality including a smartphone app for consumers.

In addition, the company is nearing the completion of its “end-to-end solution” for banks and program managers seeking to provide customers with an industry-leading mobile banking experience.

“We are very pleased to have secured these agreements — Change Financials’ Enterprise Division is rapidly expanding and is now close to a full launch of its SaaS solution,” said Mr Ash Shilkin, financial managing director of Change Financial.

“With 65% of ChimpChange’s customers being millennials, Change Financial has a proven ability to capture this valuable market segment. Combine this with our increasingly sophisticated processing capabilities and widening reach, and you get a SaaS offering that is highly attractive to the enterprise market,” declared Mr Shilkin.

In the first few minutes of trading on Monday morning, Change Financial shares were up 3.3% to A$0.93 a share.