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May 30, 2023

Three tech vendors merge to provide e

Three bank technology vendors have merged to form a single company: Kinective.

Three bank technology vendors have merged to form a single company: Kinective.

The new firm, which was announced on Tuesday, will provide application programming interfaces and workflow and analytics software to banks and credit unions. It is a product of IMM, an electronic signature vendor for financial institutions; CFM, which helps financial institutions integrate branch hardware such as cash recyclers and self-service kiosks with their core systems, and NXTsoft, a "connectivity as a service" firm that connects financial institutions and fintechs using application programming interfaces.

Kinective is backed by OceanSound Partners, a growth-oriented private equity firm. CFM is a portfolio company of OceanSound and merged with NXTsoft in January; it then acquired IMM in April.

"There is a whole world of fintech solutions. To access the menu of all those options you need connectivity," said Stephen Baker, CEO of Kinective, in an interview. "We help the financial institutions open up their world in terms of what they can offer to their clients, and we help the fintech companies get access to the world of financial institutions without having to build an integration for every one of the banking cores that exist."

Kinective, whose name is inspired by the words "connective" and "kinetic," will offer several services to its bank and credit union clients under the existing brands, including API connections between more than 40 core banking systems and 80 fintechs to date and software that automates workflow and data analytics. The company has 2,500 clients between all three brands, which had only moderate overlap. Baker said the financial institution clients are about evenly split between banks and credit unions, and range from a couple billion of assets to hundreds of billions of assets.

One such client is United Bank of Michigan, which is based in Grand Rapids, Michigan. Its original vendor was IMM, which the $957 million-asset bank used to collect e-signatures in branches and remotely, then route and archive the documentation appropriately.

"There is a lot of due diligence in making sure a new vendor is the right vendor for us. Annually we take a look and make sure it is still the right vendor, that it is not presenting any significant risks to us reputationally, that the company is doing well and will continue to meet our needs," said Eric Soya, vice president of branch operations at United Bank of Michigan, in an interview. "When we can utilize several services from one vendor it's a whole lot easier than piecemealing five different vendors for five different services."

Soya says that IMM has earned the bank's trust over the past several years and has made changes based on some of the bank's feedback. Although United Bank of Michigan has not yet engaged with any other Kinective services, Soya is excited about its API capabilities.

"As a smaller institution we don't have our own staff to build all the integrations we want, so we are somewhat limited by software that has pre-built integrations," said Soya. "We will be exploring how we can expand the software we look at so we can look at the best product out there and get it to work."