InvestCloud, a California-based fintech firm that provides wealth managers with cloud-based digital portals, is acquiring Babel Systems, a trading and accounting technology firm from London, for $20 million. The deal kicks off a year that some analysts have said will see increased fintech M&A activity.
As a modular program based around application program interfaces (APIs), Babel can integrate with any existing InvestCloud platform to provide accounting and trading. John Wise, the chairman and CEO of InvestCloud, said the purchase will help some of his company’s 660 clients upgrade from legacy systems.
“For a while, a lot of our clients have told us about dissatisfaction with client accounting and the time it takes to reconcile data,” Wise said. “Accounting should be a commodity item. Most of the systems out there were created in the last century, quite a few of them not even in the 90s.”
Babel, best known for powering the U.K. robo advisor Nutmeg, will give InvestCloud clients the ability to create sophisticated models, flexible reports, and modern digital, mobile and cloud capabilities. Wise said it marks “the completion of integrating the full robo solution stack” and makes InvestCloud a competitive alternative to FIS SunGard and SS&C Advent.
Wise said Babel was “versatile and can be applied to all major markets,” and Babel CEO Steve Wise (John’s brother) said the technology helps firms avoid the problems inherent with combining different data sets into one product. InvestCloud executive vice president of marketing, Mark Trousdale, added, “For wealth managers and allocators (multi-family offices, pensions and endowments) that struggle with old accounting systems, InvestCloud and Babel offer a low-friction, cost-effective and massively flexible platform.”
In a recent research report, Aite Group said it expects the rate of fintech transactions to increase in 2017, with the focus being on smaller technology companies that are able to tightly integrate with existing infrastructure, create customizable experiences, enable a spectrum of services, and support low-cost investment management. The statements from InvestCloud seem to check all of these boxes.
In addition to the familial connection between the Wise brothers, several of the developers behind Babel have also worked on Netik, John’s previous company. John added that another reason it selected Babel was that it was built to be international, and can handle accounting and trading in multiple currencies and languages.