Adatree acquired by payments fintech

Fat Zebra, a US-headquartered fintech specialising in payment services, has acquired Australian open banking fintech Adatree for an undisclosed sum.

It completed its acquisition of Adatree in December 2023 to accelerate its journey to providing “data-driven payments” in Australia.

All Adatree team members have now joined Fat Zebra and the back-office support is being transitioned between the companies to strengthen the operations.

Adatree will keep its brand and technology in the market for the foreseeable future. It is expected that Fat Zebra will build out and provide features that marry the capabilities of the two companies for both sets of customers in future.

Adatree was founded in 2019 by Jill Berry and Shane Doolan and was the first open banking principal within the Consumer Data Right (CDR) framework.

It now offers open banking access to mortgage industry companies (including BankVic, Liberty, and broker repricing fintech Sherlok) and is connected to 114 data sources, which covers 99.73 per cent of retail banking market share.

The Australian branch of Fat Zebra – based in Surry Hills, Sydney – annually processes around 250 million e-commerce transactions payments for over 30,000 small and medium-sized enterprises (SMEs) and enterprise Australian merchants, including PayPal, Macquarie Bank, Aussie Broadband, MYOB, and Zip.

While Fat Zebra is looking at its own use cases of CDR data, both it and Adatree will continue to focus on licensing their technology to customers.

According to Fat Zebra founder and chief executive Pred Dragila, the acquisition will enable the company to provide open data and payment services to its customers, which it suggested would “give businesses a more robust future-thinking solution, providing greater insights into their payments and customers”.

Mr Dragila commented: “Open data and open payments are the future of the financial landscape. This acquisition positions Fat Zebra to drive smarter, data-driven payments in Australia, offering enhanced services to our clients and partners.”

Adatree CEO and co-founder Ms Berry (who will retain her title as the companies migrate) added: “We are thrilled about this opportunity and what it means for our team, company, and product roadmap.

“Joining forces with Fat Zebra allows us to accelerate our mission of advancing Open Banking and data-driven solutions.

“This will enable the development of features to make payments smarter, showing immediate synergies and benefits with the companies joining.”

The CDR challenge

The acquisition came as the federal government considers turning off screen scraping (one of the most revalent data-sharing methods in finance) and relying instead on the CDR.

The CDR framework, already operational in the banking and energy sectors, empowers consumers to grant accredited third parties access to their financial and energy-related data.

Originating with major banks, the CDR’s reach has progressively expanded to encompass non-major financial institutions and energy providers.

It was also now being rolled out across the non-bank lending sector, in a bid to enable more lenders to share data on bank accounts, loans, leases, and buy now, pay later products.

However, amid ongoing data quality issues in the open banking ecosystem (including incorrect or incomplete data being pulled through) – and the fact that the non-bank CDR system is still being finalised – the expansion of CDR into superannuation, insurance, and telecommunications has been postponed.

Third-party access (via the trusted adviser model) has also been slow in rolling out – leading to the Mortgage & Finance Association of Australia (MFAA) calling on members of the industry to accelerate its adoption.

While most CDR use cases in banking currently involve sharing data, legislation was introduced in 2022 to bring about ‘write access’ (or action initiation) that enables consumers to open or close bank accounts, initiate regular payments towards savings or investment goals, automatically move funds to optimise interest or minimise fees from their financial services provider, or find and switch to utility plans.

The change could also help reduce frictions when it comes to refinancing, as banks would be legally required to undertake instructions provided by the consumer under the CDR regime to transfer banking products to another institution. For example, if a consumer instructed a business it has engaged to perform a service of transferring a range of banking products from one lender to another, the law would require those instructions to be followed by the bank as if the consumer had given the instructions to them directly.

[Related: Axing screen scraping under review: Treasury]