The financial tech sector in Los Angeles scored an exit last week with the acquisition of Pasadena’s Wallaby Financial Inc. by North Palm Beach, Fla., financial publisher Bankrate Inc.
Terms of the deal were not disclosed.
Wallaby’s products recommend what credit card a consumer should use for a given purchase, with the aim of maximizing reward points.
The company said in a statement accompanying the news that its recommendations had led to as much as $20 million in consumer savings since its 2012 launch. More than 100,000 users have used Wallaby’s Web, mobile and wearable offerings to optimize their credit card use.
Wallaby’s technology will be integrated with Bankrate’s credit card distribution platform, which includes CreditCards.com, an online marketplace that helps people identify the right card for them based on shopping habits and desired rewards. Bankrate partnered with Wallaby earlier this year to increase conversion rates in its credit card channel.
Wallaby will keep its office and nine employees in Pasadena and look to hire more staff in the new year, according to Chief Executive Matthew Goldman, who co-founded the company in 2012 with Chief Technology Officer Todd Zino.
Goldman also said that joining Bankrate would help Wallaby get its digital wallet to market faster – a product that’s been in development for three years.
“When you’re going out there with banks to move money around, regulators aren’t impressed by who your investors are,” Goldman explained. “They want to know you will be here in two years. Being a part of a public company, that stuff gets much easier.”
Not everything does, though. Bankrate has gotten into some hot water with the Securities and Exchange Commission and the Department of Justice in recent months. The company announced in September that both agencies were conducting investigations relating to its financial reporting.
Additionally, Bankrate is fending off two shareholder class-action lawsuits filed in the wake of the investigations.
Bankrate also announced Oct. 8 that it had fired Chief Financial Officer Edward DiMaria for cause after he refused to cooperate with the probes.
Wall Street analysts remain mostly positive about Bankrate’s prospects, albeit with a caveat.
“Bankrate is well positioned to benefit from the secular and cyclical growth of online financial services advertising,” wrote a team of JPMorgan Chase & Co. analysts in a Nov. 7 report. However, “uncertainty around the SEC and DOJ legal investigation could also create headwinds.”
Analysts at JPMorgan declined to comment on the Wallaby deal.
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