Finastra, a fintech that provides banking solutions supporting digital letter of credit (L/C) and many other trade finance offerings, is mulling the sale of its universal banking unit for as much as US$7 billion according to the Reuters news agency.

If Finastra's owner, US buyout firm Vista Equity Partners, does decide to market the London-based fintech's banking unit, other fintechs in the digital L/C space may be seen as potential buyers.

Mulling a sale

Finastra is in the process of carving out the business known as universal banking, which provides software to banks and credit unions to run core processes, as it prepares to kick off a sale process in the coming weeks, sources reportedly told Reuters.

Sources also told the news agency that potential buyers of the universal banking unit include other private equity firms, as well as rivals in the financial software space.

Market penetration

Finastra has an established presence in the trade finance market, with a range of customers and partnerships. Banks such as Bahrain-based Bank ABC have deployed the fintech's Fusion Trade Innovation platform to standardise core wholesale banking systems and processes and better meet demand for export L/Cs (DC World News, 22 June 2020).

Last October, Finastra announced a strategic collaboration to integrate its Fusion Trade Innovation platform for internal banking processes with digital L/C developer Contours's solutions with the aim of providing banks and corporates with streamlined end-to-end back-office workflow (DC World News, 21 October 2022).

Contour's ambition

Contour has already indicated that it wants to assume a lead role in the consolidation of the blockchain trade finance space.

When it announced it was acquiring the rulebook and other associated legal documents from the failed digital trade venture developed by the we.trade Innovation DAC joint-venture company, it said "the acquisition marks the start of consolidation in the blockchain trade finance industry, with Contour leading the charge."

The Reuters article, Vista Equity's Finastra explores $7 bln banking unit sale -sources, can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.