The news: US neobank SoFi has agreed to acquire Technisys, a cloud-based core-banking provider. The tie-up is valued at around $1.1 billion and is slated to close in Q2 2022.

More on this: Adding the provider gives SoFi its own core-banking platform.

• Dropping the multiple outside companies it currently relies on will help it to cumulatively save about $75 million to $85 million from 2023 to 2025.
• The core overhaul is designed to help SoFi move faster and to deploy more personalized offerings to its customers.

The bigger picture: SoFi said that its Technisys deal will help it with its ambition to become “a one-stop shop financial services platform.”

• The neobank also views itself as similar to Amazon’s cloud-services arm, Amazon Web Services (AWS), but operating within the fintech space.

Technisys is the third major deal for SoFi:

• The Golden Pacific Bancorp deal, which it wrapped up earlier this month, helped SoFi become a full-fledged bank after its approval by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve.
• Banking-as-a-service (BaaS) provider Galileo came on after agreeing to the tie-up in 2020. Galileo still operates independently; SoFI plans the same for Technisys.

The BaaS-growth play: SoFi will pair technologies from Galileo and Technisys for its enhanced BaaS arm, which it plans to offer to established banks and fintechs.

• Banking products it mentioned include savings, checking, credit cards, lending, and deposits.
• SoFi will also use the pairing for embedded finance, enabling non-financial companies to offer banking services to their customers.
• Technisys and Galileo both operate in the US and in Latin America, and their addressable market will cover 16 countries.

The big takeaway: Technisys gives SoFi the building blocks to form a BaaS division that could eventually rival its neobanking business in importance.

• This scenario calls to mind how AWS relates to Amazon: AWS was only 12% of the company’s net sales in Q1 2021, but made up the majority of its operating profit, per our report, “The Power of Amazon.”
• Embedded finance could be particularly lucrative, as its new revenue volume is projected to soar by 922%, from $22.5 billion in 20202 to almost $230 billion by 2025, per Lightyear Capital.

SoFi’s string of acquisitions could give its neobanking arm a competitive advantage over incumbents:

• Its newly assembled, best-of-breed tech stack is unencumbered by harder-to-manage legacy systems.
• Owning a core-banking platform eliminates its dependence on outside providers. By contrast, many incumbent banks are dissatisfied with their current relationships in this space.