Its other revenue sources include mortgage finance, corporate finance and insurance. Currently, Ally rely heavily on their auto finance segment – auto finance comprised of 91% of total pre-tax income from continuing operations during Q3 of 2021. It would also be able to market these credit cards to its account holders and borrowers.įurthermore, the acquisition will be Ally Financial’s fifth revenue source. The deal provides Ally with a scalable, digital credit card platform would help Ally to replace the overdraft-fee income it lost when deciding to permanently drop charges for depositors, in June 2021. The acquisition would diversify the range of Ally’s products and offer a new way to cross-sell products to FSF’s customer base. It is expected to grow by a compound annual growth rate (CAGR) of 3% and by 2025, the entire market is expected to reach $107.69 billion at a growth rate of 1.1%.Īlly Financial believes that the deal will enhance profitability of the company and is in the hope that it will improve its evolution in being one of the leading digital consumer banks in the credit card industry. The global market consists of sales of credit card services that involve storing, processing, and transmitting payment card data. The credit card industry is becoming more important by the day, with over 80% of consumers preferring to use card over cash when making payments. Moreover, over the past four years, the company’s customer base has grown by 66% and by 74% for loan balances. As per Ally Financial, FSF has 658,000 card holders and $763 million in loan balances. The company specialises in issuing credit cards to below-prime consumers for online shopping and payment. Pandit, Ajay Mookerjee and Steven Jay Freiberg “Steve”. Other members on the deeply experienced board of directors include Vikram S. It was founded by Priya Jakatdar and is now run by CEO Rob Habgood. Brown, who has held the position since February 2015.įair Square Financial is a much younger company, only founded in 2016. The company was founded in 1919 by William C. Morgan served as exclusive financial advisor while Skadden, Arps, Slate, Meagher & Florm LLP served as legal counsel.Īlly Financial is an American bank holding company that provides financial services such as car financing, online banking, corporate lending, an electronic trading platform and more. both served as financial advisors for Ally Financial while Sullivan & Cromwell LLP served as legal counsel. The acquisition of FSF will be done in cash and is expected to close in the first quarter of 2022.Ĭiti and Goldman Sachs & Co. The deal is Ally’s first venture into the credit card market, after a deal with credit-card lender CardWorks that did not materialise. Earlier this quarter, Ally Financial made the announcement that it would pay $750 million in acquiring credit card company Fair Square Financial (FSF).
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