Axos Financial buys Arc Technologies in digital push

Axos Financial has agreed to acquire Arc Technologies, adding a financial technology platform focused on technology and growth companies to the group.

The acquisition is intended to broaden Axos's offering to small businesses in the US, particularly companies it views as underserved by traditional banks. Founded in 2021, Arc offers cash management, access to debt financing and financial software through a single platform.

The transaction will be carried out through Axos Nevada Holding, a subsidiary of Axos Financial, and is expected to close in July, subject to customary closing conditions.

Arc has built its business around serving technology companies and other growth businesses. It operates from San Francisco and New York City, and its investors include Left Lane Capital, NFX, Bain Capital Ventures, Atalaya, Clocktower Technology Ventures, Torch Capital and Y Combinator.

For Axos, the purchase adds a newer software platform to a banking group that already spans consumer and business banking, securities clearing and digital investment advice. As of the end of March, Axos Financial had about USD 29.2 billion in consolidated assets.

Its clearing arm, Axos Clearing, had about USD 44.0 billion in assets under custody or administration at the same point. The parent company is listed on the New York Stock Exchange and is included in the Russell 2000 and S&P SmallCap 600 indices.

Digital push

The acquisition also adds Arc's tools for automating parts of financial workflows and generating financial insights. Axos sees the combination as supporting its broader digital strategy as it expands its reach in business banking.

"Arc brings an exceptional team, a modern technology platform, and deep expertise serving the innovation ecosystem," said Greg Garrabrants, President and Chief Executive Officer of Axos Financial.

He said the lender views the deal as a way to combine Arc's engineering and product capabilities with Axos's existing product set, distribution and capital base.

"The combination of Arc's product and software engineering capabilities with Axos' diverse products and services, nationwide distribution, and capital resources creates a compelling opportunity to build a differentiated digital banking solution for businesses across their full lifecycle," Garrabrants said.

Arc rationale

Arc's management said the company was founded on the idea that business customers wanted a more integrated financial platform. Its software is designed to help customers manage operating cash, seek yield on balances, raise debt capital and use software tools for finance functions.

"We built Arc with the belief that businesses deserve a more intelligent and integrated financial platform. Joining Axos gives us the infrastructure, product breadth, and scale to pursue that vision significantly faster while continuing to deliver the modern experience our customers rely on," said Nick Lombardo, Chief Executive Officer and Co-Founder of Arc.

The agreement reflects continued interest among established financial groups in acquiring newer software-led firms to broaden their business banking products and improve digital delivery. In this case, Axos is adding a company built specifically for technology and growth businesses, a customer segment that often needs cash management, financing and software tools in one place.

For Arc, the sale provides access to a larger balance sheet and a broader operating platform. For Axos, it offers a route into a younger client base and a technology stack developed outside a traditional banking structure.

Millions of small businesses in the US remain a contested market for banks and financial technology firms, as providers try to combine lending, payments, treasury management and software into more unified services. The Arc acquisition places Axos more directly in that contest through a platform designed for companies growing quickly and seeking financing alongside day-to-day cash management.