Why Canapi is Investing in Candescent

The Digital Banking Landscape 

The banking industry is undergoing a period of rapid digital transformation, and as a result, we believe the need for scalable, extensible, and integrated digital banking platforms has become table stakes. Digital banking solutions (including mobile and web apps) now serve as the primary interface between financial institutions and their customers, functioning as the "digital branch" and playing a mission-critical role in a financial institution’s technology stack – touching many aspects of the customer experience. The need for digital account opening and servicing has only been accelerated in a post-pandemic world, heightening the need to continue to build out this critical channel.

Over the past decade, big banks have invested billions of dollars upgrading in-house solutions to meet customers’ expectations and drive digital adoption. Smaller peers do not have the benefit of similarly large internal technology budgets, and today generally trail larger FIs on digital penetration/adoption metrics, which we believe results in poorer customer experiences and higher costs. 

As customer expectations for intuitive, user-friendly digital experiences grow, we are seeing small-to-mid-size banks and credit unions responding by shifting to third-party platforms with dedicated support, seamless integrations, and cloud-native, API-first architecture. When properly deployed, we believe cloud-native equates to unsurpassed resiliency and reduced operating expense, while API-first allows for deep integrations and access to critical enterprise data.   

In what Canapi sees as “the Great Unbundling” (the evolution to “Best of Breed” approach) many are moving away from outdated, in-house core systems and turning to specialized providers that can deliver efficient, scalable, digital banking solutions. As a result of this transition, the market for digital banking solutions is expected to grow quickly over the next five years.

Investing in Candescent 

In this landscape, we believe Candescent is uniquely positioned to lead. Formerly the digital banking division of NCR Voyix Corporation (NYSE: VYX), Candescent was acquired in August 2024 by Veritas Capital (“Veritas”), a long-standing technology investor with over $45 billion in assets under management as of September 30, 2024 and a focus on companies operating at the intersection of technology and government. Canapi played a pivotal role in the diligence process with Veritas, sharing our comprehensive industry knowledge, product acumen, and technical expertise.

Now operating as an independent, privately held company, Candescent is one of the largest digital banking platforms in the U.S., serving over 1,300 financial institutions and more than 29 million registered users. Candescent’s DI platform powers digital properties (mobile/web apps, etc.) in a multi-tenant environment while the D3 platform leverages single-tenant deployments to afford financial institutions with greater control and opportunities for customization. Beyond core digital banking, Candescent’s offerings extend to solutions for consumer and business account opening and branch service digitization, enabling a unified, secure, and scalable banking experience.

As the financial services industry continues to modernize, we are confident that Candescent’s leadership position and expansive market opportunity will grow. That’s why we are excited to co-invest in Candescent alongside Veritas, supporting its vision to transform digital banking for institutions of all sizes. 

Veritas: The Ideal Partner for Growth 

Canapi is proud to partner with Veritas Capital on this transaction. Veritas is a highly respected firm with a proven track record of success, including extensive experience executing over 40 corporate carve-outs. Canapi has known the Veritas team for several decades, where we have developed a strong relationship built on trust, mutual respect, and a shared commitment to value creation. 

With Veritas’ operational expertise and Canapi’s deep knowledge of the digital banking sector, we are confident that together we can unlock Candescent’s full potential. Our partnership is driven by a common vision: investing in growth, enhancing product offerings, and delivering meaningful benefits to our LPs and the financial institutions that depend on its platform. 

As a new standalone company, we see significant potential to accelerate Candescent’s growth and expand its leadership position.

The Canapi Effect 

Our investment in Candescent aligns with Canapi’s broader mission to support and promote innovation among our bank LPs and the larger banking sector. We have conviction that we can help drive further innovation and improvements to a mission-critical platform that many of our LPs rely on to power their digital banking capabilities. Currently, over 20 members of the Canapi Alliance are customers of Candescent, and we expect that number to trend higher, with critical offerings like Deposit and Loan Account Opening. Importantly, as part of this investment, Canapi will be taking a board seat and playing a critical strategic role in all aspects of the business, including on the product roadmap, to ensure our Alliance’s current and future digital banking needs are fully met. 

Additionally, the potential for our portfolio companies to integrate with Candescent’s platform is compelling. Candescent has already formed valuable partnerships with Canapi portfolio companies and we anticipate more collaborations that will fuel growth and create value across our entire ecosystem. By supporting Candescent’s growth, we are not only bolstering the largest digital banking platform in the market but also unlocking new opportunities for both our portfolio companies and LPs to thrive. 

As financial institutions increasingly seek to replace outdated core systems and upgrade their digital banking capabilities, we believe Candescent is ideally positioned to lead this transformation. We look forward to partnering with Veritas and the Candescent team to shape the future of digital banking, delivering lasting value to financial institutions and their customers for years to come.