The news: Charlie Javice, who founded a fintech that JPMorgan Chase acquired in 2021 for $175 million, was sentenced to seven years in prison for pitching the deal based on fraudulent records that exaggerated the size of the fintech’s customer base by several million.

Shared regret: Fraud in fintech acquisitions hasn’t made many headlines, but big spending and questionable strategic judgment have. 

Goldman Sachs has done so most publicly:

• The bank bought GreenSky, a consumer loans platform, in 2022 for $2.24 billion in 2022. It sold GreenSky in 2024 to institutional investors, and wrote off $506 million in intangible assets associated with the sale.
• It bought personal finance app Clarity Money in 2018 for about $100 million. It folded Clarity features into its Marcus consumer banking app in 2021. Since then, the bank has retreated from its consumer banking ambitions.

Our take: Effectively cross-selling banking products (JPMorgan) and building a business nearly from scratch (Goldman) are no small feat. JPMC and Goldman used acquisitions to buy customers superficially, and much less so to acquire innovative technology or earth-shattering products.

Fintechs can be valuable partners and shrewd acquisitions, but for banks, they may also be a siren song. A hunger for growth and a thirst for the next best thing can impair otherwise clear management judgment. Due diligence should be thorough and strategic planning measured.