One third of financial institutions to acquire a FinTech firm in next 18 months

Key findings:

  • 31% of banks and asset managers expect to acquire a FinTech firm within the next 18 months
  • Those who don’t plan to do so, 45% say the regulatory risk is too high, and 48% say they are delaying acquisitions while they seek greater certainty about which firm(s) would make the best target
  • 41% of firms that don’t plan to make a FinTech acquisition cite ‘culture clash’ as a deterrent against M&A
  • 75% of respondents say they must improve their partnering capabilities to accelerate digital innovation

New research from international law firm, Simmons & Simmons, shows strong investment appetite among banks and asset managers, with 31% expecting to acquire a FinTech firm in the next 12 to 18 months as a way to improve their digital innovation.

The firm surveyed 200 senior level respondents (30% at c-suite level) across five financial centres to investigate why most large institutions in the financial services sector are struggling to innovate quickly enough.

While acquiring a FinTech firm could go some way to addressing the innovation challenge, of those not pursuing an acquisitions strategy, 45% state that concerns about regulatory risk is holding them back, while 41% cite ‘culture clash’ as a deterrent against M&A.

Commenting on the findings, Khasruz Zaman, M&A partner at Simmons & Simmons says: “Major financial institutions are increasingly looking at making FinTech acquisitions as a way of accelerating the adoption of new technology and innovation in their businesses.  We expect this to result in a significant increase in investment and M&A activity in the FinTech sector over the coming years”.

With this focus on acquisitions and investments, it is essential to adopt a streamlined process for executing transactions and to ensure that regulatory and reputational considerations – which could have an impact on the viability of a proposed transaction – are dealt with upfront.”

Hyperfinance , Simmons & Simmons’ flagship research programme investigates how large banks and asset managers are accelerating their digital innovation. The research shows us how the industry leaders are learning to reach hyperspeed.

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