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

07 Apr 2017

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.

Click here for more information | Download the full report here.

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